back to article The NHS pays up to NINE TIMES over trade price for commodity kit

The UK’s National Health Service is paying through the nose for low-tech gear, including cables and USB flash drives, according to a poll of IT buyers. The health service came out on top in the league of prosperous procurements across 20 industry sectors, with one head admitting to coughing a margin of 920 per cent above trade …

Backhander

Forget Hanlon's Razor, this is without a doubt corruption.

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Re: Backhander

Or they're just buying their kit from Maplins.

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Re: Backhander

B&Q I thought it was...

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Anonymous Coward

Re: Backhander

Funnily enough, it's actually pretty much the opposite of corruption. You see, if I bought spare parts cheaply on (say) Ebay I could be getting a good deal, or I might be getting a kickback. There would be almost no way for auditors to tell.

So, the public sector prefers to buy from sellers that are prepared to jump through a load of hoops to provide accountability, and can produce glossy brochures showing how much money is being saved.

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Re: Backhander

Forget Hanlon's Razor, this is without a doubt corruption.

Not necessarily. The public sector tend be shit customers with a lot of hoops to jump through adding costs and hassle. They tend to prefer a small number of one-stop-shop suppliers which limits the size of their marketplace - they are not interested in how cheap your pens and pencils are unless you can also supply them with the copier paper, toner cartridges, desk tidies and that oddball size and style of clear plastic wallet that they use for that one job in particular. The likes of Viking can go after contracts like that - the small operation that undercuts everyone else by importing directly from Japan can't.

I've seen government procurement from both sides and the entire bureaucratic process produces perverse results - they are so obsessed with saving the taxpayer money that they end up spending far more than they would buying off the page. The drawn out nature of things doesn't help - 60 day terms still seem to the rule for example. Or a quote given at 2pm may result in an order at 3:30pm in the private sector, but six weeks later for HMG. They still expect that price to be valid so what do you do? You add a little to guard against fluctuations. Featherbedding the quote to reflect additional costs, hassle and risk is not corrupt, it's normal practice.

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Re: Backhander

Maplin? or PC World and their £20 USB printer cables. But they're such great quality, your prints will be clearer LOL.

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Anonymous Coward

Bureaucratic procurement

Because, this:

NHS IT Staff: "We need this IT thing. Here's a link to a reseller"

NHS Procurement: "Here's your quote"

NHS IT Staff: "But, but, this is 3x more expensive than from the company I linked you to!"

NHS Procurement: "Yeah, we know, but we will only buy it through one of our pre-approved suppliers"

NHS IT Staff: "Who charge 3x more?!?!"

NHS Procurement: "Yep. Do you want it, or not?"

NHS IT Staff: "<sigh>. Yes."

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Holmes

Re: Bureaucratic procurement

Who are the sellers and who pre-approves them? There's a story there somewhere.

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Re: Bureaucratic procurement

This is exactly it. And there's no "official" way around it because you can't buy it yourself without incurring the wrath of the procurement departments, and you would never get reimbursed.

Was posting about this on here only the other day - my girlfriends works in the NHS in charge of a lab and has to pay something like £2 each for an AA battery. And gets... an AA battery. Down the road you can get a pack of them for £2, just the same. But you're not allowed to do that.

Somewhere there's a health minister with a procurement company who's getting their percentage on every product and then decrees that you can ONLY go through procurement.

Scumbags.

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Re: Bureaucratic procurement

We are approved to supply, and it's a bloody hard struggle to get approved

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Re: Bureaucratic procurement

"Who are the sellers and who pre-approves them? "

Doesn't really matter, the suppliers are all resellers, and the business model is the same for all of them: Quote for all the core and clearly specified elements of a tender at lower margin than you need/want, in order to win the contract, then make the overall margin by inflating the prices for everything that the customer didn't specify in black and white. That can be fomalised as a ludicrous "non standard request" charge, where the request itself is the profit-earner rather than the actual item, it could be a "variation to contract", or it can just be an extortionate price for the item concerned. And where cr@p-headed procurement and finance procedures mandate the use of approved suppliers, they prevent people using common sense when the organisation is being fleeced.

I work in the private sector, for a very large company who has agreements with a huge telecoms provider and a US based ITO. Both are rapacious b@stards who charge the earth for every one of the multitude of things that our procurement and in-house IT didn't specify at the time, so the NHS may be doing poorly, but its not alone.

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Re: Bureaucratic procurement

>We are approved to supply, and it's a bloody hard struggle to get approved

And so naturally have to make back those costs - that's the whole problem,

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Re: Bureaucratic procurement

Not just the Gov't. In an y huge corporation, Procurement seems to go out of its way (1) to make finding and adding a vendor to the approved list as long and hard a process as possible (2) to make sure the final costs are always higher than just going out and gettign something, (3) making it a long-hard process simply for staff to order something. The only people benefitting are the people on Procurement: they have nice, secure jobs and (at least on one place I worked) featherign their nests with bungs. The corporation did not save money.

I agree that you can't have people dashing off to buy whatever, whenever, but they end up doing so (I bought a lot of equipment on my corporate credit card0 because finally they need it before the heat-death of the universe.

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Re: Bureaucratic procurement

> NHS Procurement: "Yeah, we know, but we will only buy it through one of our pre-approved suppliers"

A couple of FOI requests can make for very interesting responses.

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Re: Bureaucratic procurement

"they have nice, secure jobs and (at least on one place I worked) featherign their nests with bungs"

Proof of that would be rather interesting in this day and age when the Internet means that it can't be hushed up.

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Re: Bureaucratic procurement

"A couple of FOI requests can make for very interesting responses."

Denial of request on the grounds of "commercial confidentiality" is probably the only response you will get.

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Re: Bureaucratic procurement

"Who are the sellers and who pre-approves them? There's a story there somewhere."

As an IT supplier to the govt, you need to fulfill many requirements AND get yourself on a particular "list". It also helps if you have an exclusive contract to supply that kind of kit.

Long story short - you need to be Fujitsu or BT.

Then you get to be their only IT supplier and charge whatever you like.

It is a combination of suppliers being few, the lists and contracts being exclusive and terrible, and "purchase managers" therefore having basically zero flexibility.

And then there is the old trick of "offer us an exclusive suppliers contract for this range of kit and we'll give you this tasty sounding on-paper discount [whilst actually charging you through the nose]"

The whole system is a mess and excludes "small players" who might be more honest.

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Anonymous Coward

Re: Bureaucratic procurement

I worked for a while in an Irish university, where the approved supplier list was nicknamed the "somebody's cousin list".

And the first time I tried ordering something through it, it took so long that I nearly rang them to ask if they were waiting for a bribe.

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> "the products acquired were in all likelihood one-off or low volume purchases"

Isn't this just a case of "we need a twenty-foot network cable to make our £million CT scanner work, can you nip down to PC World and get one?"

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Anonymous Coward

Many, many moons ago, I worked for a few months for a company that supplied cabling, and was horrified to learn that anything sold to the armed forces was sold at three times the normal price. It was supposed to all be tested to a greater than usual standard - but I had good reason to suspect that this wasn't always the case.

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I can believe this

I do a lot of work for the NHS, the kit we supply is reasonably priced

Having said that, If I want a network point or fused spur point, it'll add maybe £3.5k to the project PER Department.

So we supply network cables & a plug on the kit when possible, to save costs for them.

It's not us that's charging for the Network or Power it's their internal works departments.

I required a server provisioned recently in a hospital data centre & the cost was accidently emailed to me, I really could have gone online and purcheased everything we needed for about £6k less.

It absolutely stupid!

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Anonymous Coward

Worked for post ICL Fujitsu

Synstar SLA was "if we have it in stock we met SLA" (even if it was in Denmark)

Fujitsu contracted SLA was 8 hours

They would send Mice by Taxi from Glasgow to London to meet SLA, at Fujitsu's cost.

No, it's not "one off" stuff either, WEY technology charge £16 for a 1metre cat 5 cable if you use them to install their kit, you pay for the kit but the mega cost is for the after support, it's based on the item purchased times the contract period eg £25 divided by 6 (months as no 1 year warranty for commercial purchases) times 60 (5 year contract) equals £250 plus VAT

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Why?

The UK’s National Health Service is paying through the nose for low-tech gear, including cables and USB flash drives

Why on earth does the NHS need flash drives? Almost all data transfers should be internal to the network, so what possible reason can they have for enabling USB ports on equipment?

It ought to be obvious by now that USB ports mean data leakage, so how can they expect us to trust them with our data?

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Re: Why?

Why do the NHS need USB flash drives? Shows how little you know.....

Medical staff often work at different sites managed by different NHS organisations or consultants have to give presentations at conferences. All our USB drives are encrypted and USB ports are protected to stop staff writing to unencrypted drives so there is no risk of data loss.

Our procurement department are fairly flexible, as long as we follow our standing financial instructions we can procure from any supplier for small items and quantities.

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Re: Why?

Medical staff often work at different sites managed by different NHS organisations or consultants have to give presentations at conferences

So no reason at all then.

There's literally nothing there that requires data to be loaded onto portable storage, nothing at all. Shows how little you know...

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Re: Why?

@LucreLout You're assuming that the NHS is a lot more joined up than it really is. Once you get past the Department of Health, it's really many much smaller organisations (some pulic sector, some private), operating independently. Previous efforts at getting it all better joined up have involved flinging loads of money at external consultancies, and watching them fail.

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Def
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Re: Why?

If the alternative is leaving gaping wide holes open on the Internet (which you know is what would happen), then let them use flash drives.

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Re: Why?

So a Consultant is giving a presentation to a hall of Consultants in a University. The presentation contains patient information and the patient has given consent. How does he get the presentation onto the PC in the lecture theatre in the University given that you cannot transmit any PID to non NHS mail approved mail addresses?

Perhaps I have missed something within the IT world over the past 20 years?

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Re: Why?

gh4662

So a Consultant is giving a presentation to a hall of Consultants in a University. The presentation contains patient information and the patient has given consent. How does he get the presentation onto the PC in the lecture theatre in the University

Trivially, as it happens. The data doesn't need to go onto the PC. The PC, or an NHS laptop plugged into the screen, remotely connects to a DMZ where the presentation is securely stored. Thus, the laptop can be lost without exposing the data. Alternatively a secured laptop with encrypted drive and encrypted data could be provided for the demonstration and wiped upon return. It really is how everyone else does it.

Perhaps I have missed something within the IT world over the past 20 years?

Sadly, I would have to agree that you have indeed missed much. In more than 20 years I've never needed to expose confidential data to loss or unauthorised access to give a presentation. Prior to that, the last time I was forced to do so was during my time in the public sector, who had a consequence free approach to data loss, because nobody was ever fired for losing it.

@Lamont Cranston

You're assuming that the NHS is a lot more joined up than it really is. Once you get past the Department of Health, it's really many much smaller organisations

Which, of course, begs the question of how the data, once shared, can be secured. The short answer is, it can't, so it shouldn't be leaving the network in which it was provided and should be retained for the minimum time required to fulfil the purpose for its provision.

@Def

If the alternative is leaving gaping wide holes open on the Internet (which you know is what would happen), then let them use flash drives.

I know it would happen in the same way you know the USB ports won't be secured properly, the data on the USB won't be encrypted properly, and that the data will be lost. The answer, if our data cannot be shared securely, can only ever be to not share it.

It's no good howling about privacy when the NSA come snooping while the NHS leak said data to all and sundry because proper industry practices are deemed too hard for their staff to follow.

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Re: Why?

This assumes they are:

A: allowed to connect their laptop to a network in the building they are giving the presentation

or

B: have mobile coverage a lot of buildings in our County have very poor mobile coverage

Brilliant, wish I had thought of this........................

And once they have achieved either of the above they might not be allowed to connect it to the projector in the lecture theatre

Unfortunately in the real world in which we work both of the above are real possibilities

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Re: Why?

allowed to connect their laptop to a network in the building they are giving the presentation

If the university want the speaker to present then they'll have to allow it. Exposing confidential patient data to all and sundry is NOT the answer you're looking for. It is never the answer.

have mobile coverage a lot of buildings in our County have very poor mobile coverage

Why on earth would the need mobile coverage? The confernece room will have network connectivity that they can use to remote into base.

And once they have achieved either of the above they might not be allowed to connect it to the projector in the lecture theatre

Allowing them to expose patient data to the outside world, which inevitably happens with flash drives and usb access, is not the answer. You can reword the qeustion as many times as you wish and it will never be the right answer.

All universities have sufficient access that remote connection using their pc to your base, or plugging in a heavily encrypted and secured laptop to their projector are ALWAYS possible. They have professionals come give guest lectures there and we would never expose confidential information to the risk of loss using a flash drive.

Your attitude is one of dangerous convenience as opposed to professional reality. You are exactly why we need stringent penalties for public sector data loss, beginning with imprisonment.

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Anonymous Coward

Have had first hand experience

I was once asked by a part of the NHS to provide a quote for some IT widgets.

Quote provided to NHS procurement officer, a little bit of email ping-pong ensued whilst we discussed specifications etc.

NHS procurement officer went silent for a week.

He then came back to me with an email that said "are you sure the price you gave to us is not too low ?"

These particular IT widgets have limited distribution in the UK, so there's only one disty and I know who they gave the other quote to (one of the "usual suspects" for government contracts, surprise surprise).

So yes, I don't dispute the content of the original article at all. Government entities are bending over and allowing themselves to be royally screwed by the same old suppliers, and in some cases such as mine, they do so in full knowledge that's whats happening.

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Bring purchasing in-house

The only way forward is to bring IT purchasing and decision making in-house so that control is at a more local level.

My main driving factor is to install and use robust and secure systems that at the same time are financially viable long term and initially priced correctly. This is not just for big items but right down to peripheral level including cables etc. The cost savings are not always obvious which is why research needs to be done when changing or selecting a supplier. You may have to self fund an initial item or system but this may allow you to negotiate better rates and prices moving forward and all contracts and warranties are then in your own name.

Looking to work with other similar organizations that are also up against the same issues with regard to IT costs may allow you to join forces and increase your buying power even further.

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Anonymous Coward

Re: Bring purchasing in-house

Looking to work with other similar organizations that are also up against the same issues with regard to IT costs may allow you to join forces and increase your buying power even further

So that in a few years your purchasing process has become a massive, complicated bureaucracy that is producing the opposite of the intended outcome.

Rinse and repeat.

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Re: Bring purchasing in-house

I totally agree with this posting, we've been saving money for companies needing expensive Network Infrastructure for 20 years and I've seen it all, the ONLY reason the NHS is paying too much for cheap stuff is because the rules the NHS created themselves don't allow for competitive quotes, the 3 quote rule doesn't work when they are all quoting the same Brand New latest and greatest and all the prices are within 10 pence of each other when there should be 20 or 30 quoting for the business, wouldn't take long for the NHS costs to come down, the money has run out and you need to deviate from the old procurement rule book, in the private sector you wouldn't be in business very long if you copied the NHS's way, its so simple its laughable, i'm stunned there isn't someone there who already knows, who is standing in the way making excuses?

Read this and mail me if you want because i wrote it http://www.gocomsys.com/14-dont-outsource.html

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Simple answer - procurement doesnt give a **** when they arent spending their own budget.

In my experience, there seems to be a "cash cow" attitude to public sector customers. Once you are in the framework to supply, it's win-win (and win again)

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Facepalm

Do'h

Over charging?....never...who'd do such a thing?................................EVERYONE

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Anonymous Coward

Charge cards

The usual answer to this is to use corporate charge cards (also known as company credit cards) so that people can simply go into a supermarket and buy a couple of AA batteries, or get on Amazon and order a cable. Some organizations are terrified that this opens a floodgate to unauthorised spending, but this can be easily controlled, and the saving on prices (to say nothing of the saving on purchase orders and small payments) is usually much more than any leakage of this sort.

Maybe I'm biased. A few years ago I built a system designed to facilitate the use of charge cards. Charges were routed to the cardholder for verification that the expenditure was real, and to somebody else who approved it. It's fairly easy to spot fraud - it collaredsomeone who used their corporate mobile to call premium rate quiz lines (the system also handles mobile phone bills).

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Not just NHS

I remember back in the day at a multi-national I worked at we were paying £300 for a £30 32MB SIMM and having to wait 4 weeks for delivery when Crucial could deliver next day.

I questioned this with one of the IT Contracts/Procurement team. He went red in the face and I was told to "Shut up and don't mention it again!"

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Re: Not just NHS

> I questioned this with one of the IT Contracts/Procurement team. He went red in the face and I was told to "Shut up and don't mention it again!"

Again, once you put in a FOI request the results can be....... interesting.

Alternatively you can just pay a visit to your local constabulary and mention that you believe that systematic fraud in excess of £threshold is happening at $ORG and you'd like to stay anonymous.

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Anonymous Coward

Re: Not just NHS

@Alan Brown

doesn't work so well when you work for the police and see this level of over charging in their procurement departments.

One helpful guy in procurement back in 2006 told me it cost the organisation ~£70 per order & more if the retailer was not on an approved list, so that £2.50 cat 5 patch cable actually cost £72.50 so better order a load of stuff in one go not just piece meal. He was advocating corporate cards at the time but was meeting heavy resistance from upper management due to the mentality that everyone would want one and then abuse them despite those that would have had one could already spend upto £1k with no justification.

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Re: Not just NHS

Alternatively you can resign, which will achieve the same end, but without making you unemployable in your chosen industry.

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Re: Not just NHS

True. They quote a notional cost of £50 to add a new supplier to the books, all the companies house look ups and credit checks etc etc. staff time etc etc.

Then they hire someone else who goes through the suppliers list every year and removes anyone who hasn't had an order placed in that time, so the odd thing here and there which you only need every few years or so like bespoke LTO cart labels, you have to go through the whole process of getting them approved again...

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Anonymous Coward

Old news

Sadly it isn't Backhanders. There is an organisation called NHS procurement or something similar. I used to work with it. All spending from any PCT is done via them, and you HAVE to. no one is allowed outside that channel.

They are meant to allow cumulative buying, blk buying and great control of spending because they have the skill set to do tenders, as well as review across a wider area.

What actually happens is you spend 135 quid on a 35 quid printer from PC world because they also charge the PCT in an internal market for the effort of buying it for you.

My IT Director in the end would go to PC world, buy it and then claim it back on expenses to save money (I know you heard that right) Then via internal Finance shenanigans the expenses came back from the correct budget pot for that IT spend.

Burnham was to blame then, but after Cameron got in the CCG's have no oversight and cna spend what they want. Like 6 plasma TV's for their surgery, 3 made it to the surgery, 3 were then found to have made it to the GP's house. (Kid you not.) But you can't do a GP for anything other than killing patients, fraud was something we could do in a PCT, now. Well no one watches the watchmen.

And one inspector when investigating that GP for fraud during an audit got back from the GP to find his senior manager asking him not to dare to ask a GP questions like that. (the question being if 3 are here, why are 3 now at your house?)

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Anonymous Coward

Re: Old news

That's how providers get paid in the NHS. They bill the fund holders as much as they can get away with.

When they "code" procedures some hospitals have been known to use "general" codes as they get paid more for those. Obviously then making any analysis of their data for business intelligence reports completely null and void.

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Re: Old news

"And one inspector when investigating that GP for fraud during an audit got back from the GP to find his senior manager asking him not to dare to ask a GP questions like that. (the question being if 3 are here, why are 3 now at your house?)"

Ah, so the fraud activity is organised?

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Re: "use "general" codes as they get paid more for those"

There's little to no evidence of that actually happening, though.

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Meh

What is "trade" price anyway?

Is this the price you or I might pay for an item with a standard warranty? How much would the 4 or 5 years on-site service warranty cost over and above this "trade" price. You know, the on-site service & repair that is more or less an essential part of all government framework purchases.

This, and the established pricing set up to 5 years in advance probably explains most of not all this "discrepancy". The 900+ per cent age[sic] figure is almost sure to be a one off, very low value item being used as click bait. Someone bought in a 1GB pendrive at 2010 prices.

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Anonymous Coward

Public sector in general

I've only worked in public sector, but in the various places I've worked, the finance/procurement departments *claim* to be working to protect the organisation from fraud and suppliers ripping us off. But they put so much red tape in the way, they made purchases cost so much more.

Want to raise a purchase order: Certainly, that'll take a week.

Want to buy from someone not on the finance system? You'll need to justify it.

Want to go down the shop to buy something because it's cheaper and quicker? Not allowed.

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Re: Public sector in general

I once got in trouble for putting in a purchase order requisition form for a pad of purchase order requisition forms...

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