Thursday, December 14, 2006
Simple Shopper Still Paying Through The Nose
Britain's Simple Shopper (see previous blogs) doesn't just screw up on buying mega-IT projects: it can't even be trusted to buy Post-It notes.
Today the National Audit Office publishes its report on the Office for Government Commerce, which was set up to make The Shopper a little less simple, and which is playing a key role in delivering those fantasy Gershon savings.
One of its functions is to aggregate public sector procurement orders into bigger blocks in order to get better volume discounts.
Good idea, you say.
Well, yes... it would be a good idea if they were able to do it as well as say, the private sector. But it turns out they can't.
According to the NAO, many of the prices obtained by OGC are actually higher than those already obtained by the more astute (or maybe that should be less unastute) government departments. For example, OGC's price for an IT consultant is over 40% higher than the price currently paid by the best (top quartile) buyers in the public sector (see report Fig 8). No wonder so many departments are avoiding OGC if they possibly can.
But even the best public sector buyers aren't a patch on say the buyer for a small corner shop. Or even you and me. Take those Post-It notes and the other common items in this NAO summary:
It says something that even the not-entirely-free-market Grauniad was quickly able to do better:
"For Post-it notes the cheapest price Whitehall could find was £4.41 for a pack of 12, while some departments paid as much as £10.55 - 139% more expensive. Yet the Guardian found that even the best price could easily be beaten: at Chartered Supplies in central London, for example, a pack of 12 unbranded notes costs £1.75 - less than half what the most price conscious bureaucrats are paying."
So why is OGC such pants? One reason is that old favourite, skill shortages. The NAO says:
"There is a need for more commercial skills (for example, the ability to negotiate contracts with senior management of multi-national supplier organisations), better marketing skills and individuals with private sector knowledge of individual product markets."
But as we've noted many times, if you had those skills, why on earth would you want to work for the public sector? You'd earn less money and you'd have to report to the likes of the Commissar and Gordo. Talk sense.
It also sounds like the whole OGC idea is sinking into the usual abyss of public sector infighting. The G reports:
"One reason for the price discrepancies is that many departments buy their own supplies. One official said: "Frankly there are a lot of turf wars going on between different departments. Some of them literally want their own brand name on the equipment and not the words OGC written on them."
John Prescott's office appears to be an example. It has recently ordered thousands of ballpoint pens with Office of the Department of the Deputy Prime Minister stamped on them."
Yup. Sounds about right.
Now, one more time- why do we have to pay for these clowns?
PS The inestimable Richard Bacon MP promises a warm reception for OGC bureaucrats when they are strapped to the Public Accounts Committee rack: "We are going to give them a very tough grilling. Frankly I am not surprised that you could get some of these items cheaper in shops or online. These huge organisations in Whitehall spend a lot of time at sales conferences discussing big deals when a little bit of common sense means that local offices could get better prices. In my own office my secretary has already spotted that the official suppliers to parliament often charged hundreds of pounds more for printers than you get in shops or online." I'm booking my PAC seat now.
Posted by Mike D at 9:04 am