The Office of Government Commerce (OGC) and the public sector procurement agency, Buying Solutions, will move to the Cabinet Office where they will form part of the Efficiency and Reform Group.
Government operations such as procurement, project management, IT and Civil Service workforce and reform functions will be under one roof.
According to the government: "The Efficiency and Reform Group will have a strong mandate at the centre of government to ensure departments work together to quickly tackle waste and improve accountability across all these areas."
Sir Peter Gershon will take charge of procurement issues. He said the government "will need to be creative and innovative in order to make a real difference and look at new ways of working".
Dr Martin Read, who last year led a government review on back-office operations and IT across the public sector, said cost reduction will become a fundamental management objective in the public sector.