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Government tops £1.6 billion and exceeds its Value For Money target
Ref: 20/03
Central Civil Government has achieved a total of more than £1.6 billion worth of value for money (VFM) gains, exceeding its target of £1 billion set three years ago, Chief Secretary to the Treasury Paul Boateng, said to day.
The £1 billion target has been achieved by implementing procurement best practice and working to make government departments smarter customers.
Paul Boateng said:
"This is good news all round, but more especially for the tax payer and for all government departments. This shows that central civil government departments are demonstrating real and enduring improvement in the way they buy and manage goods and services."
The VFM gains have been achieved through a wide variety of better procurement practices, such as aggregation of contracts across several departments, improved contract negotiation and management, improved quality of service and reduced process costs. The gains were calculated using a methodology agreed by the National Audit Office and departments.
OGC Chief Executive Peter Gershon said:
"Whitehall departments together with their executive agencies and Non-Departmental Public Bodies (NDPBs) can be justly proud of the hard work they have put into achieving this figure.
"Since OGC was formed we have worked closely with colleagues across all areas of central civil government. This dedicated team of specialists have worked together in delivering this key target.
"The good relationships and momentum they have built up across Whitehall has created an environment in which we all can energetically pursue the more challenging target of delivering £3 Billion of value for money gains over the next three years."
Key achievements over the last three years have included:
Gateway review process: Over 600 projects now reviewed covering 363 different projects. These are reviews of procurement projects carried out at key decision points by a team of experienced people, independent of the project team. Expected to yield about £500 million per year in efficiency gains from 2003-04.
Software licences: Groundbreaking deal between OGC and three of the world's major software suppliers (Microsoft, IBM/Lotus and Sun Microsystems) to offer discounted software licensing to Government. Saving worth £100 million over three years from 2002.
Vodafone and Orange: Pre-negotiation with these mobile phone companies by OGC enabled Government departments to have cheaper 'phone contracts.
NOTES TO EDITORS
Value for Money (VFM) is defined as the optimum combination of whole life costs and quality to meet the customer's requirements. It is not just lowest price.
Procurement is defined as being the whole life-cycle process of acquisition of goods, services and works from third parties - beginning when a requirement is a gleam in the eye and ending with the conclusion of a service contract or ultimate disposal of an asset.
The Office of Government Commerce was established on 3 April 2000 with the remit to achieve £1 billion of efficiency gains over the following three years.
The creation of the OGC followed a review carried out the year before by Peter Gershon the then Managing Director Marconi Electronics Ltd. It stemmed from an invitation in November 1998 by the then Paymaster General and the Parliamentary Secretary to the Cabinet Office who invited Mr Gershon to:
"Review civil procurement in Central Government in the light of the Government's objectives on efficiency, modernisation and competitiveness in the short and medium term and to report as soon as possible."
Mr Gershon's report "Review of Civil Procurement in Central Government" was published in April 1999. OGC was established the following April with Mr Gershon as its Chief Executive.
The Office of Government Commerce (OGC) is an office of HM Treasury, which works with central civil Government as a catalyst to achieve best value for money in commercial activities. OGC aims to provide guidance and expertise to support successful delivery of procurement-based projects and other commercial activities; develop the Government market to make it more efficient and attractive to suppliers and customers; and develop a clear and supportive framework for best-in-class procurement activity, while making a leading contribution to Government modernisation.
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Page last updated: 2008-10-20
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