Headlines: April 25th, 2001

The Comptroller and Auditor General has told central government departments that they need to sharpen up their act when buying professional services. The report by the National Audit Office is based on a survey of 152 departments aimed at finding out how they bought services. The survey covered consultancy and advisory services, the design, development and implementation of information systems, advertising for recruitment of staff, the delivery of contracted out services such as payroll administration, research and development, and staff substitutionThe report claims that if Departments adopt the advice to act as intelligent customers by discussing with suppliers all the elements of the contract price, they could cut expenditure by 10 percent and save 60 million pounds a year. Most of the savings could come from a tougher negotiating approach based on better information about comparative fees. Researchers found that almost one third of contracts were awarded on the basis of single tender or informal price tendering and that some contracts were open to interpretation. The report identifies further costs savings from the use of competitive tendering and from contracts that are more tightly drawn up.

The researchers also discovered that the combined purchasing power of the departments is not being used to best effect. Twenty five suppliers account for 37 per cent of the annual 600 million pounds expenditure, but because departments rarely share information with each other they are unaware of how the rate they are paying relates that paid by others.

The report recommends that the Office for Government Commerce should co-ordinate a management information database that would allow departments to compare prices and fees paid, evaluate suppliers’ performance and assess the amount of business suppliers are receiving from departments collectivel