The UK government has centralised the procurement of common goods and services following the recommendations outlined in Sir Philip Green’s efficiency review.
The review, published last October, highlighted stark differences in costs that different government departments and agencies were paying for the same products. For example, departments were paying between £350 and £2,000 for the same laptop, and between £85 and £240 for the same printer cartridges from the same supplier.
As part of its changes to procurement processes, the government has created a central team, Government Procurement, which will contract for products and services at a single, “better” price.
The Cabinet Office believes that the measures will help the government save £3 billion a year by 2015.
Cabinet minister Francis Maude said: “It is bonkers for different parts of government to be paying vastly different prices for exactly the same goods. We are putting a stop to this madness. Until recently, there wasn’t even any proper central data on procurement spending.
“In the last year, we have already made significant changes to drive down procurement spend by £1 billion, but this new centralised service means we will continue to deliver savings which are expected to reach more than £3 billion a year.”
Meanwhile, Maude announced new initiatives to enable SMEs to compete with larger companies for government contracts.
Lengthy and costly government procurement processes have previously deterred SMEs from bid for tenders, but the coalition government has set itself a target to do 25 percent of its business with them.
Further to this, the government has now published a range of action plans for each government department, which include breaking large contracts into smaller lots, increasing the amount of information available to SMEs about contract opportunities and holding ‘product surgeries’ for SMEs to pitch innovative ideas.
For example, the Cabinet Office aims to adopt the new electronic ProcServe Dynamic Marketplace by September, to better manage suppliers and SMEs and provide access to centralised contracts and deals.
In addition, HM Revenue & Customs (HMRC) is planning to work with its 12 largest suppliers, representing around 80 percent of third-party spend, which could include IT giants HP and Capgemini, to ensure they identify and engage with their own SME supply chains. This consultation has started and will finish by March 2012.
Ian Watmore, chief operating officer for the government and responsible for the government’s efficiency reform group, revealed the plans for a procurement reform to boost SME involvement in February, which started with the Government’s Contracts Finder, an online tool displaying information on all new procurement opportunities for central government worth more than £10,000.