HISTORIC PRESS RELEASE : OGC Drives down the cost of Hotel bills to save the taxpayer £18 million [April 2001]

The press release issued by HM Treasury on 3 April 2001.

Andrew Smith, Chief Secretary to the Treasury, today announced that the drive for better value for money in government procurement has produced its latest ‘quick win’, in the area of hotel accommodation and conferencing, with the Office of Government Commerce (OGC) delivering £18million savings to the taxpayer over three years.

The OGC initiative under which the Department of Social Security (DSS) took the lead on behalf of Government in the tendering exercise and award of contract to Expotel, provides a single contract to Government at competitive rates to drive down the cost of hotel rooms and external conferences, minimising paper based transaction charges and eliminating government re-tendering costs.

Speaking in London at Public Sector Expo, OGC’s ‘One Year On’ conference, Andrew Smith said: “This latest quick win initiative for hotel accommodation and conferencing is another example of how the OGC is working with departments to make a real difference in the way Government does business.  The £18 million savings demonstrate what can be achieved by optimising the purchasing power of government.

There are clear benefits for Government in entering strategic partnerships with major private sector providers of government services and products.

This is excellent news for the taxpayer because for every pound saved in procurement an extra pound can be spent on front line public services.”

Peter Gershon, Chief Executive of the OGC said:

“One year on, OGC’s pursuit of value for money improvements and our strategic approach to the purchase of key procurement commodities and services is making a real difference to the way the Government and its departments are able to develop their commercial activities.

This innovative DSS led contract is available to the whole of the public sector and is further proof that the OGC is making a real difference both in disseminating best practice and in delivering value for money improvements.”

The main features of the contract with Expotel include:

• A Guaranteed Average Room Rate, dependent upon subsistence rates, which equates to a saving of approx £5.50 per night to the DSS;
• A booking agent rebate of 63 per cent equivalent to approx £3.50 per room;
• A £30 process cost reduction through on-line booking;
• £30,000 savings for each department from unnecessary re-tendering.

The potential annual spend in hotel accommodation and conferencing costs across central civil government averages around £60m each year and the contract provides scope delivering further savings on conference facilities.  The newly negotiated DSS contract with Expotel gives a high priority to reducing transaction costs in the booking service by establishing an on-line booking facility in the drive to meet Government’s commitment to do business on line.

Currently Departments operate individually negotiated contracts for hotel accommodation.  By using the Expotel contract, negotiated by DSS, the need for Departments to incur further tendering costs is negated.

The contract with Expotel will run for three years and there is the scope for the contract to be extended for a further two years if there is clear evidence that further savings can be achieved.

The agreement is another in a series of initiatives arranged by the OGC following up its ‘quick wins’ on the Vodafone and Watermark contracts, the introduction of the Gateway Review process and introduction of best practice procurement guidance.