With the need to reduce budget deficit and control public spending, UK councils and jurisdictions have been under pressure to buy more efficiently, namely through the implementation of ‘collaborative procurement’ and ‘aggregated demand’, by joining purchases of common goods and services such as energy, telecoms, professional services, vehicle fleet, office supplies, print and advertising, to name but a few, in order to negotiate better prices with suppliers.
While a Northern Ireland Procurement Policy was agreed in 2002 by the Procurement Board to this effect, the Northern Ireland Audit Office found that little progress had been made to take advantage of the power of this strategy, and concluded in its latest report published in September 2012 that Northern Ireland’s public sector must be more efficient in its purchasing.
A Missed Opportunity For Savings
The report states that out of £2.7 billion spent on public procurement in 2010/2011, common goods and services represented Â£880 million and that procurement organisations could have worked more closely to take advantage of the potential for savings.
It argues that lack of information and communication was an issue that had to be addressed by Northern Ireland’s public sector and that increased collaboration between sectors could lower the bill for common goods and services dramatically, as has been the case in Scotland.
Lack of Information
In order to successfully implement this aggregated demand policy, the sharing of reliable and up-to-date information on demand and prices is obviously crucial. However, in the course of its audit, the NIAO discovered that procurement staff did not have access to accurate data and that the Central Procurement Directorate, a key organisation in this process, didn’t know the amount spent on common goods and services.
Furthermore, it was found that the lack of centralised information meant that the same goods and services were purchased at different prices by different public sector organisations and that very little benchmarking was taking place due to the lack of overall strategy as far as procurement is concerned. In addition, Non-Departmental Public Bodies that are not part of aggregated contracts and can’t exert much power over their suppliers pay more for the purchase of common goods and services.
The Need For Trained Staff
Another key factor in making the procurement process more efficient is skilled and well-trained staff. All too often, procurement managers focus on their ‘clients’ rather than the supply, and are therefore less able to negotiate good terms. The audit brought to light the fact that important organisations such as Centres of Procurement Expertise (CoPE) didn’t have enough experienced, professionally qualified staff, which hindered the implementation of aggregating demand.
In its report, the NIAO outlines that while UK jurisdictions have been setting themselves, and have been achieving, challenging targets in terms of savings from collaborative procurement, the figure set by the Procurement Board Strategic Plan for 2012-2015 is too modest an amount and should be revised upwards.