Good procurement is essential to ensure good public services, from buying goods and services that work as they are supposed to, to achieving savings that can be ploughed back into front-line services. The public sector spends over £125 billion a year procuring a wide range of goods and services, from every day items such as pens and paper, to major construction projects such as schools and hospitals. All those who, as taxpayers, use and fund public services have the right to expect government to meet the highest professional standards when it procures on their behalf. The Government has already achieved a great deal. Substantial increases in public sector investment since 1997 have delivered vital improvements to public services, including the largest hospital building programme in history, with 76 new hospital schemes open since 1997 and another 29 under construction. Increasing numbers of construction projects are completed on time and on budget, and we are now driving out efficiencies from the management of the government estate. The Government is also making better use of its collective buying power and new procurement methods, and the Government Procurement Card is making savings on a wide range of transactions in over 400 public sector organisations. As well as increasing the scale of public sector investment, the Government has also worked hard to ensure public money is well spent. Following the publication of Sir Peter Gershon's report "Review of Civil Procurement in Central Government" in 1999 the Office of Government Commerce (OGC) was established as a one-stop shop central procurement organisation. It has since played a key role in delivering over £8 billion of efficiency savings from public procurement. However, the pursuit of value for money for the taxpayer must remain uncompromising. The Comprehensive Spending Review will put further priority on departments and procurers to exploit opportunities from innovative procurement methods and the latest products and services, to ensure that procurement is built on the principles of value for money and sustainability. The Government is determined to be at the forefront of sustainable procurement, making the government estate carbon neutral by 2012. The OGC will help delivery, encouraging departments to develop the expertise to value whole life costs. To meet these challenges and opportunities the OGC will have strong powers to set out the high standards of performance required, monitor departments' performance against them, insist improvements are made where necessary, and demand departmental collaboration where that improves value for money. More intelligent government procurement can also drive the market for more innovative and effective products and services. To achieve these changes the OGC will have to reform. It will become a smaller, more focused, higher calibre organisation, with the skills and powers needed to drive through the necessary changes within central government. This report sets out how this transformation will be delivered. It is a major challenge, which will depend on the contribution of dedicated procurement professionals and changes in government more broadly to bring it about. Recognition of the need for such reforms reflects our determination to ensure that procurement drives further improvement in our public services to match the public's rightly held high expectations of government. John Healey, MP Financial Secretary to the Treasury |