As it seeks to reduce an unprecedented budget deficit, the UK government has turned its attention on public procurement by asking its 20 largest service suppliers to trim their prices.
According to media reports, Frances Maude, the minister for the Cabinet Office, will tell the tier-one public suppliers including giants BT, Hewlett Packard and IBM that they must cut the prices they charge Whitehall for their services.
Maude is also expected to tell suppliers that the government would seek to further reduce costs by tightening Whitehall’s control of procurement of goods. He has already opined that the government can make more of its collective buying power for both goods and services.
The Financial Times reported that Maude told a conference organised by the think-tank Reform that he would “be renegotiating with them across everything they do for the government” to get costs down. “We will say we want to have something off your margins; we will expect you to tell us how we can pay you less, sometimes for doing less.”
“Thursday’s high-level conversation is expected to be followed by meetings with senior executives from suppliers such as G4S, Siemens, Steria, Cap Gemini and property specialist Telereal Trillium, to seek ways of making longer-term savings in addition to the shorter-term price cuts the government wants,” according to the FT.
Annually the UK government spends about £140bn on procurement of goods and £80bn on services.
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