Council body to set up online marketplace

9 August 2000
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10 August 2000 | Mark Whitehead

An online marketplace, which supporters claim could save councils millions of pounds a year, may be up and running early next year.

The move, for which plans are due to be unveiled next week, follows six months' research in the UK and US by the local government Improvement and Development Agency (IDeA).

Led by Gary Richardson, director of assets and resources at Slough Borough Council, the investigation found that councils could save up to a third of their combined annual purchasing transaction costs of £2.5 billion by going online.

It was also found that a further 8 per cent of the £25 billion a year spent on goods and services could be saved through bulk buying.

And more could be saved by improving how councils source products and by reducing the number of intermediaries, according to Richardson.

The IDeA, formed from the old Local Government Management Board last year to improve local-authority efficiency, hopes to form a consortium of commercial backers to develop the marketplace project.

The plan appears to have widespread local government support and has been welcomed by the Central Buying Consortium (CBC), which consists of 17 local authorities.

But how it will fit in with an existing online marketplace for councils is unclear. Paul Leggott, public-sector manager at Tradezone International, which announced the launch of it Best Value Zone in May (see News, 18 May), said he expected to have eight major councils using his company's site by the end of the year.

Tradezone claimed then that its site could save councils up to 40 per cent on their collective annual low-value spend of £14 billion. Local authorities in England and Wales are expected to achieve the government's goal of procuring 70 per cent of their low-value routine goods electronically by April 2002.

Leggott said that Tradezone hoped to work with the IDeA's project and provide the technology for it, but that he could not rule out that the two sites might eventually be in competition.

Richardson stressed that councils and suppliers would not be obliged to use the IDeA's system, idea. "We're confident that the marketplace will enable local authorities to make big savings - on what they buy, as well as on the transaction costs for those items," he told SM.

The transaction fees for items bought via the IDeA's system would probably be between 0.5 per cent and 1.5 per cent of an order, and signing up to the site would be free for councils and suppliers, added Richardson.

Michael Biddulph, spokesman for the CBC and marketing manager at Oxfordshire County Council, said: "We welcome the IDeA's move very much. We want buyers to have the maximum access to useful information. The new site will be at the centre of our thinking when we draw up our own development plans later this year."

SMaug2000

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