Dark purchasing refers to the practice of companies buying goods or services outside of the visibility or approval of the procurement department or other stakeholders. This often results in higher costs, risks, and lack of control over the supply chain.
Dark purchasing in the public sector poses several risks, including:
1. Lack of transparency: Transactions made through dark purchasing can bypass established procurement processes, leading to a lack of accountability and transparency.
2. Increased costs: Goods and services purchased outside of established procurement processes may result in higher costs for taxpayers.
3. Reduced competition: Dark purchasing can limit the pool of potential suppliers, reducing competition and the opportunity for cost savings.
4. Unauthorised spend: Transactions made outside of established procurement processes may not comply with regulations and laws, leading to unauthorized spend and potential legal consequences.
5. Loss of control: Dark purchasing can lead to a loss of control over the supply chain, which may result in risks related to product quality, delivery, and sustainability.
6. Lack of compliance: Procurement processes help to ensure that public sector organisations follow relevant laws and regulations, such as procurement laws, competition laws, and transparency regulations.
The main way to combat dark purchasing in the public sector is to
1. Develop established procurement processes.
2. Communicate the procurement process
Established procurement processes are essential for ensuring the responsible and efficient use of public funds in the public sector. Procurement processes go beyond simply purchasing goods and services; they provide a framework for transparency, accountability, and value for money.
One of the most significant benefits of established procurement processes is transparency and accountability. These processes ensure that all purchasing decisions made by public sector organisations are open, transparent, and accountable to the public. This helps to prevent corruption and promote public confidence. For example, by using competitive bidding processes, public sector organisations can ensure that contracts are awarded on the basis of merit, rather than influence or other factors.
Another important reason why established procurement processes are important for the public sector is cost savings. By following established procurement processes, public sector organisations can ensure that they are getting the best possible value for taxpayer money. This is achieved by creating a competitive environment for bidding, which encourages suppliers to offer their best prices and services. By following established procurement processes, public sector organisations can also reduce the risk of waste, fraud, and abuse of taxpayer funds.
Established procurement processes also help to ensure that public sector organisations comply with relevant laws and regulations. These processes help to ensure that all procurement activities are carried out in accordance with procurement laws, competition laws, and transparency regulations – and that suppliers who are vetted by the system are compliant. This helps to reduce the risk of legal consequences and protects the public sector from financial and reputational risks.
Established procurement processes support better decision making by public sector organisations. These processes provide a framework for clear evaluation criteria and methods, which help organisations to make informed and strategic purchasing decisions. This can help to ensure that public sector organisations purchase goods and services that meet their needs and are fit for purpose.
Finally, established procurement processes help to improve the quality of goods and services purchased by public sector organisations. By following these processes, public sector organisations can ensure that they are purchasing goods and services of high quality, which meet their needs and are fit for purpose. This can help to ensure that public sector organisations are able to deliver high-quality services to the public. Conclusively, developing and communicating established procurement processes in your public sector organisation are essential for defeating the phenomena of ‘dark purchasing, and ensuring the responsible and efficient use of public funds in the public sector.
These processes promote transparency, accountability, and value for money, while also reducing the risk of waste, fraud, and abuse. By following established procurement processes, public sector organisations can ensure that they are making informed and strategic purchasing decisions, which support the delivery of high-quality services to the public.
You know your processes and your business. We know payments. Caxton is a Bloom accredited public sector provider. The Bloom supplier accreditation means any member or associate member of Bloom or NEPO may request a proposal from Caxton through the Bloom supplier network for expense management systems, supplier payments, payroll payments and FX payments. Caxton are already serving a large number of Healthcare sector clients including a number of NHS Trusts, where we help Trusts provide new nurses coming in from overseas with their salary on pre-loaded expense cards, getting the new staff up and running in their new country, quicker.