Einstein said that education is what remains after one has forgotten what one learned in school.


Well if the annual volume of education supply contracts is  anything to go on, students passing through the UK education system over the next few years will need much less time to forget.


In the years 2007 to 2009 the average number of contracts awarded for educational supplies was 9,460. In 2010 the number is just 839, representing a jaw dropping reduction of 91%.


Clearly this is bad news for suppliers to the education sector. Only time will tell what it means for pupils.

Government Captive Insurance

More government procurement notices are issued for insurance than any other category.

Of the 235 insurance contracts awarded by the public sector so far this year, Zurich Municipal, Allianz and Royal & Sun Alliance are the main beneficiaries.

Given the UK's population of 61 million and its ability to absorb billions in losses from banks, the question which has to be asked is why the UK government does not establish a captive insurance scheme.

Use of captive insurance is common practice for large corporates where subsidiary risk is underwritten at a group level. The group carries policies to insure against risks which are material for the group but the kind of events associated with such claims are few and far between and, relatively, inexpensive to cover.

The logic of using such schemes is that, on average, premium income earned by the insurance industry outweighs claims. Therefore, by "self insuring" subsidiary risk, savings for shareholders are considerable.

Applying the same logic to government, individual public bodies would pay premiums to central government, and the surplus after claims would be reinvested in the public sector or provide a tax break.

That's not to say that the private sector has no role to play. dotgovdotuk believes that this should be limited to administering the scheme rather profiting from the nation's risk.

Satisfactory Assurance of Identity

It seems that the UK government is looking into software to "provide satisfactory assurance of (citizen) identity when interacting with public services". You can find more by following this link.

Given that many UK government "services" in place today may have been slimmed down or eliminated within a year or two, isn't this a little premature?

Maltese Power

The Maltese government was accused last week of failing to comply with EU procurement legislation. As a result it risks "effective, proportionate and dissuasive" penalties should it decide to proceed with its chosen contractor for a power station extension contract.

The row has arisen after the government breached EU procurement rules by taking a last minute decision to relax emission requirements for bids relying on diesel engines. This gave suppliers whose solutions relied upon diesel, a significant advantage over other proposals based on gas.

dotgovdotuk is putting together some quizzes and materials aimed at anyone working in public sector procurement who is worried that planned changes to initiatives may run foul of legislation. If you're interested please follow these links:

EU procurement basics
EU procurement procedures

EU Procurement Benefits - Where Do They Come From?

The annual economic benefit of the EU's public procurement structure is estimated to be £60 billion across the whole community. Given that the UK represents 13% of EU GDP, a back of envelope calculation puts Britain's annual share of EU public procurement benefit at £8 billion.

Assuming that this is correct, the saving represents almost a month of the cost of running the Department of Health.

Over the next week, dotgovdotuk will look more closely at the cost and benefit of EU public procurement rules. To get started, we went back to basics. If you fancy testing your knowledge on this topic, why not spend 2-3 minutes and take a quiz. If you're up for the challenge, follow this link. Good luck!

OJEU Discussion

A debate has been raging all day with regard to the application of OJEU procurement rules in the UK public sector.


We see no contradiction between best in class procurement practices driven by self interest in the private sector, and the requirements of OJEU.


Surely no procurement organisation wants to issue a tender until a sound strategy has been developed. Surely a strategy will always be based on sound demand analysis and market testing which reaches out to all qualified suppliers regardless of where they are based.


The debate can be followed by clicking this link.

More Process Disclosure Please

To date, only a handful of public authorities have released data under the coalition's spend publication policy.

At present, Kier Group top the vendor chart with monthly public spend of £9 million. Kier is a construction, development and building services group. It entered into a successful joint venture with Islington Council some years ago, and has won a string of public contracts in the last 12 months including a £20 million agreement with Islington, announced on 6th August.

dotgovdotuk is finding an abundance of information regarding the outcomes of public procurement processes but the inner workings, governance and approval structures remain hidden from public view.

Audit Commission

On BBC Radio 4's Today programme this morning, local government minister Bob Neill stated that private sector audit firms would offer better value for money than the UK's Audit Commission. Mr Neill's logic was that competitive offers by private sector participants force winners to offer value for money and failure to manage costs thereafter is a private sector's problem.

The minister is correct provided that government departments are capable managers of suppliers once contracts go live. Spend data released to date would suggest that the public sector is no better at managing its suppliers than it is at managing its own agencies.

UK Government Management of 3rd Party IT Spend

Every seller’s dream and procurement manager’s nightmare. The relationship between service provider and  IT department which has morphed unchecked and become “strategic”.

On 12th August the UK's Department of Community and Local Government (CLG) released detailed spend data for the 12 months to April 2010. A review of Ordnance Survey, the CLG mapping agency’s £38 million 3rd party costs, reveals IT to be the leading spend category.  

With spend of £5 million, Computacenter UK provide IT infrastructure services. A manager at OS is quoted on Computacenter’s website as saying that Computacenter's centralized maintenance services provide “a single point of contact, which reduces the administrative burden". Recruiter, Lorien Resourcing, is another supplier which boasts OS as a customer on its website. OS spent £6 million with Lorien in 2009/10 and the companies have worked together since 1998.

Despite the fact that both companies frequently use OS as a reference client and might have been forgiven for bragging about coming top of a strategic review by their customer, dotgovdotuk was unable to find any reference to such an assessment by Ordnance Survey, although, both vendors are signatories to frame contracts with Buying Solutions, the Government's leading procurement services organization for the UK. 

Readers would be forgiven for thinking that the amounts involved above are a drop in the ocean. However, bearing in mind that Computacenter's UK revenue is £1 billion and they are one of twelve IT service providers with which Buying Solutions has signed a frame agreement, we believe that the Government's approach to using IT service providers is material and relevant to a broader debate on government procurement strategy.

In a future article dotgovdotuk looks at the role of Buying Solutions and whether use of their frame agreements absolves Government departments from the need to develop their own procurement strategies.