Memorandum submitted by the Department for Transport, Local Government and the Regions
1. The Treasury Sub-Committee has agreed an inquiry into the work of the Office of Government Commerce (OGC) with the following terms of reference:
how the OGC deploys its resources to meet its aims and objectives; and in this context
to examine its strategies and progress towards achieving its target of delivering £1 billion of value for money improvements from central civil Government commercial activities; and
its role in PFI projects.
2. The Sub-Committee has invited the Department to submit written evidence on the use it makes of the OGC and the services it provides. This memorandum records our views.
STRATEGIC MANAGEMENT OF OGC
3. We generally welcome the creation of the OGC and the work that Peter Gershon is doing to drive forward the commercial agenda across central government. The management structure at board level, including the Supervisory Board, gives departments the opportunity to influence and benefit from the work at strategic level and appears to be working well.
4. The Gateway Review process for major projects has been a particular success. On the evidence of the reviews undertaken so far, the process adds real value and will help us to deliver projects on time, to cost and within specification. We are now working with OGC to develop the concept of gateway reviews for low value projects.
5. OGC work in this area is proving to be of benefit. While it is right to concentrate initially on strategic suppliers, work in this area will need to be extended eventually to include second tier suppliers. Central government is often the major customer, and this presents us with a real opportunity to influence the wider agenda in areas like green procurement and sustainable development.
6. The creation of Buying.solutions within the OGC should create opportunities to generate significant economies of scale in the procurement of goods and services across central government. We make extensive use of the G-CAT and S-CAT catalogue purchasing arrangements for computer hardware/software and consultancy services respectively. They offer ease of use and good value for money, both in terms of price and reduced transactional costs.
7. OGC need to ensure that the agenda takes on board the needs of departments and is properly managed and co-ordinated. A number of earlier central initiatives, including the now abandoned `electronic shopping mall' (initiated prior to the creation of OGC) have led to abortive work in departments.
GOVERNMENT PURCHASING CARD (GPC)
8. The OGC led initiative to introduce purchasing cards in central Government departments has been a great success. Use of the GPC is leading to significant reductions in the processing costs associated with low value purchases.
ESTATES, PROPERTY AND CONSTRUCTION SERVICES
9. The OGC is well placed to provide the strategic overview on property and estates matters necessary to deliver value for money for Government. The former Property Advisors to the Civil Estate (PACE), set up following the 1996 Scrutiny report on the Government Civil Estate and now part of OGC, has an important and continuing role to play in this area, which we fully support and would not wish to see diluted. We also support the key role of the OGC in delivering to the Government construction procurement community the modernising construction agenda.
PRIVATE FINANCE INITIATIVE
10. The OGC Private Finance Unit has a key role in helping set the Government's agenda for PFI, and providing strategic advice, guidance and support to departments, which we welcome and fully support. We would also welcome greater emphasis on OGC's strategic role in assessing key PFI markets and how they might more effectively deliver better value for money.
15 November 2001