17 March 2006 | Anusha Bradley
A radical overhaul of public-sector procurement in Scotland could result in £1.3 billion more savings than currently sought.
This was the conclusion of a Gershon-style review of public-sector purchasing conducted by leading business figure John McClelland.
The Rangers FC board director and chairman of capital investment firm Technology Ventures Scotland warned "urgent action" was needed to address his concerns, or the present drive to save just £200 million through procurement by 2007-08 would fail.
The £200 million target was unveiled in the Scottish Executive's "Efficient Government" initiative launched in June 2004. McClelland was appointed in December 2004 to head a review of public-sector purchasing. Publishing his findings this week, he said the country could save £400 million in 2008-09 and £600 million in 2009-10 if changes are made. This would result in £1.5 billion savings overall in the next five years, he said.
But McClelland said wide-reaching improvements were required to achieve this.
"Organisations need to raise their performance and improve procurement processes. At the moment, not every organisation is meeting minimum governance and accountability standards," he said.
He recommended every public-sector organisation should have a head of procurement and professional procurement staff with "appropriate seniority and influence".
And where skills are scarce, he said organisations should "optimise" resources through the use of national contracts for goods and services.
He suggested centres of procurement expertise be set up for local authorities, NHS Scotland, Scottish higher and further education, and for the Scottish Executive departments, agencies and non-departmental public bodies.
He also advised the publication of a single set of supplier guidelines, business conduct rules and a procurement policy manual for the public sector. These would need to address issues of corporate social responsibility, he added.
Responding to the report, Tom McCabe, finance and public service reform minister, immediately appointed McClelland to chair a new organisation - the Public Procurement Reform Board - to implement his recommendations.
A Public Procurement Advisory Group will also be established, which will include representatives from business to assist the board.