An all-of-government procurement programme will enable hospitals to save $18 million on power bills over the next three years.
The new contracts are part of a public sector-wide Government Procurement Reform Programme aimed at making government buying as efficient as possible and reducing costs. It includes all public sector agencies, councils and up to 2500 schools.
An electricity tender on behalf of 17 District Health Boards (DHBs) has been awarded to Contact Energy and Genesis Energy following a market process.
Economic Development Minister Steven Joyce says the majority of the new contracts have commenced and the estimated savings of $18 million over the next three years is based on a comparison of the new tender rates against the previous year’s contract rates.
“The lower contracted rate shows the benefits to the taxpayer of government organisations like DHBs working together to align their service needs,” Mr Joyce says.
Health Minister Tony Ryall says these significant savings are part of a programme of procurement and administrative savings being carried out by the 20 district health boards.
“This includes moving to one bank nationally for DHBs, resulting in saving more than $4 million a year from lower fees and higher interest payments,” Mr Ryall says. “All savings made by the DHBs go back into frontline health services for patients.”
In addition, the Ministry of Business, Innovation and Employment has been working on an All-of Government reticulated gas supply for agencies. This contract has recently been agreed with Genesis Energy and is forecast to realise an additional $4.1 million in savings over the next three years.
All-of-Government contracts let to date are tracking to deliver $330 million in savings over the contract lifetimes. The All-of-Government contract for reticulated gas is the 12th All-of-Government contract signed since 2009 which includes external legal services, computers, mobile voice and data, air travel, and advertising.
Those are significant savings and one of the reasons the government has been able to reduce costs while maintaining services.
Bigger buyers can usually negotiate better prices and the government is one of the biggest buyers in the country.
Using that buying power to get better prices is such a good idea, why has no-one thought of it before?