14 July 2006
The Treasury is to launch a root-and-branch review of procurement throughout the public sector, amid ministers' mounting frustration that many organisations are still not using their buying power to achieve efficiency savings.
John Healey, financial secretary to the Treasury and the minister in charge of procurement policy, is setting up the review in a concerted effort to overcome the reluctance of many public bodies to co-ordinate their procurement functions.
The top-level exercise will be conducted by Peter Fanning, deputy chief executive of the Office of Government Commerce, and will span the procurement regimes in place across central government departments, NHS bodies and local government.
It opens another front in the Treasury's drive to improve government efficiency and wring maximum value for money from the government's investment in key services, as it prepares for a tight Comprehensive Spending Review next year.
Fanning and his team will comb through a list of 54 goods and services, such as temporary staff and energy, to examine how these can best be purchased.
The intention is to draw up 'single sourcing' arrangements for each. Under this regime, public bodies will have to use, as appropriate, approved suppliers, framework contracts or standard specifications to reduce the financial and staffing costs of purchasing supplies.
Healey said Fanning's remit was 'to identify a range of goods and services that are suited to such techniques, to quantify the benefits of doing so, and to set out the delivery patterns that will enable such efficiencies to be exploited'.
He has been instructed to report back in the autumn with a strategy capable of delivering measurable efficiency savings just six months later.
Healey, revealing the review on July 12, spelt out his irritation at the lack of progress on improving procurement. He said: 'The tools and techniques to deliver value-for-money improvements are well established. But while they are tried and tested they have yet to be widely adopted and accepted.'
Citing e-procurement, he said: 'Frankly, I find the low level of take-up amazing and disappointing.'
Healey also admitted that the CSR 2007 would assume real terms' growth in investment of just 1.9% between 2008 and 2011, compared with growth averaging 5% in the preceding years.
The conclusions of the Fanning review would be at the heart of Whitehall departments' settlements to help bridge that gap, he said.
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