Central government could save up to £10 billion per annum through a reformed e-procurement platform, placing a greater emphasis on administrative efficiencies and market competition, according to a new report.
With the use of e-procurement models championed by the likes of South Korea and Estonia, The Reform, a public-service think-tank, claims that savings of 25% could be made to the present $40 billion procurement bill. Even if e-procurement growth continued on trend, UK government would be set to save in the region of £550 million annually.
Whilst there is a large level of scrutiny placed on the government spending, significant steps have been made since 2010. The government now procures more than 25% of its services from small and medium-sized businesses, and since 2015, has relied upon G-Cloud for the procurement of cloud services.
G-Cloud as a platform has lowered barriers to entry, allowing more firms to compete for government business, and saving in the region of 20-50% when compared to legacy contracts. Building on this success, the implementation of the Crown Marketplace platform will enable government to move e-procurement models to new departments beyond IT services.
While it is still early days within the UK, other countries have demonstrated the wide benefits of e-procurement. Estonia currently attributes roughly 50% of its expenditure through e-procurement platforms, saving an estimated 30-40% on the cost of administrating procurement.
The Reform has recommended a consolidated platform for all government procurement activities:
“The Crown Marketplace should be a single portal for the e-procurement of goods and services. This should be accompanied by an integrated payment function,” said the report. “The framework to purchase commodities must be recompleted regularly to ensure maximum competition.”
While the immediate benefits demonstrate a reduction in expenditure, the move away from the current process will allow government employees to create value-for-money propositions, as opposed to drowning in administrative tasks.
Though the report and supporting statistics demonstrates a positive outlook for government spend, the potential of e-procurement can only be achieved if trends accelerate. The report highlights “If e-procurement continues to expand at the rate of G-Cloud growth in 2015, total government e-procurement spend could reach £3 billion by 2020”
Current e-procurement adoption levels would see UK central government save in the region of £1.8 billion and £4.5 billion depending on the level of pro-rata savings, though emulating the example of South Korea or Estonia would see the UK save in excess of £10 billion.