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OFT to review public sector procurement

16/04    5 February 2004

The OFT is to commission a preliminary research study into the impact of public sector procurement on competition.

External consultants will be asked to undertake a broad-ranging economic analysis of how public sector procurement might affect competition, both positively and negatively. The research will also aim to identify specific markets where public procurement is likely to be affecting competition. One possible example is whether procurement practices might be restricting entry by new firms; another is whether they might be enhancing competition – and its benefits – through openness to new and innovative ideas.

The OFT expects the study to highlight areas for further market studies under the Enterprise Act 2002. It is also likely to be of interest to other parts of Government, in particular the Office of Government Commerce and the work it is conducting in relation to competition and long-term capacity planning.

See details of the proposed research

See summary of the terms of reference

The OFT expects this research to be carried out by July and to publish a report in the summer.

NOTE

1. The Office of Government Commerce published its report Increasing Competition and Improving Long-Term Capacity Planning in the Government Market Place in December 2003. The aim of the report was to consider what further steps can be taken to increase competition and encourage better long-term capacity planning in markets where the Government possesses significant purchasing power. One of the main findings was that the public sector needs to take a more systematic and strategic approach to the markets in which it operates. The OGC recommends that the Government should take a view on the number and nature of suppliers necessary for effective competition or security of supply. Under certain circumstances, there may be a case for investigation by the OFT.

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