NAO argues for more collaborative procurement

Public spending watchdog says there is huge scope for savings

Wide differences in prices paid for LCD computer monitors

The government is wasting huge sums of money, and incurring unnecessary costs for its suppliers, as a result of overlap in procurement processes, according to a review of collaborative procurement released today by the National Audit Office (NAO) and the Audit Commission.

The report argues that these costs could be saved as a result of collaboration between departments.

Currently, the public sector procurement landscape is fragmented, with no overall governance - it comprises nearly 50 professional buying organisations.

The ICT and travel industry are the sectors that make most returns, and spend most money tendering for contracts from and with the public sector.

Some 27 of the 33 major suppliers surveyed for the report said that some of the framework agreements they were supplying to covered the same or similar goods and services and most claimed this was the case with more than half of their contracts.

And it's not just the public sector that is paying over the odds; the report states that the cost to suppliers of undertaking a full Official Journal of the European Union tendering exercise was around £36,000 in 2008 but estimates that 20 per cent of the 300 contract notices issued were unnecessary and could have been covered by a single compliance framework, potentially saving suppliers more than £25m.

Amyas Morse, head of the National Audit Office, said: “The public sector spends £220bn a year on goods and services. Given the potential to make significant savings, it is vital that there is better co-ordination of procurement activities to ensure value for money is secured across the public sector.”

The report also states that public bodies are paying a wide range of prices for the same commodities, citing a 169 per cent difference in prices paid for LCD computer monitors in 2008 (from £65 to £125), with government bodies not managing to leverage adequate discounts as a result of the public sector's significant buying power in many instances.