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25 September 2012 | Anna Reynolds
A collaborative approach to procurement in Northern Ireland with more challenging targets could save millions on goods and services.
A report by the Northern Ireland Audit Office, Collaborative Procurement and Aggregated Demand, revealed £2.7 billion was spent on public procurement in 2010-11 and urged organisations to work together to increase buying power with suppliers and make significant cost savings.
A NI Procurement Policy was implemented in 2002, which created the Central Procurement Directorate (CPD) to achieve greater collaboration between public bodies, as well as Centres of Procurement Expertise (CoPEs) to provide specialist purchasing advice to public bodies.
But the report claims that the policy has shown no evidence of a collaborative approach to improve efficiency from procuring common goods and services.
Furthermore, the ‘procurement board strategic plan’ has set a target to save £30 million from aggregation of demand of goods and services by 2015 (1.1 per cent of expenditure). This is much lower than Scotland’s target of 5.3 per cent, which could save £140 million if adopted in Northern Ireland.
The report also found the CPD was unaware of how much was spent each year on the procurement of goods and services and this information was not shared across the CoPEs. The total spend accounts for almost £900 million each year spent on common goods and services.
According to the report, the key to successful aggregation is the use of category management. It said this approach would deliver greater value for money from suppliers, but requires a skilled workforce. The report also said there would be more scope for savings and suggested the procurement board set more challenging targets in line with the rest of the UK.
In addition, public organisations need to produce accurate, up-to-date management information on spend and the Audit Office urged the CPD to analyse and share this information across CoPEs and implement measures to generate cost savings. Lead CoPEs should be appointed to manage the procurement of specific categories of goods and services.