Public sector needs to make better use of its buying power, say auditors

21 May 10
The public sector could do much more to maximise its considerable purchasing power, auditors have said

By Vivienne Russell

21 May 2010

The public sector could do much more to maximise its considerable purchasing power, auditors have said.

In a joint report published today, the National Audit Office and Audit Commission say public sector organisations need to work together much more effectively on the procurement of goods and services.

With more than 50 professional buying organisations in the public sector, procurement is fragmented and has no overall governance structure.

Duplication of activity is incurring unnecessary administration costs and the public sector is paying a wide range of prices for the same commodities. Auditors found a 169% variation for LCD computer monitors (£65 to £175) and a 116% price variation for the same broad specification of paper (£6.84 to £14.79).

The auditors praise the Office of Government Commerce’s Collaborative Procurement Programme, established in 2007, saying it has led to some real improvements in the way public bodies buy goods and services. However, they say this work needs to be built on and a pan-governmental approach to procurement should be adopted.

NAO head Amyas Morse said: ‘The public sector spends £220bn a year on goods and services. Given the potential to make significant savings, it is vital that there is much better co-ordination of procurement activities to ensure value for money is secured across the public sector.’

Audit Commission chief executive Eugene Sullivan added: ‘With all public service costs under pressure, better procurement provides an opportunity to make significant savings that don’t cut into frontline services. Most councils already collaborate but even where there is collaboration, it is not delivering all the possible benefits.’

Communities minister Baroness Hanham said the report was an ‘important assessment’ of the challenges facing public sector procurement.

‘Procurement accounts for nearly half of gross local government expenditure, and the report highlights how savings can be made. At this time, when substantial reductions are having to be made in expenditure, it shows one way that this can be done,’ she said.

‘I want to ensure that purchasing and procurement processes and results are transparent, and will be looking to work with local government to see how best value deals can be achieved, to save local tax payers money and help to protect frontline services.’


Did you enjoy this article?