Headlines: March 16th, 2004

Fewer than a quarter of central government procurement managers who spend 15 billion pounds each year have a professional qualification from the Chartered Institute of Purchasing and Supply. They buy goods and services, ranging from equipment, information technology, research, and consultancy advice to postal services, travel and stationery for central departments, agencies and other public bodies. The National Audit Office is critical of this non-professional approach and also of the fact that heads of procurement had board status in only 13% of the organizations it surveyed.Although central government made a 1.6 billion pounds saving on procurement, against a target of 1 billion pounds, the result was achieved by just nine departments. The NAO believes that more will have to be done if the target of 3 billion pounds savings by 2006 is to be met. The NAO report: ‘Improving Procurement’ sets out areas where improvements need to be made.

Invitations to tender are too prescriptive, burdensome and they restrict innovation. Focus groups organized by the NAO saw government procurement as fair but felt that tenders were not secured on the basis of value for money, but rather on price, the size of the company, its track record and experience and its capacity to take on risk. The NAO warns that companies are unlikely to want to compete for government business if departments’ procedures are bureaucratic, unnecessarily time consuming and wasteful.

There needs to be a better commercial awareness. Nearly two thirds of departments and agencies rely on more than 250 suppliers. The extreme example is the Prison Service with 23,000 suppliers. Procurement managers have insufficient knowledge of how supply markets for goods and services such as IT, consultancy and telecommunications are organised. Better information is also needed on the relative performance of existing and potential suppliers and the resilience of their supply chains which might impact on the quality of service that they provide.

The NAO urges the Office for Government Commerce to brand and package its advice and guidance in a way which is more relevant to those agencies and other public bodies, who so far, have not responded to the appeal to develop a more professional approach to procurement.