The UK education sector could save substantial sums by cutting or eliminating fees paid to procurement companies like ESPO and the Litmus Partnership.
However, pinpointing the exact savings is difficult due to the lack of publicly accessible data on the total fees paid by educational institutions to these firms.
From our own perspective, we’re finding there’s a huge uptick in schools now moving away from this model, with over 85% of our Education-based sales stream being schools and academy trusts that are opting out from using procurement and dealing with the supplier directly.
The National Audit Office (NAO) report revealed that the UK Government could save at least £500 million through better oversight of its £125 billion annual procurement spending. The report noted that fees charged by private framework providers – sometimes as high as 5-6% of contract revenues – drive up costs for Government services.
In education, procurement companies such as ESPO and the Litmus Partnership claim to simplify complex purchasing processes while achieving cost savings and regulatory compliance.
For example, ESPO offers frameworks to help schools procure goods and services more efficiently. Similarly, the Litmus Partnership provides tailored purchasing solutions to optimise procurement and deliver long-term savings.
Although these services incur fees, they can also generate cost reductions via bulk buying, supplier negotiations, and compliance management. As a result, the financial impact of using procurement services depends on whether the savings they deliver outweigh the fees they charge.
Schools and educational institutions must analyse their procurement expenditures in detail to assess the potential savings from reducing or removing procurement fees. This includes evaluating fees paid to procurement firms and determining the feasibility and cost-effectiveness of managing procurement processes in-house. Such an analysis must also factor in internal procurement management’s risks and resource demands.
In conclusion, while cutting procurement fees presents an opportunity for cost savings, schools must carefully evaluate whether the benefits of external procurement services justify the associated costs.
If you want to learn more about the savings your School or Trust can make by reducing or eliminating fees paid to procurement companies, contact the EducationCare team today.
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