Irish Government could save €1.7 billion a year by managing procurement

12 Nov 2009

Technological transformation of the State’s procurement processes could result in the Government shaving €1.7 billion off the total spend of more than €10 billion a year.

Declan Kearney, head of Irish technology company Supplierforce, which has won deals to deploy procurement transformation programmes across UK councils as well as at An Post and Bord na Móna, explained that if the State is to transform itself, the first place to start with should be procurement.

“Procurement transformation is a combination of services and technology. Services-wise, this means getting into demand management and cutting spending where money shouldn’t be spent.”

More post-contract management may be required

Kearney, who was speaking at his company’s annual conference in Dublin, said the problem with public procurement in Ireland is that there is little post-contract management where terms of contracts are tracked.

“If a contract is not managed the business value of the deal is lost. We estimate that close to €1.7 billion a year is wasted this way in the Irish economy.

“A proactively managed procurement policy, where staff are trained and ensure the terms of a supplier contract are met at all times, would make a meaningful difference,” Kearney told

Minister Mansergh

Dr Martin Mansergh TD, Minister of State at the Department of Finance, with special responsibility for the Office of Public Works, officially opened the conference, entitled ‘Managing Supply Cost & Risk in Challenging Times’.

“Annual public expenditure on goods and services amounts to about €10 billion with a further €7 billion (approximately) on works,” said Mansergh.

“Therefore, public procurement is a hugely important element of total public expenditure. Given the scale of this expenditure, Government policy is to ensure that the development of organisational structures, skill sets, systems and procedures in public procurement are consistent with the overriding objective of achieving value for money.

“In March 2009, the Government approved the establishment of a national operations unit for public procurement of goods and services: the National Public Procurement Operations Unit (NPPOU), as it is now called, is based in the Office of Public Works, in its new offices in Trim, where I spent my first day on Monday.”

New contracts for Supplierforce

It emerged at the conference that Supplierforce has secured five new contracts in recent weeks with Irish and UK organisations, including An Post, Bord na Móna, Woking Borough Council, Calerdale Council and Norland Managed Services Ltd. The combined value of the deals for Supplierforce is more than €600,000.

After a single managed sourcing event, Norland Managed Services have already realised direct cost savings of more than £2 million as a result of Supplierforce sourcing technology and professional services.

Supplierforce’s technology, which is hosted from Dublin, has already managed to help a UK city council to save more than stg£500,000 sterling this year.

The technology enables Peterborough City Council to deliver “cashable” cost savings through more transparent and more efficient management of its various suppliers.

A makeover

As part of a vision to provide a modernised service to citizens, while keeping council taxes low, Peterborough City Council recently embarked on a major business transformation programme to revolutionise the way it operates internally.

The programme has already yielded the council £3.7 million sterling in savings in 2008, with additional savings anticipated in 2009 and 2010.

By John Kennedy

Photo: The Irish Government may shave €1.7 billion off the total spend of more than €10 billion a year if it revamps its procurement processes.

John Kennedy is a journalist who served as editor of Silicon Republic for 17 years