Global firms set example

21 June 2010

22 June 2010 | Lindsay Clark

Nigel Smith, the chief executive of the Office of Government Commerce (OGC) has said the public sector should look to global companies for examples of how to standardise buying and business processes.

Speaking at last week’s Public Procurement Show in London, Smith (pictured) said the government would focus on collaborative procurement across public bodies, and that standard purchasing could be mandated. “Hold a mirror to government departments and see if that is what happens in the private sector. Global businesses have standardisation.”

If necessary, the government might compel the use of certain standards in categories, he said. Similarly, in IT, some software would be standardised, as would the business processes it supports, he said. “There will be mandating, but on its own, it’s not the answer.

“Government is complex. Mandating has a part to play, but unless there is a shared self-interest, it will not work properly or efficiently.”

One of the problems was that the current system of framework agreements did not aggregate demand, he explained.

“The real problem is framework agreements provide nothing apart from a way of getting through EU procurement – they are designed to be as wide as possible. The framework is not the issue, the issue is there is little true aggregation of demand.”

Smith elaborated on the Whitehall ‘aggregation layer’, a programme revealed in SM earlier this month. The aim, he said, was to bring together demand for commodity items across central government departments, but not “going back to central procurement”. There would not be “hundreds of new people in the OGC or elsewhere”, he added.

Instead, the government would go to market with existing buyers – either through a central government department, a shared service centre or even a private sector buyer. The government would be able to guarantee suppliers demand, he said.

Meanwhile, the focus on public spending meant procurement was getting a higher profile in government, said Smith. “The number of times it is mentioned is remarkable. Since the new government, every department has asked its permanent secretary what the plans are for procurement.”

Last week the Cabinet Office took control of the OGC as part of wider moves to tackle the huge public spending deficit. SM went to press prior to today's emergency Budget. See www.supplymanagement.com later today for the report.

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