Aggregation: Is bigger always better? - Eupian

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ContentsPurpose of this guidance 1What is aggregation? 2When should aggregation be considered? 4Why use aggregation? 6Some practical considerations 8Further reading 122
Recent developments in public sector procurement haveraised questions about the extent to which we should poolour requirements and let fewer and larger contracts.The efficiency agenda is driving us towards reducing ourprocurement costs, making use of our combined influenceas buyers and achieving economies of scale. However,there are also increasing concerns about the role of smallfirms in a competitive and healthy market, and the fact thatin some markets a small number of suppliers is able toexert an undue influence on us. As we move towardsadopting a more holistic approach to the markets in whichwe operate, it is becoming increasingly important to assessboth the benefits and potential dangers of aggregation.This guidance is designed to inform decision makingduring the development of organisational procurementstrategies, and during the strategic planning stage prior toa programme or project. It aims to clarify what is meant bythe term ‘aggregation’; identifies the possible advantagesand disadvantages associated with it; and discusses the keyissues that will inform the decision-making process.Purpose ofthis guidanceThe three areas of procurement activity covered by theguidance are:• analysing demand information both within agovernment organisation and across differentorganisations• taking decisions on whether to seek aggregated deals(for example, to engage in collaborative deals betweendepartments)• taking decisions on whether to bundle goods andservices together into a single contract (for example,moving to an outsourced IT service is likely to involvebundling).The target audience is primarily those who take strategicdecisions on procurement, programmes and projects, butalso those who implement such decisions.Key messages• Aggregating, or coordinating, demand information bothwithin and between public sector organisations is animportant step in the journey towards more efficientdealings with markets – and <strong>better</strong> value for money.• Procurement strategy and sourcing decisions on whether toseek aggregated supply should be taken on a case-by-casebasis. The advantages and disadvantages of each optionshould be assessed in the light of the individualrequirement, the capability and capacity of the buyerorganisation(s), the wider government agenda and thefeatures of the commercial marketplace. It may beimportant, for example, to ensure that a competitive supplymarket is safeguarded for the future.It is important to ensure that competitive supply marketsare safeguarded for the future1
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Aggregation: Is bigger always better? - Eupian

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