LOCAL government is big business and councils spend billions of pounds a year on goods and services.

Now, Best Value Procurement (BVP), in Barnard Castle, County Durham, is cashing in on the growth of e-procurement - the buying of services over the Internet - to help councils across the country substantially cut their costs.

Teesdale District Council - one of the smallest local councils in the region in terms of population and employees - is already making the most of BVP's services to help it to save money.

BVP is the second business to be established by Ken Kyle, after the success of his Telergos operation, founded as a subsidiary of a French company.

He said: "Telergos is a long distance dictation and typing service.

"We transpose dictation for clients in London and elsewhere around the UK, from offices in Barnard Castle.

"It was a French idea that has been doing well since it was introduced to the UK around ten years ago."

Mr Kyle, who graduated in physics and electronics at Manchester University, used his background in IT to establish Telergos in the UK for its French parent company.

He said: "That business can run itself now, so I was looking for a fresh challenge.

"I established BVP with my fellow director, David Horne, in October 2001. We provide councils and their suppliers with an online marketplace to facilitate trade between them.

"We recorded turnover of £500,000 in our first year, but we expect that figure to have increased to £850,000 this financial year."

BVP employs 16 staff at its offices on Harmire Enterprise Park and within the offices of clients across the country.

Those clients include 17 local authorities and 200 suppliers, including the likes of Barnet, Lewisham, Newham, Redbridge and Tower Hamlets councils in London, and Blackpool, Cheshire, Chorley and Preston in Lancashire, and East Riding, Kirklees and Wakefield, in Yorkshire.

"The business is all about developing networks to facilitate intertrading," said Mr Kyle.

"By doing it over the Internet, we can save organisations both money and time spent on paperwork."

"Council employees can currently source, requisition, order and pay for routine goods and services from their desktop PC, using their own Intranet and a simple browser. "Businesses only need to publish their catalogues once and can build up a one-to-one relationship with many customers via the Internet and e-mail.

"The need for any infrastructure development is kept to a minimum."

Mr Kyle is hopeful of establishing a North-East marketplace, along the lines of the operation in London and Yorkshire and Lancashire, within the next year.

He said: "Teesdale District Council is the only council in the region using the service, but we hope others will follow suit in the coming year to help establish a marketplace for the region.

"It is one of those ideas that was developed here, but which took off outside the region. Now we want to give councils in the North-East the chance to use it.

"I'm North-East through and through, and I wouldn't want to base this business anywhere else."

Chris Carveth, a finance officer at Teesdale council, said: "While we are one of the smallest councils in terms of population and employees, we are one of the biggest in the area we cover.

"That makes it important to get the best value we can for our council tax payers, and we regard e-procurement as the way to do this."

He added: "We currently use the e-procurement system to buy stationery and cleaning equipment, but hope to progress that to include computers and IT equipment."

Eventually, Mr Kyle hopes to interest both public and private sector operations in his services.

That could lead to a jobs boost for Barnard Castle.

He said: "I fully expect the staff numbers at BVP to grow substantially with the business. We should be employing in excess of 20 staff over the next few months, and that number could increase still further as the business develops.

"We are looking to interest other sectors, not just councils, in our services.

"Any organisation that needs to buy and sell services on a regular basis can use our operation. Potential clients currently include NHS trusts across the UK."

Mr Kyle said: "We can help organisations procure all kinds of things, from protective clothing, to computer accessories, agency hire and printing services.

"It also boosts the suppliers business. Users of our service have reported seeing their average order value increase. It helps to reduce order bias, with more suppliers having the chance to tender for contracts."

BVP's services are backed by Lloyds TSB e-Markets, which provides the e-procurement technology. In return, BVP acts as public sector e-procurement partner for Lloyds TSB.

Mr Kyle said: "This arrangement provides the necessary commercial assurance and log-term viability for our public sector customers."

Wally Howe, head of emerging services at Lloyds TSB Corporate, said: "Coming from Newcastle myself, I'm delighted to be in partnership with Best Value Procurment, a North-East business committed to delivering excellence and service.

"Together we are the leading provider of procurement services to the local authority market in the UK, a position from which I can only see us going from strength-to-strength."