Government reduces procurement spend by £1bn over the last year

The Government is making significant changes to drive down procurement spend, having saved over £1bn already and expecting to reach savings of more than £3bn a year.

It is making changes to how it buys in categories of common goods and services such as stationery and office services.

Small and medium enterprise (SME) action plans published set out how each Government Department will seek to achieve the Government’s overall aspiration to do 25 per cent of its business with Small and Medium sized Enterprises (SMEs).

The plans include the creation of one central team, Government Procurement, which will contract for widely used goods and services for the whole of Government at a single, better price, ending the signing of expensive deals by individual departments.

The move will end poor value contracts such as those where government departments and agencies pay different prices for the same product.

Central procurement of common items is expected to save more than £3bn a year by 2015 – 25 per cent of the Government’s current annual spending on these items, helping departments to meet tighter budgets set in the Spending Review.

SME commitments also include greater use of the ‘open’ procurement procedure ,which has already increased by 12 per cent across the public sector between March and April alone, ensuring all suitable suppliers have their tender proposals considered and five further Dragons’ Den style ‘Product Surgeries’ are planned so that SMEs are increasingly able to pitch their innovative proposals directly to Government.

Cabinet Office Minister Francis Maude said: "We are determined to press ahead with measures to create a more level playing field so that small organisations and businesses can compete fairly with bigger companies for Government contracts."

"SMEs can provide better value and more innovative solutions for Government and the actions set out will support their growth as the economy starts to recover."

Further information:
Cabinet Office