Headlines: July 26th, 1999

A new Office of Government Commerce is being set up as part of a shake up in how Whitehall goes about managing its £13 billion a year procurement budget. The main task of the Office will be to maximise the Government’s buying power. It will deliver over £1 billion of efficiency savings over the next three years while cutting project delays and overruns. Driving procurement from the centre is the major finding from a review, headed by Peter Gershon, Managing Director of Marconi Electronic Systems Ltd.

The review found weaknesses in Whitehall procurement arrangements. Industry suggests that bidding for Government contracts is typically between 10 and 50 per cent more costly than bidding for comparable projects in the private sector and this additional cost can deter some potential bidders from competing. The public sector is the largest buyer of goods and services in the country, but this purchasing power is not used to the best advantage. The prices paid for gas and electricity, for example, vary widely. Because of this fragmented approach 180 departments and agencies typically have separate dealings with the same supplier. Joined up procurement is seen as a major contribution to joined-up government.

The Office will be a distinct organisation within the Treasury, but with close links to other Whitehall departments. It will support departments with a central resource of procurement skills and set the strategic framework within which departments would operate. There will be some loss of departmental sovereignty. The Office will be created by bringing together a number of bodies presently in the Cabinet Office and the Treasury, including the Buying Agency, CCTA, PACE and the Treasury Procurement Group and the PFI Taskforce.

A Supervisory Board chaired by the Chief Secretary to the Treasury with representatives from Government departments and the private sector will approve and monitor the business plan and approve and monitor targets across Government. A transition team has been set up and the Supervisory Board will be in place by the end of the year. At the same time, a Chief Executive will be recruited by open competition. The Office should be operational from April 2000.

Full details are available at http://www.hm-treasury.gov.uk