30 November 2005 | Rebecca Ellinor
Buying power at the Department for Culture, Media and Sport is not used effectively and enhanced procurement could save up to £28 million a year by 2010/11.
That is the verdict of a report published today by the National Audit Office (NAO) into the department and the 24 largest organisations it supports, including the Arts Council England and English Heritage. Together they spend £575 million a year on goods and services.
The report, Procurement in the Culture, Media and Sport sector
, acknowledged the savings achieved in the past two years through contract renegotiation, using new suppliers and aggregating demand, but stated that more needed to be done.
Sir John Bourn, head of the NAO, said: "Procurement is an area where the culture, media and sport sector can achieve significant savings and improvement."
The study said 60 per cent of organisations' procurement spend is on generic goods and services, such as facilities management and ICT, but only 4 per cent of work is done collaboratively.
The NAO also noted a lack of co-ordination of procurement activity which presents a "significant risk to value for money".
In 2004/05, the 25 organisations processed 350,000 purchase orders, an average of 14,000 each at about £44 per order. The NAO said more investment in computerized systems and greater use of payment cards could reduce the administration cost of processing orders and paying invoices by up to £5 million a year.
It said better procurement practice could result in annual savings of £14 million by 2008/09 and could double that figure within five years. This is in addition to the efficiency target of £26 million set to be reached by 2007/08.
Edward Leigh, Conservative chairman of the Public Accounts Committee, said it was "disappointing" the department had failed to heed advice already published by the NAO and the Office of Government Commerce, among others.
"Not even a handful of the sponsored bodies have procurement strategies. Only half of them have skilled procurement staff. They are ignoring opportunities to get better prices by teaming up to get volume deals," he said.
He added the department needs to demonstrate leadership and "shake up" sponsored bodies so that they "take the issue seriously and implement common-sense approaches that are already well-known and proven to be effective".
The NAO said DCMS has established a procurement project to deliver greater savings and would use the recommendations made in its report as a framework for action across the sector.
Further information:National Audit OfficeDepartment for Culture, Media and Sport