MPs: OGC must raise its game to stop £415m a year public procurement waste

Government procurement agency must deliver a “higher octane performance” to help cut down unnecessary public sector procurement costs of £415m a year, MPs have urged.


Government procurement agency must deliver a “higher octane performance” to help cut down unnecessary public sector procurement costs of £415m a year, MPs have urged.

The call follows an inquiry into the agency by the powerful Commons public accounts committee, which found that unnecessary procurement process costs across the public sector hit £415m in 2005, while prices across central government organisations for four standard products varied by between 73% and 139%.

OGCbs and parent agency the Office of Government Commerce must provide public sector organisations with accurate and comprehensive information on contract procurement costs, with clear price benchmarking data. This would allow the agencies to challenge government spending departments on a "comply or explain" basis when they decided not to follow the "best deals", the MPs said.

The committee noted that OGCbs had met its value for money performance target in each of the past three years, but had the potential to increase its annual savings by at least £500m.

"These savings should be achievable within three years, but the Office of Government Commerce needs to set much more challenging targets," the committee’s report says.

The committee found that OGCbs operated 180 framework agreements – a key tool for achieving economies of scale in the public sector - but more than 90% of purchasing through the frameworks was undertaken using just 25% of the agreements, while 40% of the framework contracts did not cover their own letting and management costs.

Central government organisations had made "little use of e-procurement", the committee found, despite potential price savings of 20-25% using e-auction techniques.

In a January hearing held as part of the MPs’ inquiry, OGCbs chief executive Alison Littley admitted that she did not know how much public sector procurement takes place online. OGCbs did not track the use of online procurement in the public sector, Littley told the committee.

The MPs said the Office of Government Commerce and OGCbs should publicise such savings “to demonstrate to procurement professionals and, more importantly, budget holders and finance/commercial directors the value that is not being currently captured”.

The OGCbs website also came under fire, with the MPs noting that public sector users still found it difficult, "despite three development stages".

Public sector organisations should also be better consulted when framework agreements were let, the committee said, noting that 73% of public bodies said they were not consulted enough.

Committee chair Edward Leigh said: "The bill for public sector procurement can be cut: first, by a much more coordinated approach to purchasing by government departments and the many public sector procurement organisations; and, secondly, by the agency delivering a higher octane performance."

OGCbs "should be centre stage" in the drive for better value procurement, but was currently "just one of the chorus," he said. " must get a better idea of what its customers want in the way of new framework agreements with suppliers."

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