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Public executive procurement requires transformation

25 September 2009

Local government executives' procurement strategies must become more innovative, according to a politician.

Communities secretary John Denham has met with senior public and private sector executives to discuss his plans to transform the procurement contracts of local government.

The member of the executive committee of the Fabian Society has recommended that director-level councils co-operate to bulk purchase goods and services to reduce the government's £42 billion annual bill for external contracts.

This is a particularly important issue in the current climate, as public services face the prospect of severe cuts to lower the UK's multi-billion pound fiscal debt.

Mr Denham explained that creative local government executives could deliver real social, environmental and economic benefits.

He said: "Councils need to recognise that creative purchasing is not simply 'buying for less' it is also about being innovative and shaping markets."

The communities secretary added that frontline services must be protected and this must become the new principle of public procurement.

Charlotte Baker, Head of OdgersInterim Public practice added:
"Procurement is a big issue for us as suppliers to government. Whilst
everyone understands that government needs to buy wisely, all too often
the emphasis is on cost and bulk deals, important if you are buying
supplies, stationery and pharmaceuticals, rather than strategic
commercial arrangements.

If you need someone to come in and transform
your children's services department or to manage a merger, should the
metrics not be different to hiring an IT contractor? Many organisations
do not compare like with like or the effectiveness of the procurement
deals preferring to look at how much money has been sliced from the
budget. Rarely does an organization calculate what they really save
because of devolved budgets, or indeed what the opportunity cost is of
not getting the right person to do the job.

It seems that procurement encourages organisations to do what is readily
available and cheap rather than what may be right. Let's compare like
with like, get sensible metric in place and check how well the
arrangement manages supply and really cuts costs. My hunch is that many
deals do not do the job for the whole organization which is logical when
you think about it, we don't use the same criteria to buy a house as
we do a bicycle, we apply quite complicated calculations and factor in
the future utility of whatever we are buying. It would be fantastic if
organisations took a more thoughtful approach when delivering to their

Categories: Central Government


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