A survey of the CBI's member firms showed the public sector was perceived as a poor client which pushed costs up by failing to specify more clearly what it wants to buy.
Of those surveyed, around 70% were involved in council procurement.
Poor practice in public sector procurement wastes resources and hampers attempts to build partnerships between firms and the public sector, the CBI said.
Chris Wilson, executive director of 4ps, admitted excellent procurement across all councils 'would not happen overnight'.
'But there is a strong commitment, a well-defined service improvement programme, and an infrastructure now in place which should deliver practical, visible results,' he said.