By Marcus Leach

In a move expected to save £3 billion a year, Francis Maude today (Friday) announced that the Government is making significant changes to the way it buys in categories of common goods and services such as stationery and office services.

The move follows Sir Philip Green’s Efficiency Review findings last October that Government could better take advantage of its scale and buying power.

Francis Maude also reinforced the Government’s commitment to buy more of its products and services from smaller suppliers.

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% 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 paid between £350 and £2,000 for the same laptop and between £85 and £240 for the same printer cartridge from the same supplier.

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

The announcement comes on the day that Francis Maude announced that the Government was on track to have saved more than £1 billion from tighter spending on discretionary goods and services including consultants and agency staff in the last year.

Changes to make Government contracts more accessible to SMEs have already led to one not-for-profit SME successfully undercutting larger competitors and winning a £1.6 million contract to provide office support services to HM Revenue and Customs.

"It is bonkers for different parts of Government to be paying vastly different prices for exactly the same goods. We are putting a stop to this madness which has been presided over for too long. Until recently, there wasn’t even any proper central data on procurement spending," Maude said.

“So, as Sir Philip Green found, major efficiencies are to be found in Government buying. The establishment of Government Procurement means that the days when there was no strategy and no coherence to the way the Government bought goods and services are well and truly at an end.

“In the last year, we have already made significant changes to drive down procurement spend by £1 billion, but this new centralised service means we will continue to deliver savings which are expected reach more than £3 billion a year.

“We are also 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 today will support their growth as the economy starts to recover."

SME commitments made today include:

- Greater use of the ‘open’ procurement procedure — which has already increased by 12% across the public sector between March and April alone - ensuring all suitable suppliers have their tender proposals considered.
- Following the Innovation Launch Pad, five further Dragons’ Den style ‘Product Surgeries’ are planned so that SMEs are increasingly able to pitch their innovative proposals directly to Government. Moves to address the different prices paid by departments have already been taken by Government. Tenders to supply Government travel and office supplies have been issued, with a view to contracting a new central supplier for each later this year.