Government departments mask supplier profit margins

26 March 2013

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26 March 2013 | Anna Reynolds

Some UK departments are “hiding the true margins commercial suppliers are making”, according to government CPO Bill Crothers.

Speaking at the Public Administration Select Committee (PASC) hearing yesterday, Crothers said the lack of transparency of spend between departments meant vendors could mask their real margins. He identified certain cases, including a large IT contract, where the public sector was paying the same supplier more than the private sector. “There has been a culture where departments are used to having the total relationship with suppliers,” he said.

Crothers said lawyers are advising their department not to share contractual information with other departments to protect commercial confidentiality. He said the Government Procurement Service is working to resolve this, but called for a Crown Procurement Service to cover all public sector organisations that would be able to provide better transparency for taxpayers and departments.

Stephen Kelly, chief operating officer at the Cabinet Office, who was also speaking at the hearing, said: “We want best value from suppliers who need to step up and provide consistent, outstanding services.” He said the NAO produces good reports, but there is still a long way to go to get better management and data across government expenditure.

Colin Cram, managing director of consultancy Marc1, who gave evidence to MPs on public procurement in January, told SM that while the benefit to the public of shared data would be huge, there could be negative impacts for suppliers. “There is no reason why data on suppliers should not be shared by departments with the Cabinet Office. The legal issue is a nonsense.”

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