E-procurement key to £6bn a year government savings

The government must dramatically speed up its use of e-procurement in a bid to save £6.1 billion from its annual procurement budget.

The government’s Operational Efficiency Programme report on collaborative procurement said: “Greater uptake of collaborative procurement” could save “£6.1 billion of annual money savings by 2013-14, compared to the 2007-08 government procurement baseline of £89 billion that has been categorised to a commonly-procured commodity.”

The public sector as a whole spends a total of £175 billion a year on external goods and services. To get value for money, the report said, the public sector needs to aggregate purchases.

In an effort to kick start the process the review recommends that the Office of Government Commerce, the government’s procurement arm “should develop and agree by October 2009 an e-procurement policy for Government, which can be made available immediately to all Government departments.”

The OGC should promote “appropriate use of a standard suite of tools that maximises on existing investments, such as Zanzibar.”

Zanzibaris a managed service provided by PA Consulting subsidiary ProcServe to the OGC, under a seven year contract signed in August 2005. It boasts 4,300 customers and 2,000 suppliers. However, the Operational Efficiency Programme report believes this is barely scratching the surface of what is possible.

The Operational Efficiency Programme report calls on the OGC to agree common standards for relevant data and expand the current contracts database so that “by April 2010 it has become a central register of collaborative deals and the constituencies to which they apply.”

The OGC is also urged to drive interoperability between existing e procurement systems in the public sector and by October, perform an investment appraisal for a central eAuction Centre of Excellence to “act as a catalyst for a significant increase in the frequency and scale of eAuctions across the public sector”.

Central government departments are urged to align this central eProcurement policy with their commercial strategies, including setting explicit targets for eAuctions, electronic transactions with suppliers, electronic tendering, eInvoicing or eSourcing) by March 2010; and incorporate all deals from the OGC maintained central database into their departmental e-procurement solutions by October 2009.

“e-procurement or online marketplaces are essential to delivering the benefits of collaborative procurement to the wider public sector,” the report declared.

“Government has not yet realised the full potential benefits of such technologies,” it noted.

Copyright © 2009 IDG Communications, Inc.

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