08 June 2006 | Steve Bagshaw
Public-sector procurement departments should create savings of more than £8.5 billion by April 2008, but will need to sustain "significant cultural change", according to John Oughton, OGC chief executive.
Speaking at a CIPS Central London branch event last week, Oughton said: "More than a third of the £21.5 billion [total Gershon savings target] will come from procurement, maybe £8.5 billion, maybe a bit more."
He also said this would be in "hard cash for the most part".
Fourteen months into the 36-month plan he estimated procurement efficiencies have saved £2 billion "so far" and took issue with National Audit Office (NAO) criticism of how the OGC measured savings. In a report in February, the NAO expressed "significant concerns over whether adopted measurement methodologies could be relied upon".
Oughton replied: "One hundred and eighty of 300 projects under [NAO] review did not have baselines, but half of that 180 now have baselines."
He went on to say that some "underreporting" was also to blame. "Schools report only once a year and so far we have had no returns from schools, so if anything we have underrecorded".
Oughton continued that a shift was already occurring in Whitehall and beyond. Choosing not to improve was "not an option, not for central government or the wider public sector," he said.
What he described as "intelligent collaboration" and a single sourcing strategy would bring better deals for the public sector.
But he acknowledged that this constituted a "significant cultural change", as "departments jealously protect their independence".
Oughton assured delegates the plan was not about squeezing suppliers on price. "We do not want to reach a position where the marketplace isn't attractive to suppliers, we therefore have to redesign the model and process."