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23 October 2013 | Will Green
Two London local authorities with similar IT contracts from the same supplier ended up with a five-fold difference in the price they were paying, it has emerged.
The situation was uncovered by a “spend analysis exercise” carried out by the Government Procurement Service (GPS) on behalf of a number of London boroughs in 2012/13.
Details of the exercise are contained in the Cabinet Office's (CO) written submission to the Communities and Local Government Select Committee (CLGC), which is conducting an inquiry into local government procurement.
The CO says: “A spend analysis exercise undertaken by GPS on behalf of a number of London boroughs in 2012/13 revealed varying prices for similar software services from the same supplier including a five-fold variation between two London authorities.”
Spend analysis by the GPS across eight local authorities, including four London boroughs, revealed the potential for savings of between 2 per cent and 4 per cent of total council spending by using more centralised procurement, says the CO.
In the submission, the CO describes how the GPS and the newly-created Crown Commercial Service “presents a significant opportunity for local government procurement to access best in class procurement services, aggregated and benchmarked deals for commodities and training programmes”.
“There is a significant opportunity for more local government organisations to use and benefit from centralised procurement services without compromising the Localism Agenda and the critical need to support economic growth of businesses, in particular SMEs, in local areas,” the CO says.
The submission says that in 2012/13 the GPS managed £11.44 billion of public spending, including £1.25 billion from local authorities, and delivered almost £100 million of savings to them.
The CLGC will be taking oral evidence on Monday as part of its inquiry, which is investigating whether local authorities are “delivering good value for money”.