What's New in Public Sector Procurement Transformation & Reform

Q1: What would be a realistic savings goal for this parliament across the whole of the public sector? The Efficiency & Reform Group have set themselves a target of 25% savings and Sir Roy McNulty’s report on the railway system identified a 35% goal. A goal of 15%, therefore, should be very achievable, and if applied across conventional public sector procurement spent would unlock £37bn.

Q2: Has anyone in government highlighted such a figure? Not in the Cabinet. In our report, Why Public Procurement is Central to the UK’s Economic Performance ... and How to Transform It, we have argued for such a quantum of savings. Interestingly Lord Sugar, in a debate in the House of Lords, also believes that this is eminently achievable. At the moment, though, there is no such policy goal across government.

Q3: Are cost savings the only goal? Definitely not. But at a time of real financial austerity, it is essential that procurement makes a major contribution. Billions of pounds saved can then be reinvested in front-line services, infrastructure and the competitive advantage of the UK.

Q4: Where will the savings come from? In the cost reduction section of this public sector transformation overview , we have summarised nine options to do with price structures, cost structures and commercial structures that can be applied to total spend. One of our major concerns is that cost management will be tackled only from the most tactical perspective rather than through the application of systematic category and supplier management.

Q5: Will those savings be driven top-down by the ERG? No. Less than 10% of total savings are likely to come from mandated collaboration of pan-government commoditised spend. What is really needed is for each part of the public sector to create its own public sector transformation reform plan, focused on 1:3:5 year strategies to drive out cost savings, redefine services in innovative ways and maximise competition.

Q6: Does the public sector have sufficient resources, firepower and skills to do this? Alas, no. Unfortunately a lot of skills have been hollowed out across the public sector, particularly through poor use of the big management consultants and an over-reliance on contractors. A much better resource and leadership plan is essential, to use scarce resources in the most effective way.

Q7: Is there still a role for consultants supporting public sector organisations? Most definitely, but without the need for an army of them. Injection of top quality expertise, properly planned transfer of skills and much greater emphasis on coaching and staff development will certainly help. This is the style of consulting that Future Purchasing adopts with clients, and we feel it can really make a difference.


UK Public Sector Procurement
Annual UK GDP £1,473bn
Public Sector
Total Expenditure
£632bn
Total External
Supplier Liabilities
£562bn
Conventional Annual
Procurement Spend
£243bn
Private Finance Initiative
Supplier Liabilities
£267bn
Nuclear Decommissioning
Supplier Liabilities
£52bn
Public Procurement as
a Percentage of the UK’s GDP
20%
Annual Tax Per UK Taxpayer
Spent on Public Procurement
£5,000
15% Cost Reduction from
Conventional Procurement Spend
£37bn

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