Collaboration warning

23 December 2010

Five UK councils sign up to use collaborative purchasing


Shropshire, Cheshire and Chester take road to collaboration

 

Councils in capital look to merge procurement

 

Joint procurement to rise in Wales and Scotland

 

Suffolk votes to outsource most services

30 December 2010 | Lindsay Clark

The UK should proceed with caution as it pushes for collaboration between local authority procurement departments, experts have said.

Earlier this month, central government announced an average spending cut across all councils of 4.4 per cent in 2011-12.

At the time, local government minister Eric Pickles told BBC Radio 4’s Today programme: “We are suggesting local authorities look towards sharing chief executives, [and] sharing back offices, including procurement.”

Peter Howarth, CEO of the Society of Procurement Officers, which represents local government buyers, said that in some circumstances collaboration was a good idea. “What it is not, is a panacea for all ills,” he told SM.

The danger was it could drive suppliers out of the market, he added. “And we all know when you have fewer suppliers prices tend to go up.”

David Padwick, a partner at PricewaterhouseCoopers covering local government, said: “There are many potential risks if you don’t enter into this in a sophisticated way. Hooking up with dominant, potentially monopoly suppliers is a place you don’t want to go.”

He said the government was encouraging more diverse approaches to offering services. “For that, you need a more diverse supply base.”

In some circumstances it did make sense for councils to club together to negotiate with large multinational suppliers, he said.
Caution about collaborations was highlighted by a recent Audit Commission report into Southwest One – a procurement joint venture involving a number of authorities. It stated that one member, Somerset County Council, made cashable savings of just £3.3 million since 2007, which the commission said was below forecast expectations.

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