Buying in bulk helps save taxpayers $300m

John Ivil. Photo / Supplied

John Ivil is the $300 million man - that's the amount of money he and his team of public servants have saved the taxpayer in two years.

The former army logistics officer heads a team of negotiators who have turned the Government's approach to spending money on its head.

Government departments have always taken an individual approach to buying goods and services, with $30 billion spent by agencies, hospitals, local councils and schools.

Public servants need cars, flights and office supplies, and each agency will head out into the market to try to strike the best deal with taxpayer money.

Now Mr Ivil and his team of 30 people at the Ministry of Business, Innovation and Employment promote the Government as the "customer of choice", using the combined purchasing power to drive costs down and secure discounts.

Instead of Government departments going looking for the best deal, they now have the best deal looking for them.

Mr Ivil said his team had made $293 million in savings over the life of contracts secured so far (five to seven years).

"We're trying to get government looked at as an organisation rather than these 200 different parts," he said.

The principle seems simple - bulk-buying gets discounts.

"I guess you needed something to light the flame and the financial crisis was it," he said.

Mr Ivil said the goods and services bought, and the people signing the cheques, remained the same.

"We set up the contracts, they spend against them. We're not asking them to release their purse strings. It is a lot of communication and a lot of listening."

The team of negotiators spend time with each agency to understand individual needs.

For vehicle purchasing, for example, ACC might have a premium on safety which trumped factors necessary to other agencies. Nursing services in urban areas might require smaller cars than rural agencies.

Mr Ivil said the contracts negotiated were in areas that would not affect local suppliers.

"We always had in mind our potential impact on local business. These were all things that weren't manufactured in New Zealand - they were imported."

Mr Ivil said some agencies already had good deals. But costly contracts held by others were effectively using taxpayer money to subsidise discounts.

The greatest effect was a culture change in the public service, he said.

The benefits went beyond dollar savings. The new system brought specialisation to purchasing and negotiating which might not have been a primary focus in some agencies.

"We might have three people living and breathing recruitment - a lot of agencies do it in a part-time way."

It also made it easier for businesses to work with government, he said. Suppliers would struggle to work out who to approach with their products, and if their pitch was being made to the best person.

The money saved was kept in the agencies. "If I'm helping the Ministry of Social Development save a lot of money on travel, then they have more money to spend within their budget on social outcomes."

For Mr Ivil, the underlying mantra is the benefit to the taxpayer. "That's who we are here for. It is highly rewarding."

CUTTING THE COST

* Air travel - $70m
* Legal - $108m
* Desktop/laptop - $28m
* Office consumables - $30m
* Vehicles - $38m
* Print - $19m
* Total - $293m.