'Second phase' of government procurement as £14.3 billion savings announced

Will Green is news editor of Supply Management
10 June 2014

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10 June 2014 | Will Green

UK government CPO Bill Crothers has told SM his team has entered a “second phase” of procurement as Whitehall announced savings of £14.3 billion in 2013/14.

Crothers said they had moved from a “fairly blunt” approach with suppliers to becoming a “good, responsible customer”.

He told SM this work was focused on around 50 suppliers who make up £20 billion of procurement spend and the savings achieved from this group had increased to £1.8 billion in 2013/14, up from £900 million in the previous year.

Crothers said this work was based on a shift to contract management and pre-procurement. “It’s those two areas where there’s much more value for us to realise,” he said. “We had a fairly blunt, perhaps at times adversarial relationship. The money we were saving was reasonably low-hanging fruit. Having taken that out we now need to be a more considered, sophisticated and responsible customer.”

Procurement’s contribution to the £14.3 billion total savings, which are against a 2009/10 baseline, was £5.4 billion, up from £3.8 billion in 2012/13. Spend on consultants was around £850 million in 2013/14, down from £2.4 billion in 2009/10. Transformation savings, including reducing government property and moving services online, made up £800 million; project savings made up £3.3 billion; and workforce reform and pensions made up £4.7 billion.

Cabinet Office minister Francis Maude has announced he expects savings to reach a total of £20 billion next year, and Crothers predicts procurement will contribute around a third of this figure.

“The big commercial relationships, that’s where we can make savings,” he said. “Sitting below this is a cultural shift for us. We need to change where we have been spending our time. As commercial specialists a lot of our time has been in the procurement process. That core regulatory process. We need more people to be spending more of their time pre-procurement on engagement and more people to be spending time on contract management.”

Crothers said as the work of the Crown Commercial Service was expanded, taking in more public spend, there would be more opportunities for savings. This was particularly the case for health spending, which he called a “land of opportunity”, and where crown representatives have just been appointed, but not yet publicly announced.

The public sector spent a total of £674 billion in 2012/13, the latest figure available, of which £63 billion was central government procurement.

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