If you want smarter government, you need smarter procurement

IT expert Pedro Paulo, CEO of Gatewit discusses how the next government can cut costs through electronic procurement

by Pedro Paulo on 14 January 2015 17:21

The approaching UK general election has already seen the two main political parties pledge commitments around deficit reduction, each promising to save billions. 

Chancellor George Osborne has already unveiled the government’s latest round of spending reductions in his recent Autumn Statement, proposing to reduce public spending by another £30bn if it remains in power after next May’s general election.

There has been much debate about how these targets can be met, with some arguing the need to protect front-line services whilst the necessary financial savings are made. So how can the next government reduce spending, without jeopardising vital public services? The answer lies in smarter procurement initiatives.

Recent research commissioned by Gatewit with the Centre for Economic and Business Research (CEBR) revealed that the average cost of a UK procurement competition in the in the public sector is £42,200 which is 90 per cent more expensive than the EU average of £23,900 making it the highest in the European Union. The research found that the UK’s public sector procurement process takes 53 days longer than the EU average, something that will undoubtedly contribute to the high cost of procurement to the government.

The current system needs urgent reform, and it is time that political parties recognised that smarter government can only be achieved with the necessary reforms to the procurement process. Expensive, long decision-making processes not only cost money, they can put smaller businesses with less resources at a disadvantage and jeopardise the public sector’s ability to work with more dynamic suppliers.

For its part, the EU has made it easier for UK ministers to outsource critical services healthcare, social care, education and prison services more quickly under the new “light-touch” regime. If the contracts in these sectors are less than 626,000, they will be excluded from EU laws because they are deemed not to be of cross-border interest.

The announcement has been welcomed by Francis Maude, Cabinet Office minister, who said, “This is big boost for all small and medium-sized enterprises and all bidders to make it cheaper and quicker with less red tape.” The proposals also mean that bidders for public sector contracts will not have to supply high volumes of documentation and paperwork, such as insurance details. 

But the Cabinet Office’s own data reveals that the average contract size in the UK is twice that of similar deals in France and Germany, a set-up working against smaller competitors. 

So whatever the outcome of the general election in May, the next government must go further with these reforms, using digital technologies to enable smaller providers through eProcurement initiatives. Doing so will empower Britain’s SME community and ensure that these innovative companies are able to make their contributions to transforming the public sector.

You cannot build a smarter, more efficient government without a smarter approach to procurement. By embracing eProcurement initiatives, the next government will be able to make significant savings, whilst transforming and enriching the procurement process. 

Building a smarter government is easy, but only when you have the right suppliers and providers to deliver it. 

Pedro Paulo is Chief Executive of Gatewit a leading IT service provider which specialises in eProcurement Solutions, Source-to-pay solutions and Public eProcurement

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