Government procurement agency the Office of Government Commerce (OGC) is to establish a centre to encourage the use of e-auctions for procurement across the public sector.

It estimates that the move could save the public purse £250m by 2011.

E-auctions see companies trying to outbid each other for state contracts in real time online. The auction process means companies compete on price, and research by the OGC shows that the process means suppliers provide services that are better value for money via auction than through the traditional tender process.

The OGC centre of excellence will have a remit to provide co-ordination and support for e-auctions across the wider public sector, particularly where there is scope for increased collaboration.

Several e-auction programmes already exist across Whitehall and in local authorities, and the centre will look to improve the efficiency of these systems by encouraging co-ordination, establishing a consistency of approach, and providing a platform for coalitions.

Nigel Smith, chief executive of the OGC, said: “The new centre of excellence will look to foster opportunities for better collaboration, marking a significant positive step towards achieving the maximum potential outcomes from public sector e-auction activities.”

The centre will begin operating next year.

It will work closely with professional buying organisations such as Buying Solutions, as well as regional improvement and efficiency partnerships.

The OGC recently published a policy on the use of electronic systems to support procurement activity.

The policy requires public sector organisations to move towards achieving the outcomes outlined in the Treasury’s Operational Efficiency Programme (OEP) by increasing investment in e-procurement systems and tools.

The OEP found scope for up to £15bn of annual savings across the public sector.