In 2003, the NAO found that the Prison Service's procurement function was "fragmented and costly to deliver". In a new report, it says the Prison Service has implemented a new procurement strategy, led by a new centralised professional procurement team backed up by regional purchasing units, which negotiate central contracts for a range of goods and services.
The Prison Service admitted however that its Oracle enterprise resource planning system is capable of providing more reliable management information and better information to suppliers.
The Prison Service has, up to now, maintained a database of catalogues manually. But at the end of last month it introduced a new function on its Oracle system, which aims to improve the automation and control of this process.
At the same time, the Prison Service has introduced a shared service centre to provide administrative functions, including purchasing, for prisons.
The implementation of these reforms has enabled the Prison Service to make significant savings in both purchasing and administrative costs, the NAO said.
As a result of the changes, prisons now receive more consistent supplies of goods and services, often at much lower prices than previously.
"The Prison Service is still capable of making further savings. In the near term it should concentrate its efforts on bringing more expenditure under the remit of its nationally negotiated contracts," the report says.
Tim Burr, head of the National Audit Office, said, "The Prison Service has made real progress in how it buys goods and services for prisons throughout the UK.
"The service spends around £450m a year and is securing a good deal for the taxpayer in using that money. It could do better still by extending the new approach to the whole of the organisation."