"OGC: buyers not adding value" reads the heading on page 7 of the latest issue of Supply Management magazine. At a recent conference on Energy, Nigel Smith, OGC CEO, is reported to have cited the fact that 250 OJEU notices had been issued for energy suppliers over the last two years. His colleague also pointed out that only 30% of electricity and gas supplies were purchased through best practice procurement.
As someone who has been involved directly with the modernisation of energy procurement over the last three years, I can say unequivocally that Mr Smith and his OGC colleagues are spot on with their analysis of the symptoms. The public sector is nowhere as good as the best of the private sector. When you consider that the UK public sector spent £3.5 billion on energy in 2006/7 alone there is massive room for improvement.
However, where I would beg to differ is on the likely causes. Is it really the buyers holding back improvement? A lot of evidence suggests that energy is often purchased in organisations by junior staff with little or no training, often with risk averse lawyers in tow insisting that buying energy is no different to buying office supplies.
Of course, as most readers of this blog will know energy is a commodity, like gold and oil and is bought on international markets by specialised traders. There is a wealth of knowledge and information now available to help public sector bodies understand this and make the changes that are long overdue. The London Energy Project led by Michael Wood and his Haringey team has been leading the way since 2005* on modernising Energy procurement. They are now moving into benefits realisation mode and will be making some encouraging announcements in the coming weeks.
As with so much on the efficiency agenda, there is still a long way to go. This is a battle of hearts and minds; cultural change in its rawest form. If you haven't already read up on the possibilities in the energy market, then may I suggest the first port of call should be to http://www.lcpe.gov.uk/Energy/Default.asp ?
* The Procurement Agency for Essex also kicked off a project at the same time