Companies across the county are unnecessarily losing £40m a year according to new research on how they do business.
Figures released by procurement and efficiency experts blur Group from analysis of data used by the Government’s Annual Fraud Indicator reveal that £40m a year is estimated to have been lost to procurement fraud by businesses in Derbyshire and a further £6m by the public sector in the county.
Within the county, east Derbyshire has lost £11m (£9m by companies, £1.6m in local government) and South and West Derbyshire has lost £12m (£10.8m by companies, £1.8m in local government) through procurement fraud.
It is recognised that 20 per cent of all spend by organisations is unmanaged and often un-contracted, and so at risk to procurement fraud, the second most frequently reported form of economic crime.
The impact of practices such as deliberate bid rigging and rogue spending includes increased and unnecessary costs, reduced profits and ultimately higher prices and bills passed on to consumers and taxpayers.
blur Group, whose cloud software and managed services platform helps companies and councils eliminate waste and inefficiency in their procurement processes, examined data for all areas of England.
blur Group CEO Philip Letts says while organisations have got to grips with direct spend in recent years, there is still a huge problem with controlling non-direct spend, including areas like hiring professional services and consultants. It means businesses are at risk of losing out to competitors already tackling the problem and councils face added cost pressures and accusations of inefficiency at a time of tough financial settlements from central Government.
He said: “The figures are shocking but Derbyshire is not alone on this issue. As well as private sector companies wasting millions of pounds of their own potential profit and operating under a tighter financial burden, a major aspect of procurement fraud falls within the public sector which means taxpayers’ money is being wasted too. This part of an organisation’s spend is largely unmanaged, meaning many are not even aware that the issue is so prevalent.”