PROCUREMENT


A Cleaning up procurement


Public sector procurement is in a mess. Public Sector Executive spoke to Keith Davis, author of a recent National Audit Office report on the subject, to find out how it can be put right


government report released in the dying days of Gordon


Brown’s government showed that even those in power knew that they had made a colossal error, finding that £9 billion could be saved straight away by simply reorganising the back office approach which central government departments take towards procuring goods and services.


With a new administration in power, something clearly needs to be done. But where to start?


Keith Davis, director of cross government studies at the National Audit Office, is calling for a more co-ordinated and consistent approach towards procurement across the public sector.


“Although a lot of activity has taken place in the past to set up framework agreements, we feel that this wasn’t effective in delivering value for money because they were not able to get volume committed in the market.”


“Since we published our report in May, the new Efficiency and Reform Group has made it a priority to deal with some of these issues.”


Individuals and organisations within government need to take responsibility for delivering a more co-ordinated approach.


Given that the OGC and Buying Solutions have been major government players in the procurement market for a


Sep/Oct 10


number of years, would either of these be suitable?


“Although the National Audit Office has not looked at which specific organisations should be given which role, we are saying that within a clearer national framework better decisions need to be made around which commodities should be bought at a national level and which at a regional and local level.


“For those bought at national level there is a clear role for a strong centralised approach to managing that category of expenditure.”


Despite the current state of disarray amongst many government bodies, local and central, over their procurement practices, many have shown themselves to be innovative and willing to try new ideas such as collaborative buying.


But these alone will not be enough to deal with the problem, according to Keith.


“For us, it is really about clearing up the procurement landscape. There are too many framework agreements, too


Keith Davis


many professional buying organisations at all levels. There is a confusing array of framework agreements which public bodies can choose from, covering very similar if not identical territory.”


Given the complexity of the current situation, the quality of procurement skills in public sector organisations has also been called into question. Is there a need for more comprehensive training of procurement staff or for staff with appropriate skills to take over those procurement roles?


“We believe that there needs to be clearer guidance about who makes what decisions on a whole range of commodities. This would allow for staff to develop their skills and build better relationships with suppliers.”


If public sector organisations can build up strength in the procurement market it could prove useful not only to the public sector organisation, but the private sector suppliers, according to Keith.


“Clearer communication between the public sector and suppliers would benefit both parties. In the past, suppliers have often found they need to go through a new tender process despite a framework already being in place. Not only is this frustrating for the supplier, but it can lead to extra costs which will often be passed on to the public body.”


“By improving the procurement process, a more co-ordinated and professional approach can be developed delivering benefits to the taxpayer.”


The public sector procurement pse 21


process can be extremely daunting and expensive for suppliers, with some spending up to £100,000 per tender. So is there anything which can be done to reduce these costs?


“We do think that costs could be reduced. We studied some of the OJEU notices from 2008 and estimated that about 2,500 notices were unnecessary because there were already arrangements in place which could have been made to work. Because there are also too many framework agreements, it means that a lot of money has been wasted creating greater costs for both parties.”


So, given the huge amount of effort which has gone into arranging public sector procurement over a number of years, including the creation of the OGC and Buying Solutions, why is public sector procurement in such a mess in the first place?


“I suppose that this situation has resulted from a series of decisions taken at different times. What we are saying now is that we think that there is a good opportunity to clean up the landscape.”


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