04 March 2004 | David Arminas
The leak of Labour's major government efficiency review has sparked fears among purchasers of a more centralised and dictatorial procurement regime.
The review, led by Sir Peter Gershon, chief executive of the Office of Government Commerce, was leaked late last month to the Financial Times and could signal one of the biggest shake-ups in government procurement for several years.
It concluded that more collaboration is needed between local authorities and central government departments and agencies. There should be fewer local government purchasing organisations and the establishment of four super-agencies.
The role of the OGC, the government's main procurement advisory body, is to be expanded to negotiate contracts directly.
This larger and more active OGC will help to set up and work closely with what amounts to mini-OGCs for local government, health, defence and other major public service areas.
The report also says services including human resources, IT and procurement would be run across departments and agencies with common interests and led by a single department with central processing centres.
One purchaser warned that an expanded OGC with direct buying activities harked back to the days of large inefficient central buying organisations like the old Property Services Agency.
"These were inefficient, unwieldy and steered like a battleship, as well as being prone to nepotism," he said.
"The question is how far down the line of centralisation should government go before a low-cost, large-scale deal loses value in other ways."
But one director of procurement for a major government agency told SM that politics appears to be playing a large part in forcing changes on purchasers: "It appears very political and Cabinet Office-driven rather than based in reality."
With one eye on a possible general election in 2005, the government wants to save £10-15 billion a year on its annual budget of about £100 billion.
The money is to be ploughed back into the more politically sensitive front-line services such as health, education and policing.
Gershon's remit is to look at how money can be saved from improving procurement, back-office functions and transactional services, regulation and funding.
An OGC spokesman said Gershon, who steps down after four years at the OGC this month, consulted widely across all departments and agencies and it was one of those consulted.
The final report is to be released in late April, in time for consideration in the government's July spending review, which will set departmental budgets up to 2007.
Even though the leaked review has been described as "interim", a source close to the project said major changes were unlikely.
"The efficiency team is now in consultation with departments and I don't think they are going to change their recommendations. Even if only 30 per cent of them happen, there will still be some pretty big changes."
News focus: Higher purchase