13 March 2003 | David Arminas
Government purchasers are set to make more savings on buying everything from paperclips to major building projects.
Peter Gershon, chief executive of the Office of Government Commerce (OGC), has set a target of saving £3 billion over the next three years on contracts for Whitehall departments and other public-sector bodies.
This will follow predicted savings of more than £1 billion in the first three years of the OGC, the government's procurement advisory body.
Gershon announced the new target to 200 private and public-sector delegates at the OGC's Achieving Excellence in Construction conference in London.
He said agencies and departments would continue to keep savings made from better purchasing. This would provide "a significant amount of money to improve hospitals, schools and other public services".
Gershon claimed that last month's positive report by the National Audit Office into private finance initiative (PFI) building projects showed the government was increasingly proving itself a better client for big projects.
He told SM: "Procurement has got better at managing large projects, a phenomenal improvement over three years. PFI forces government to specify what it wants in output terms."
Savings are estimated on the difference between the costs under new contracts and those they replaced.
On large projects, a formula is used to calculate what the contract would have cost before PFI was introduced.
Vice-admiral Peter Dunt, chief executive of Defence Estates, which manages Ministry of Defence land and properties, said the savings so far were due largely to the OGC's Gateway process of evaluating projects at set stages throughout their development.
"It focuses our minds to make sure we know what we are asking of industry during the entire construction process," he said.
But Colin Busby, chairman and chief executive of Kier construction group, said that although a good strategy was now in place, improvements in procurement of large projects had been patchy.
He said too many purchasers still did not keep to their own schedules, particularly Defence Estates, because they "had not bought into the concepts of teamworking".
He called for the OGC to have more direct influence over Defence Estates and the NHS, which are outside its formal remit, and local government.