The government did not know until recently what it was spending with IT suppliers, according to a representative charged with managing spending.
Bill Crothers, a Crown Representative, told delegates at the Public Sector Efficiency Expo in London today that his role, also mirrored by eight other individuals, was created to pull government departments together as one customer and tackle the problem.
"The government really did not know what it spent with suppliers," he said. "We had to ask the suppliers how much it was, and they told us."
Crothers said the problem was that individual departments had "some idea", but tallying the total across government was more difficult, as was being clear of each department's future obligations and net financial position with suppliers.
Additionally, he said, departments were signing contracts with suppliers, then being 'upsold' to larger, all-encompassing deals "that took no notice of sensible market prices". A number of departments that started with £200 million deals quickly found themselves spending billion pound annual sums with the same companies, as more work was awarded.
When the Crown Representatives began their work last year, they met the 20 largest IT suppliers, with which over £10 billion a year was being spent, and in six months carved out millions of pounds of costs from each.
"It was a negotiation of embarrassment," he said. "We made clear to the suppliers the inefficiency we'd found and the difference with market prices."
Under new arrangements, he said, each department remains the contracting authority in deals, but the government monitors procurement centrally and takes a single customer view of accounts across departments.
"To my mind, it's ridiculous we didn't have that view before," said Crothers.
The government is working fast to "refresh the market", he said, and to ensure smaller companies are bought from "either as direct suppliers or within the supply chain of larger firms".
"We also need to spend much better time talking to suppliers, and we are starting this before we engage them in procurement," he said.
The Crown Representatives placed their initial focus on IT, facilities and business process outsourcing, and are now also looking at construction and financial services.