21 May 2010 | Lindsay Clark
UK public sector procurement remains fragmented with no overall governance despite efforts on joint buying, according to the National Audit Office (NAO) and the Audit Commission.
As well as incurring unnecessary administrative costs by duplicating procurement, prices paid for commodities varied widely, a study by the two public spending watchdogs has found.
For example, the report out today said that the highest price paid for a broad specification of paper (£14.79) was 116 per cent higher than the lowest price paid (£6.84). For LCD computer monitors the highest price was 169 per cent higher than the lowest (£65 to £175).
There are nearly 50 professional buying organisations, as well as individual public bodies running commercial and procurement functions in the UK. Many of these organisations operate framework agreements for similar goods and services. However, organisations are not exploiting the benefits of volume when using these agreements. There are also few constraints on brand or specification choice, the watchdogs said.
Eugene Sullivan, chief executive of the Audit Commission, said: “With all public service costs under pressure, better procurement provides an opportunity to make significant savings that don’t cut into front-line services. Most councils already collaborate but, even where there is collaboration, it is not delivering all the possible benefits.”
In 2007, the Office of Government Commerce established a Collaborative Procurement Programme to manage more than £18 billion of spend under nine goods and services categories, the NAO and Audit Commission said. However, the work of this project needed to be improved upon, they added.
Amyas Morse, head of the National Audit Office, said: “The public sector spends £220 billion a year on goods and services. Given the potential to make significant savings, it is vital that there is much better coordination of procurement activities to ensure value for money is secured across the public sector.”