The UK public sector’s procurement process is the most expensive in the European Union, according to new research from the Centre for Economics and Business Research (CEBR).
Commissioned by Gatewit, Europe’s leading e-procurement provider, the independent research found that procurement processes in the UK incur the highest combined costs to public sector bodies looking to attract bids, and private sector suppliers bidding to win contracts.
The average total cost of a competitive procurement process (or competition) is £45,200, with £8,000 of those costs falling on the public body seeking to attract bids. This compares to an EU average cost of £23,900, meaning that public sector procurement processes in the UK are 90% more expensive than the EU mean.
The research also isolated the costs of holding a competitive procurement process to public bodies. The average cost to a UK public authority of attracting each bid from a potential supplier is £1,260, making the UK the fourth most expensive place in Europe for public bodies putting contracts out to market. Only Denmark, Norway and Italy record higher costs for this measure. The UK’s high costs contrast sharply with the EU average of £800, making the UK’s public procurement process 58% more costly than that of its European neighbours.
CEBR also studied the length of procurement processes. The UK public sector purchasing process was found to be one of the longest in Europe, a full 53 days longer than the EU average and some 20 days longer than the Italian process, the next longest.
The cost and complexity of bidding processes has an important effect on the value the public sector is able to achieve. Longer, more difficult processes dissuade potential suppliers from submitting bids, meaning that the eventual winner comes from a smaller pool of bids which is less competitive.
Complex processes also tend to discriminate against smaller firms which can lack the required resources to commit staff to a time-consuming, and therefore expensive, procurement process.
For more statistics and to download the CEBR research in full please visit Gatewit’s site.