04 January 2007 | Antony Barton
OGCbuying.solutions, the trading arm of the OGC, could push public sector savings beyond £1 billion a year, according to the National Audit Office (NAO). To meet this aim, however, it would need to double its current market penetration while maintaining existing savings.
The report found that OGCbuying.solutions saved £412 million last year but the figure could increase by up to £660 million.
Although the OGC's executive agency raised its value-for-money savings by 71 per cent from 2003-04, OGCbuying.solutions "will require a step-change in its performance" to secure further savings.
The report from the comptroller and auditor general of the NAO, Sir John Bourn, highlighted that procurement through the agency represents only 5 per cent of central government spending and less than 1 per cent of wider public sector outlay.
The NAO recommends reducing costs for customers through framework agreements by benchmarking prices against the lowest 25 per cent of prices paid by public sector organisations. Other recommendations include securing greater volume commitment from customers and reviewing framework prices regularly to ensure they stay competitive.
The report found a third of framework agreements had not had a price review in the past 12 months, and 26 per cent had not had a review in the last two years.
OGCbuying.solutions declined to comment on the findings but it released the following statement: "We welcome the publication of this NAO report and will be officially responding to it at the Public Accounts Committee hearing this month. We cannot go into detail on the contents before this date."