Call for new office to oversee the procurement programme

A SWEEPING overhaul of Whitehall's pounds 12bn annual procurement programme and the creation of a new Office of Government Commerce (OGC) will be called for in a report to the Prime Minister next week.

The report, commissioned by Tony Blair and carried out by a senior GEC executive, Peter Gershon, is expected to recommend that the office be set up within the Treasury and empowered to coordinate procurement policy across all central government departments.

The OGC may also be given executive responsibility to help administer very large single procurement projects in individual departments.

It would be run either by a senior civil servant of a deputy permanent secretary grade or a businessman brought in from the private sector.

The Gershon review is due to be published next Wednesday alongside the announcement that the Government's Private Finance Taskforce (PFI), which helps channel private capital into public projects, is being reconstituted as a de facto merchant bank called UK Capital.

Critically, the OGC will act as a counterweight within the public sector to UK Capital, which will be 51 per cent privately owned.

The OGC will have responsibility for vetting the list of projects which are targeted for PFI-style deals or public-private partnerships.

This will help allay fears in some quarters that, as a privately owned entity, UK Capital would tend to favour projects which can be most easily financed or offer the best return to the private sector, irrespective of their necessity.

The Gershon review, which was launched last December by the former paymaster general, Geoffrey Robinson, was given the task of improving the effectiveness of central government's civil procurement activities.

Currently some 5,000 staff are employed in 200 departments, handling a budget of pounds 12bn a year.

It is possible that the OGC will subsume both the Cabinet Office efficiency unit and Pace, the estates management arm of what was the Government's Property Services Agency.

The Confederation of British Industry has been pressing hard for better coordination of central government purchasing policy.

Amanda MacIntyre, of the CBI, said: "We are optimistic that the Government intends to pull together support for public procurement activities without there being a complete takeover of responsibility by one organisation."

She added: "There is a genuine recognition on the part of ministers and senior officials of the need to handle procurement better and that means making sure that there is a shift in project management and appraisal at the top level of the public sector."