OFT investigates competitive fairness of public sector procurement

The study follows the publication in December 2003 of a report by the Office of Government Commerce (OGC), which concluded that the public sector needs to take a more systematic and strategic approach to the markets in which it operates.

The OGC recommended that the Government should come to a conclusion on the number of, and nature of, suppliers necessary for effective competition or security of supply. Under certain circumstances, said the report, there may be a case for investigation by the OFT.

In the IT market the study may impact on major players such as Microsoft, which is already facing the prospect of an increasing number of public agencies transferring to open source technology. In January Microsoft narrowly managed to hold onto a desktop contract with Newham Council in London.

The OFT study will involve preliminary research into the impact of public sector procurement on competition. This will invlove external consultants analysing how public sector procurement might affect competition from an economic point of view, 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 this research to be completed by July with a report published later in the summer.