1. Public Sector Efficiency and
Procurement
David Shields
February 2014

2. Efficiency and Reform Group
Broad Scope of Activities
• Civil Service Reform;
• Public Bodies Reform Programme;
• Commercial Models – including mutualisation;
• Supporting Economic Growth;
• Benefits Fraud and Error Programme;
• Procurement;
• Major Projects;
• Government Digital Strategy;
• Government Property Unit;
• Shared Services;
Procurement was one element of a broader programme of transformation.
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3. Transforming Government Procurement – Scale and
Complexity
Total procurement expenditure is approximately £190bn per annum.
Spend categories are as diverse as defence equipment, medical supplies, energy,
adult and children's care services, waste management and construction.
There are over 40,000 separate organisations, including schools, district councils,
GP surgeries, local authorities, devolved administrations (e.g. Scottish
Government) to large Central Government Departments such as Ministry of
Defence and Department for Work and Pensions.
75% of procurement expenditure is in the most diverse and organisationally
complex part of the Public Sector with 25% in Central Government.
Very limited examples of collaboration or data sharing across the Public Sector
especially in procurement, e.g. over 13,500 separate OJEU’s per annum.
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4. Transforming Government Procurement
Governance / Leadership
Ministerial Leadership – Francis Maude Minister for the Cabinet Office;
Public Expenditure Committee – jointly chaired by Minister for the Cabinet Office
and Chief Secretary to the Treasury.
Chief Procurement Officer post established, supported by,
Procurement Delivery Board – major Departmental Commercial Directors who
oversee and lead Central Government Procurement.
Non-Executive Directors (NED’s) Roles across Departments and other Public
Bodies – a formalisation of the roles of NED’s with a particular focus on
procurement and the successful delivery of major projects.
Government Procurement Service established as the primary delivery organisation.
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5. Transforming Government Procurement – Key Policies
(1)
At the beginning of the change programme there was a general rationalisation of
Government Policies around procurement to provide greater focus on fewer key
areas:
Centralising the procurement of common goods and services
• Mandating the buying of common goods and services using Government
Procurement Service (the largest UK Buying organisation);
• Spend under management increased from £7.6bn to £11.4bn in 2 years;
• Total savings delivered first 3 years £6.9bn.
Strategically Managing Major Government Suppliers
• Engaging with the top 40-50 major suppliers as ‘the Crown’ / single customer
entity;
• Approximately 60% of expenditure is managed via 100 suppliers;
• Establishing the Crown Commercial Representatives to provide commercial
leadership in managing these relationships;
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6. Transforming Government Procurement – Key Policies
(2)
Supporting SME’s
Crown Representative for SME’s – single point of contact for SME issues;
25% goal of all Central Government spend to be channelled to SME’s;
Prompt payment for SME’s;
Solutions Exchange;
Reduce the need for PQQ’s and standardise PQQ’s deployed.
Transparency
Mystery Shopper – enables suppliers, customers and the public to complain or
question any specific procurements or commercial behaviour;
Publication of procurement spend data;
Contracts Finder – publication of contracts over £10,000.
Improving Capability
Commissioning Academy – whole system delivery, outcome based activity;
Major Project Leadership Academy – improving major project management skills;
Lean Procurement – using lean techniques to reduce waste in procurement cycle.
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7. Transforming Government Procurement – Controls
To support the transformation programme and provide greater central assurance
and oversight a comprehensive series of controls and authorisations where
established in the following areas:
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Advertising, marketing and communications;
Strategic Supplier Management – including disputes;
Commercial Models – including outsourcing and establishing new organisations;
ICT expenditure;
Digital Service deliver- including ID Assurance;
External recruitment;
Consultancy;
Civil Service Learning;
Property – including lease renewals and disposals;
Facilities Management;
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8. Implementation
Implementing this transformation of procurement required the following critical
activities:
• The establishment of a clear Operating Model across the Public Sector;
• An effective buying organisation with improved capability and performance to
operationally deliver new agreements, manage contracts, more effective
management of suppliers. This is now the Commercial Crown Service;
• Establish revised processes and procurement policies;
• A more capable and flexible set of procurement professionals;
• Great transparency of Government expenditure and the ability to effectively
utilise this data in driving policy and operational decisions;
• Investment in leading class technology based solutions;
• Improved performance management and transparent reporting across the Public
Sector;
• Category management addressing the totality of Public Sector expenditure.
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9. Operating Model
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10. Technology – Efficiency, Transparency and Change
A critical enabler of the transformational change was the use of best of breed
technology / service providers
Technology needs to be implemented within a clear Operating Model
Technology was used to help drive:
1. Operational efficiency;
2. Improved outcomes;
3. Cultural change;
4. Improved performance management and reporting;
5. Compliance with processes and policies;
6. Highlight new areas for further improvements;
Technology also enabled greater evidenced based delivery which was completely
auditable
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11. Technology Road Map
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12. Bravo Solution – Spend Analytics
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13. Lean Procurement Process
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14. Significant Operational Efficiency
227 days
91 days
27 days
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Sub-OJEU procurements now run within 14 days
Pre-OJEU processes implemented within eSourcing tool
Target pricing established for all procurements
Each part of the process is actively reviewed using
standard deviation methodology
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15. Government Procurement Service
Key Facts
2010/11
2011/12
2012/13
Spend (£m)
7,602
8,430
11,441 (50.5%)
Savings (£m)
1,714
2,504
2,726 (59.0%)
Operating surplus (£m)
6.69
12.39
11.17 (67.0%)
Total cost per FTE (£000)
77.5
71.9
68.3 (11.9%)
Managed spend per FTE (£m)
19.39
26.91
30.27 (56.0%)
Savings per FTE (£m)
5.5
7.5
7.7 (40.0%)
Supplier commission (average %)
0.49
0.42
0.33 (32.7%)
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16. Impact
There has been a positive change in the way procurement is being managed
across the Public Sector:
• Improved delivery of savings;
• Increased efficiency in procurement processes;
• Reduced costs of the broader procurement function across Central
Government;
• Increased central control and assurance over broad areas of
expenditure;
• Transparency of procurement expenditure;
• Improved alignment of procurement policies to broader
Governmental objectives;
• Strategic oversight of the major suppliers to Government.
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17. Contact Details
David Shields
David.shields@Apsiz.co.uk
+447920 768370
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