In the first four years of its operations as a central buying agency for hospitals in England, NHS Supplies saved the health service pounds 264m. But the Commons Committee of Public Accounts has been told that the authority has total annual running costs of pounds 70m - or pounds 280m over four years.
David Davis, the former Tory minister who chairs the committee that monitors Whitehall efficiency and effectiveness, said: "NHS Supplies operates in a sector where funds are scarce and every pound must be spent to maximum effect. It was set up to save the NHS money, and to date it is clearly failing.
"Progress in establishing a single organisation has been too slow. It is unacceptable that there is no consistency in prices paid and `mark- ups' charged by NHS Supplies."
In evidence, MPs were told that in the early years of the authority, trusts in the South and West of England were being charged pounds 26 for delivering a box of surgical gauze, while only pounds 4 was charged for the same service in North Thames Anglia region.
MPs were assured last year that such charging differentials no longer existed. They were also told that more than half of all trust chief executives were unhappy with the authority's prices and its value for money.
But the authority's chief executive told the committee: "We took over a pretty unholy mess. What we have done is to transfer that into something which is already very, very significantly better."
In spite of their low rating for the authority, trust chief executives were still using NHS Supplies because it was better than the alternative, he added.
One MP commented that the organisation was a "funny animal"; while another said it was a "monster".
l NHS Supplies in England. First Report of Public Accounts Committee. Commons paper, 349: Session 1997-98; Stationery Office; pounds 8.Reuse content