It is well documented through schemes such as the Operational Efficiency Programme that local government in the UK is facing pressure to make savings on its £42 billion annual spend. Reduced budgets and increasing demand mean failing to take action is no longer an option.
Organisations such as the Office of Government Commerce (OGC) and the regional improvement and efficiency partnerships (RIEPs) are supporting the sector’s procurement community, with authorities making savings through national and regional initiatives. An example of this is the national IT Hardware eAuction programme, led by the OGC. Its past 11 events have saved around £50 million for more than 600 public sector participants. The country’s nine RIEPs are also delivering efficiency gains including:
- Improvement and Efficiency West Midlands has helped local authorities save over £6 million through the use of e-auctions for home-to-school transport.
- Improvement and Efficiency South East supported 12 authorities on a collaborative tender for legal services that is set to save £1 million.
- Seven Nottinghamshire councils agreed on a common specification for refuse collection vehicles and secured savings in excess of £580,000.
- The North East RIEP, working with the North Eastern Purchasing Organisation, saved more than £3 million on a range of procurement activities.
Despite these success stories, local government procurement continues to be fragmented. Authorities can opt out of collaborative arrangements because they can claim their needs are different. However, do local government demands differ so much? Local government buyers must challenge upwards in their organisations to influence the specifications of their procurement requirements. Only through greater standardisation will we maximise savings opportunities.
Authorities also need to take a more coordinated approach. Opportunities are lost because contract-end dates are not aligned, so authorities continue to go it alone. Through greater visibility of future demands they can award contracts with a phased uptake.
Finally, local government and professional buying organisations (PBOs) need to establish a structured approach to the supply market. Councils should relinquish procurement of “standard” commodities, goods and services and use the PBOs to source these on their behalf. This removes duplication and frees up the sector’s limited procurement resources to focus on strategic activity.
In addition, while open frameworks provide an easy way for authorities to ensure they are using EU-compliant supply arrangements, they may not be the best solution. Authorities need to work with PBOs and commit spending to secure the best prices.
Challenging times are here. Through working together, procurement can make the most of the opportunity they present.
Wayne Welsby is project manager, Improvement and Efficiency West Midlands
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