Does procurement as a shared service add up?

Back in 2008 I had a paper published on Procurement as a shared service (let me know if you want a copy).  That paper examined case study evidence from six local government procurement shared services (14 councils);  it concluded that delivering procurement through a shared service did add up.  The case studies included the financial savings reported. Savings that went beyond those which could have been achieved through other routes, including the use of consortia.  It also highlighted some of my concerns, for example, none of the case study shared services had developed a joint procurement strategy, the need to develop trust slowly and incrementally, and the need to consider what happens when the political objectives of the partners diverge.  Nevertheless, I remained convinced that delivering procurement as a shared service does make sense as one option to be explored, and, when it when the circumstances are appropriate, implemented.

So it was with some interest I discovered that the Public Accounts Committee concluded Whitehall's approach to shared services didn't add up, and that's despite originally being advocated by the Gershon Review back in 2004. But let's remember that Gershon's argument was based on securing access to scarce procurement expertise.

The PAC report however appears to be using the same language but means something different.  Shared services in PACs view is a shared service centre - that certainly wasn't what I found in my local government research.  What I'd found was
people and organisations working collaboratively.  The shared service was shared people, shared expertise and shared buying power. The shared services I examined were not shared transactional services.  If we merely look at sharing transactional processes why not just outsource?  That way you can avoid costly computer systems and their need for integration and kit and focus on the real strategic delivery of the service, for example, a strategic procurement service.  Indeed when we hear so much about the demise of 'big government' should shared service centres really have an 'in-house future'?

Margaret Hodge, who chairs PAC was obviously annoyed with central government apparent waste of money.  She still remains convinced in the value of shared services:

Government could save significant sums of money if it pooled back office functions such as finance, HR and procurement. Securing efficiency savings is essential to protect public services from further cuts that could otherwise have been avoided.

But I really think we need to revisit what we mean by a shared procurement service.  If it is shared scarce procurement expertise - yes, the evidence stacks up from local government. If it is shared purchasing transactional services then we are talking about an entirely different thing and the discussion needs to be within the 'make or buy' context.