Public sector procurement must reform

17 September 2010

17 September 2010 | Lindsay Clark

Central government spending on ‘administration’, including procurement spend, could face cuts of between 30-50 per cent as part of the 25-40 per cent overall cost reduction challenges, as part of the Comprehensive Spending Review, according John Collington, head of procurement in the Cabinet Office ’s Efficiency and Reform Group.

Speaking at the Procurecon Public 2010 conference in London yesterday he emphasised the important contribution procurement teams would make to reducing the government’s £155 billion deficit.  And he offered examples of good practice he had seen in the public sector since joining, which he plans to better leverage as part of the new operating model for centralising commodity procurement. But he could not rule out the prospect of job cuts among buyers following the 20 October spending announcement.

“We know from what’s already been reported that Departments are currently working on plans and are in negotiations with the Treasury on cutting budgets by between 25-40% over the next three years.  “The total budget is then set and agreed by the Treasury. Within that there is an amount that is used to run the central corporate services and administration, including procurement,” Collington said.  As part of the wider 25-40% budget reductions Administration costs including Procurement spend, may have to reduce more, to lessen the impact on front line services.

Also speaking at the conference, David Smith, commercial director of the DWP, said: “It will be for each of those departments, individually, and through their principal accounting officers, to decide how they are doing to deliver those cuts – whether that is all in head count, or third-party expenditure – and what proportion of that is appropriate for the commercial function.”

Procurement’s new-found prominence in reducing the deficit did not make it immune to staff reduction, he said. “There will be a common template that this is important – we need to have the right tools and the right people, [but] maybe fewer people as we move to share service centres, delivering things in a more efficient way.”

However, he did offer some reassurance. “The permanent secretaries and CEOs take [procurement savings] extremely seriously. It is not in their interest to take massive swaths through the commercial function and commercial population,” Smith said. “I think the saviour will be the work that is done at the centre [of government] and the work that has been done in supporting government in enabling it to do more with less.”

Rob Woodstock, Accenture senior executive for health and public service, offered a stark indication of the cuts that could face public sector procurement. He told the conference that the average public sector procurement professional was responsible for £5 million spending, compared with £31 million for private sector organisations. In the best performing private sector procurement departments, that figure was £50 million, he said.

Birmingham, West Midlands
HS2 Ltd
London (Greater)
£50,800 plus up to £10,000 Recruitment Retention Allowance
House of Lords
CIPS Knowledge
Find out more with CIPS Knowledge:
  • best practice insights
  • guidance
  • tools and templates