Public sector buyers still getting ripped off

Government procurement is controlled and restricted by bureaucratic and lengthy procedures that have been passed down from the EU to ensure a level playing field across Europe when competing for business and also to ensure corruption is stamped out.  Unfortunately, these procedures are so lengthy and arduous; they just end up adding costs to the contract rather than saving money.  The Commons public accounts committee believes that the public sector wasted £400m on unnecessary procurement costs last year - though I suspect this is a very conservative estimate. 

At the heart of the problem is the government's purchasing agency (a suspect sounding quango if I ever I heard of one)  The committee believes that must it must change its status as a trading fund that has to raise revenue.  This is because at present its revenue-raising status acts as a disincentive for it to promote the government procurement card.  A procurement card is simply a credit card, but it saves time and money by simplifying many smaller procurements.  It is claimed that one in five are not using the cards.  The committee also claimed that has also failed to publicise central deals it has done that have saved public agencies money but do not yield a direct return to them.  For example, the agency did a deal with Microsoft for low-cost licences, but 47 per cent of central government organisations are not using it.  The agency also has 180 framework agreements that allow departments to buy goods and services at broadly pre-agreed prices, yet they are used so little that 40 per cent do not cover the costs incurred in negotiating and managing them.

There are clearly many problems in the public sector when it comes to procurement.  However, whilst it is clearly not doing its job effectively, I am not sure that 100% public funding is the solution.  Not using a procurement card or not using a framework agreement only demonstrates the lack of expertise from the buyers themselves.  They should have the knowledge of best practice when to use a p-card and they should make it their business to know what frameworks are available to them.  On a higher level, public sector procurement needs to be freed from the shackles of the EU and best value obligations it has had forced upon it.  Compared with private sector procurements, there is little room for hard driven negotiations with the balance of power more in favour of the bidders.  With the massive spends some of our departments have and the opportunities to amalgamate their spending power, the public sector should have massive leverage when it comes to negotiating large contracts and framework agreements.  Yet despite Gershon and despite the spend power of government it is still getting ripped off.