NAO slams government purchasing capability

9 November 2009

9 November 2009 | Jake Kanter

"Significant weaknesses" in procurement skills are jeopardising value for money on major projects, according to the UK's National Audit Office (NAO).

The spending watchdog's latest report, Commercial skills for complex government projects, said the public sector lacked commercial capability in areas including contract management, commissioning and risk management.

It said skills shortfalls had put value for money at risk on 43 major central government projects worth about £200 billion. Even greater risks existed on programmes not subject to a high level of scrutiny, it added.

The NAO said central government bodies had attempted to fill skills gaps with interim staff and consultants. Thirteen departments spend 35 per cent of their staff budget on temporary employees.

A high reliance on advisers can lead to higher project costs and departmental staff failing to take commercial decisions, the watchdog said.

Last month the Office of Government Commerce (OGC), suggested greater commercial expertise existed in government purchasing as a result of the first wave of procurement capability reviews.

But the NAO said efforts by the OGC and departments to increase commercial capability have had a "limited impact". In addition, 14 of 16 departmental commercial directors argued the OGC had "done little to address skills gaps within their departments".

In response, an OGC spokesman said departments are responsible for their own commercial skills.

The NAO said departments should develop strategies for building and retaining commercial skills and must decide the calibre and pay of commercial staff needed for the successful delivery of a project.

In a letter in the Financial Times today, OGC chief executive Nigel Smith said: "The OGC undertakes a wide range of activities driving real positive change in commercial activity across Whitehall and helping deliver value for money for taxpayers, which is very much recognised by the NAO."

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