E-auctions slash Whitehall buying costs

New types of electronic procurement and increased use of project management tools are helping to drive down the cost of government procurement.

The public sector spends £125bn per year on goods and services, from pens and paper to major construction and IT projects. And according to a report from the Treasury, a number of electronic tools are helping to cut the cost.

Successes of the Office of Government Commerce (OGC) include running 63 e-auctions to a value of nearly £1bn, and e-tenders to a value of £2bn with 14,500 suppliers and 1,100 buyers.

The report said these e-auctions - which allow suppliers to bid online for business - are resulting in savings of around 20 to 25 per cent of the project value through "transparent negotiation" and simpler processes.

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OGC sponsored IT e-auctions have saved nearly £16m on an expenditure of £54m, involving more than 300 organisations.

The report also said the use of Prince2 project management and IT infrastructure library (Itil) tools are helping departments and local authorities manage programmes and follow IT best practice.

The introduction of the BT Premier Value scheme offered BT's best permanent voice call rates to the public sector due to the guaranteed volumes that collaboration brings, where users save between 10 and 30 per cent on their telephone bills, the report said.

Improvements in the mobile telephony framework contract have also led to an increase in users from 250,000 to 700,000 since 2003, earning £16m in savings this year.

The report also mentions other innovations, such as the Zanzibar e-marketplace, procurement cards which make it easier for staff to conduct low-value transactions quickly, and Supply2.gov.uk to make it easier for SMEs to bid for government contracts valued under £100,000.