25 July 2010 | Lindsay Clark (updated 26 July 2010)
The government's national procurement body for the fire service has hit back at claims that its setup and running costs were nearly double the total savings it has made.
In a letter to suppliers and to fire and rescue services, Firebuy chief executive Terry Brewer said the National Audit Office (NAO) did not accept some savings it had identified, although mostly these had been calculated using methodology accredited by the Office of Government Commerce (OGC).
He also said the government spending watchdog included all costs relating to Firebuy such as a start-up grant from the Department for Communities and Local Government (DCLG) and the one-off costs of litigation over a procurement it inherited.
Since 2006, the cost to the taxpayer of setting up and running Firebuy’s procurement contracts has been £16.8 million. This is against claimed savings of £8.5 million and an income of £1 million, the NAO found. Firebuy’s approach to measuring savings was inadequate and the information that the estimated savings were based on was mostly unreliable, the report said.
The NAO has recommended that the DCLG, which set up Firebuy, should assess whether to continue with a nationally directed central purchasing body.
Amyas Morse, head of the NAO, said that the government should either change the way Firebuy works or transfer its operations to another professional buying organisation.
“To deliver value for money for the taxpayer, public sector bodies should prevent the procurement of unnecessarily expensive bespoke equipment and collaborate successfully to build higher volume orders which reduce supplier prices,” he said.
Firebuy does not have the power to make local fire and rescue services use its national procurement contracts, so it has had to rely on persuasion. The NAO found most of the contracts allow suppliers to offer many variations of the same types of equipment, which in turn enables local fire services to buy expensive bespoke equipment, and prevents suppliers offering the low prices achieved through high volume orders. For example, the Firebuy contract for fire engines alone allows for 54 possible combinations of supplier, chassis, water pump and body type.
In his letter, which was also signed by Firebuy chair Peter Holland, Brewer said: “We acknowledge that the NAO report identifies a number of areas where national procurement can be taken further forward building on the work Firebuy has done to date.
“All fire and rescue services in England use Firebuy and we are keen to work with the government and the service to identify how greater savings and efficiencies can be achieved. This will be of key importance as the government seeks to reduce costs in public services.”
The letter also said that mandating a central procurement service has been shown not to work in the past.