The Office of Government Commerce (OGC) is to lose half its staff as a result of an overhaul announced by the Treasury this weeky.

Peter Fanning, the OGC’s deputy chief executive, said about 200 jobs would go between now and 2011 – the end of the current Comprehensive Spending Review period. He added that most of the redundancies and transfers to other areas of the civil service would happen this year.

The overhaul will bring the independent office, which advises on public procurement policy, closer to the Treasury, but strip it of its procurement and project management role for local government. It will also transfer responsibility for the efficiency savings programme to the Treasury.

The review, announced on Tuesday by John Healey, the financial secretary, follows criticism that spending departments ignored the OGC’s advice. Fanning acknowledged the point, but said: “The ambition is to transform government procurement.”

He said OGC teams would be sent to departments to review their abilities. A procurement career path would be established and commercial directors would be appointed to department boards.

The OGC will also advise the new Major Projects Review Group, which has the power to stop failing schemes during the tender process.