Select Committee on Treasury Third Report



The OGC seeks to offer customers and suppliers integrated, flexible and responsive support for all aspects of procurement and supplier management in central civil Government. All of the OGC's work is based on a collaborative approach with central civil Government Departments, their agencies and Non-Departmental Public Bodies (NDPBs). The OGC works with central civil Government to achieve its aims, objectives and targets.[8] Its high level objectives are to:

  • provide guidance and expertise to support the successful delivery of procurement-based projects and other forms of commercial activity;

  • develop the Government market so it is more efficient and attractive for both suppliers and customers;

  • develop a clear and supportive framework for best in class procurement activity to help achieve better value for money; and

  • deliver efficient and effective services to external and internal customers, gaining widespread recognition for excellence and as a leading contributor to Government modernization."[9]

The OGC's central civil Government remit does not cover the devolved administrations, but it does have a commitment to exchange information and knowledge across a range of its activities with them, and with the Ministry of Defence (MOD).[10] Mr Gershon told us that he thought the reason that defence procurement had been excluded from the OGC's remit was that the MOD had already undertaken a review of its own procurement activities and had introduced what is now called 'Smart Acquisition'. As a result "...they were already, in a sense, further ahead with their own reform programme than central civil Government was. Having said that, when the OGC ... and the Supervisory Board [were] created, it was recognised that there were opportunities for co-operation with the MOD. Therefore, the Chief of Defence Logistics ... is a member of my Supervisory Board ..."[11] The MOD is included in some areas where the OGC has undertaken aggregated procurement, such as a deal with Vodafone on mobile telephony which has been taken up across central Government and the wider public sector.[12] The OGC is also working closely with the MOD "to make sure that the work we are doing on skills development in central civil Government in acquisition builds on and relates to the work they have already done so that there is not unnecessary duplication in this area."[13]

The remit of the OGC does not extend to National Health Service (NHS) procurement. We asked the Department of Health whether there is a case for extending it to do so. They told us that this was something they had looked at in terms of the potential advantages from economies of scale, of bringing expertise together within one organisation, and of ensuring consistency in the application of guidance across Government. However, they had concluded that the NHS market requires a particular purchasing expertise that is different to that required by the rest of Government, and that a consistent procurement approach across Government could be achieved without organisational changes.[14]

Although NHS procurement does not fall within the remit of the OGC, the Department of Health ensures that OGC guidance is used in the business case approval process for its major capital investments by way of a requirement to confirm compliance with OGC guidance. The Department noted that "there is one area where strictly we do not comply with the OGC guidance ... at the moment we do not have a Gateway review process[15] in the NHS ... so that is one area where ... we need to make changes to move in line with the guidance."[16] The NHS Purchasing and Supply Agency told us that they have a close working relationship with the OGC, and that they were following or had adapted to their own purposes all the OGC guidance they had received. They also told us that the Health Service had saved a million pounds through using the national contract with Vodafone and that the Agency has agreed to arrange a national contract for office and ancillary agency staff for both the OGC and the NHS.[17]

The OGC's work designed to modernise and promote best procurement practice is based on a collaborative approach with Departments. Success therefore depends on Departments utilising the OGC's guidance and expertise. We expect the OGC to monitor and report on the extent to which this is happening in practice.

The OGC's remit is limited to central civil Government and it does not therefore cover very significant areas of public spending such as Defence and the NHS. We have reviewed the evidence we have received of the close working relationship that the OGC has with the relevant bodies in these fields. We welcome this and consider that such relationships are essential to ensure best procurement practice is followed in all areas of public expenditure. We look to the National Audit Office, the Audit Commission and the proposed Commission for Healthcare, Audit and Inspection to review and report on whether best practice is followed in these areas.

8   Ev 3, para 3.3 Back

9   Ev 3, paras 3.3, 4.3 Back

10   Ev 3, para 3.1 Back

11   Q36 Back

12   Qq34, 36 Back

13   Q36 Back

14   Q185 Back

15   See paragraph 22 Back

16   Q184 Back

17   Ibid Back

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Prepared 23 May 2002