Improved procurement saves UK government £1.8 billion

Gurjit Degun
7 November 2013

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The UK government has reported half-year savings of £5.4 billion, with £1.8 billion saved through collaborative purchasing. 

The Cabinet Office’s Efficiency and Reform Group added enforcing “sensible controls” on using consultants has also contributed to the £1.8 billion saving. It said departments supported by the group have saved nearly £300 million by “utilising innovative technologies and improved procurement practices” in public sector construction projects.

 

Financial secretary to the Treasury Sajid Javid said the government is working to increase the number of small to medium enterprises (SMEs) competing for government contracts.

 

“We are changing the way government does business to ensure that we are a good customer,” said Javid during the announcement in London this morning. “We are creating an environment where firms feel better informed of opportunities, and where SMEs can be confident on competing on equal terms.

 

“We want to develop and manage our supply markets. In April 2012 we published £70 billion of potential business opportunities, 18 months on that value has doubled to £169 billion.” 

Javid said he hoped 20 per cent of central government procurement will be with SMEs either directly or indirectly by the end of this financial year.

 

He added: “We’re also working with our large suppliers to ensure they include SMEs in their supply chain.”

 

The government’s chief procurement officer Bill Crothers told SM over the next six months there will be greater focus on engaging with businesses to encourage more competition and develop better contract management procedures. 

He said: “If you’re more thoughtful about what you want to buy by breaking it into pieces to encourage competition, encourage small businesses, encourage new entrants, you get much better competition and therefore a better deal.

 

“We don’t spend a lot of time or as much time with sufficient expertise managing the contract so value leaks out.”

 

In response to the recent G4S and Serco contract controversy, Stephen Kelly chief operating officer for the Cabinet Office, added: “What we’ve failed to do is put as much diligence and emphasis on contract management. Candidly, I think some of the data in the last year is suggesting that we need to raise our game on the contract management side.”

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