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By | Paul Kunert 16th June 2015 13:39

The NHS pays up to NINE TIMES over trade price for commodity kit

Funding crisis? What crisis? Look over there, charities get stiffed like this too!

The UK’s National Health Service is paying through the nose for low-tech gear, including cables and USB flash drives, according to a poll of IT buyers.

The health service came out on top in the league of prosperous procurements across 20 industry sectors, with one head admitting to coughing a margin of 920 per cent above trade price for a product.

The Society of IT Managers (SOCITIM) reckons margins should not exceed more than three per cent of trade price, but this is in a world where users are switched on and all suppliers are benevolent.

Bad buyers don’t work exclusively for the NHS, the third annual survey by pricing bench markers KnowledgeBus revealed: charity and housing association sectors paid a margin of 850 and 711 per cent respectively on individual items.

Al Nagar, head of benchmarking at KnowledgeBus, said the products acquired were in all likelihood one-off or low volume purchases, including smaller products, though “the size of some of the margin is a concern.”

"The scrutiny of spending on these items cannot be neglected, however, as they often make up a larger-than-expected per cent age of the budget, in some cases as high as 25 per cent," he added.

The recruitment sector was the worst offender overall in 2014, paying a margin of 30 per cent; education came in next at 23 per cent; followed by the NHS (22 per cent); and charity and councils (tied at 21 per cent).

Some areas of industry did show some progress: the Housing Association reported average tech margin of 20 per cent compared to 36 per cent in 2012, and the banking area paid 16 per cent versus 39 per cent last year - even the fat cats have tightened their belts.

“A slight drop in margins across the board suggests that [some] organisations are getting better at scrutinising their IT purchases,” said Nagar.

Some government frameworks ask suppliers to specify their margins in the tender process, and Crown Commercial Services audits individual companies from time to time to ensure they adhere to it.

But public sector organisations can often wander outside of these frameworks for single purchases, and that is likely where they are getting stung. ®

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