Headlines: February 6th, 2004

The Office of Fair Trading is to look into how the systems used by public sector for buying goods and services affects competition. It has commissioned preliminary research into the impact of public sector procurement.Consultants are to be asked to carry out a broad-ranging economic analysis of how buying by public bodies might result in both positive and negative results. The research will also try to identify specific markets where public procurement is likely to have an impact.

Possible examples put forward by the OFT include whether procurement practices might be restricting entry into the market of new firms, or whether they might be enhancing competition – and its benefits – through openness to new and innovative ideas. It is expected that the study will highlight areas for further market studies under the Enterprise Act 2002. The OFT expects the results to be of interest to other parts of Government, especially the Office of Government Commerce.

The OGC published a report in December looking at what steps could be taken to encourage better long-term capacity planning in markets where the Government possesses significant purchasing power. One of its main findings was that the public sector needed to take a more strategic approach to the markets in which it operates.

The OFT expects its initial research to be complete by July with a report of its findings being published later in the summer. The terms of reference of the proposed research can be found on the OFT website.