The Ministry of Defence spends some 2.5 billion pounds a year with suppliers on buying everything from catering and clothing to high tech aircraft spares. It claims that it will achieve a 20% saving on output costs over the next five years by introducing an e-procurement system costing 45 million pounds.The Defence Electronic Commerce Service will be the MOD’s single electronic gateway to its trading partners and it will revolutionise the way it does business. The procurement system will include on-line catalogues of products and automatic purchasing transactions. It will allow communication across a variety of technologies and departments and speed up the buying process. The service will be provided through a Public Private Partnership by Cap Gemini Ernst & Young , who it is believed were preferred rather than EDS.
The predicted cost savings are much higher than those claimed for the private sector, but this could be due to cumbersome public sector procurement processes. In the private sector the average cost of a procurement transaction is 50 pounds. The National Audit Office found that the average for the MOD is 74 pounds. A simple padlock can cost 80 pounds