Departments 'could save £45m a year' on services

9 May 2001
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10 May 2001 | Robin Parker

A better understanding of consultant fee structures and improved negotiating skills could save government departments £45 million a year, according to a National Audit Office (NAO) report.

The survey of how departments buy professional services also claims that better use of competitive tendering could save a further £12 million. A third of consultancy contracts were awarded through single tenders or informal price tendering.

Twenty-five suppliers accounted for 37 per cent of the departments' £610 million annual expenditure. The biggest earner was consultancy PriceWaterhouseCoopers, which received £69.8 million.

The line managers in charge of buying these services were often not purchasing experts, which can affect monitoring of spending. The second-biggest spender, the Department of Trade and Industry (DTI), could not account in detail for £115 million of its £125 million a year spend.

A DTI spokeswoman said the department's accounting and budgeting were being updated with new software to give more accurate up-to-date data.

The NAO claims the lack of a co-ordinated procurement strategy is creating inefficiencies and incurring expense.

It recommends introducing more combined purchasing and up-to-date knowledge-sharing, largely through intranet-based information systems.

It also encourages framework agreements, currently awaiting formal recommendation from the European Commission. The Department of the Environment, Transport and Regions' framework contract for public-private-partnership and private finance initiative advice has made 10.7 per cent savings on the 15 commissions it has secured to date, it reported.

The research was prompted by a 1994 review of the government's use of external consultants. Its aim of reducing consultancy fees by £65 million has yet to be met. Spending in 1999-2000 was 7 per cent higher in real terms than in 1993-1994.


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