Microsoft bulk-buy benefits by-pass public sector IT

Almost half of central government departments don't use the Microsoft bulk-buying framework agreement set up to trigger big software licensing discounts for the public sector.

The figure is revealed in a wider report by the Public Accounts Committee criticising government purchasing body OGCbuying.solutions for failing to negotiate better buying deals for the public sector.

Central government organisations spent £20bn on all goods and services in the financial year 2005/2006 and OGCbuying.solutions reported purchasing savings of £412m.

But despite meeting its value for money savings targets for the past three years the report says OGCbuying.solutions could increase that figure by at least £500m if it improved its performance.

Vista: all the coverage...

♦  Vista - when will business take the plunge?
♦  Gates: Vista selling faster than XP
♦  Tesco.com takes stock with Windows Vista
♦  CIO Jury: IT chiefs not yet planning for Windows Vista
♦  Blighty Vista "overcharging" attacked

In the report OGCbuying.solutions admits it doesn't have the commercial expertise to negotiate consistently good deals with suppliers, and almost three-quarters of those in the public sector said OCGbuying.solutions doesn't consult their organisations enough when signing new framework agreements.

Although OGCbuying.solutions operates 180 framework purchasing agreements with suppliers, the requirement to be a revenue-generating body means it doesn't actively promote other public sector deals. In the case of Microsoft software, for example, only 47 per cent of central government organisations use the memorandum of understanding for purchasing licences.

Central government departments have also made little use of e-procurement, with almost three-quarters having never used electronic auctions.

Another problem is the lack of co-ordination between the four main procurement organisations across central government and the NHS - the Defence Logistics Organisation, the Defence Procurement Agency, NHS Purchasing and Supply Agency and OGCbuying.solutions.

The report said: "To support its single approach to sourcing, the Office of Government Commerce should develop a concordat so that, where a lead organisation, whether a dedicated procurement organisation, government department or other public body, is identified for each commodity or product, these four procurement organisations commit to using and promoting the contracts put in place by that organisation."

PAC chairman Edward Leigh MP, said in the report: "Very little public sector spending benefits at the moment from the range of products available from OGCbuying.solutions. Attracting more customers from the public sector will require OGCbuying.solutions driving down the prices it can offer. The agency acknowledges that it currently lacks the level of commercial acumen to negotiate attractive deals with its suppliers."