Select Committee on Treasury Appendices to the Minutes of Evidence


Memorandum by the Department of Trade and Industry


  1.  This memorandum provides evidence for the Treasury Sub-committee on the use made by the Department of Trade and Industry (DTI) of the Office of Government Commerce (OGC). The Sub-committee is inquiring into the work of the OGC and invited DTI to submit written evidence on the use it makes of the OGC and the services it provides.


  2.  OGC was launched in April 2000 as an Office of the Treasury, funded by its own Parliamentary Vote and responsible to the Chancellor of the Exchequer. It inherited responsibility for the provision of a broad range of services previously offered by the Treasury's Procurement Group, the policy arm of the Treasury Taskforce on PFI, and three Executive Agencies: The Buying Agency (TBA), Property Advisers to the Civil Estate (PACE), and the Central Computer and Telecommunications Agency (CCTA).

  3.  DTI is engaged, with varying degrees of involvement, across the whole spectrum of OGC activity. OGC sets the direction for central Government in undertaking commercial activity. DTI delivers many of its business objectives by contracting with second and third parties, including most of our services to industry and to the public. Our policy responsibilities in trade and industry mean that we recognise the importance of a consistent approach in delivery, and hence the importance of the role of the OGC.


  4.  At the highest level, DTI has a seat on the OGC Supervisory Board chaired by the Chief Secretary. Departmental representation is at Permanent Secretary/Accounting Officer level. DTI is represented by Robin Young. The aim of the Supervisory Board is to ensure that the strategic direction of the OGC meets the needs of central Government collectively.


  5.  DTI also has a seat on the OGC Chief Executives Advisory Group. This Group deals with commercial / procurement strategy for government, specific areas for action and the strategies adopted to take forward those actions. Through this Group, OGC consults Departments on strategy and the priorities within it, and Departments influence the way these are agreed and progressed.


  6.  OGC are the custodians of procurement policy in central Government. DTI receives guidance and direction from OGC on procurement policy issues for promulgation across DTI, its Agencies and NDPBs. Where appropriate, OGC consults Departments on procurement policy issues. DTI also consults OGC on its own policies which have a commercial impact, eg on Small and Medium Enterprises, ethnic minority businesses and state-aid rules. OGC acts and negotiates on behalf of Government on EU public procurement Directives and the incorporation of those Directives by regulation into UK law. DTI consults OGC on the Directives and their application. In turn, OGC consults Departments to ensure that, as far as possible, Departmental needs are met and that the positions OGC adopt in negotiation reflect the business needs of UK Government. Procurement policy and EU issues can require input and advice on legal issues from lawyers. DTI lawyers consult OGC lawyers as appropriate.


  7.  OGC have the leading role in Government for the development, sharing and promulgation of best practice in commercial activity. Existing guidance issues by the former Central Unit on Purchasing is being reviewed for currency, consistency and ease of use and again, Departments are being consulted. There is a greater emphasis now than hitherto on the adaptation of private sector practice where this can provide added value in a public sector setting. The best practice issues being addressed are wide ranging:

  8.  As part of strategic supplier management, Peter Gershon, OGC's Chief Executive, has established top-level review meetings with the key suppliers to Government. DTI feeds into this process where the supplier is critical to DTI's business, eg ICL or Consignia (former Post Office). ICL is part of the Unitas partnership to whom DTI's IT provision is outsourced. Consignia is running a one-stop shop pilot for customer services by Government. DTI is represented on the Consignia User Group, resurrected by Peter Gershon to improve service delivery by Consignia to Government.

  9.  A "Gateway" process has been introduced to address the number of high profile failures in Government projects, particularly in IT and construction. The process, adapted from private sector practice and the McCartney review on IT projects, consists of a series of peer reviews or "Gateways" through which a project must successfully pass before proceeding to the next stage. The process so far has been very successful, highlighting issues such as the adequacy of project resources and project management skills, and the realism of timescales. These issues are not always comfortable matters to address, but airing them through the process should lead to higher success rates across Government projects as a whole. DTI has found the Gateway process very helpful for its own projects, eg on the re-tendering of our contracted-out accounts service.

  10.  A number of areas of supply, common across Whitehall, have, in consultation with Departments, been identified as areas for "quick wins" in achieving better value for money by aggregating the needs of central Government, establishing contractual arrangements with selected suppliers led by the major user Department, and making them available for use by other Departments. Of the areas covered so far, DTI is using the Vodafone contract for mobile phones, and uses Expotel who are contracted for hotel accommodation. DTI also use some of the supply frameworks established by OGC Buying Solutions (formerly TBA), the trading arm of OGC.

  11.  A key area for common supply is management consultancy. A recent NAO report on Government's use of external professional services has led to proposals by Peter Gershon to revise the referral levels to Ministers on the use of external consultants, focusing particularly on non-competitive supply. Subject to the outcome of Peter Gershon's consultations, we will be putting his proposals to Ministers. OGC will establish Government wide contractual arrangements with common consultancy suppliers to Government, the first tranche to be identified by end-December. (Management consultancy had been identified as a "quick win" area before the NAO report was published.) All of this is consistent with DTI's own commercial strategy plans. DTI also uses S-CAT and G-CAT frameworks managed through OGC on behalf of Government in the IT/IS area.

  12.  A Procurement Excellence Model has been developed by OGC, based on the European Foundation Quality Model. This provides a benchmarking system for Departments to compare themselves with OGDs across a range of areas of performance on an "innocence to excellence" scale. The information accruing is stored and brokered on behalf of OGC by CMPS (Civil Service College). DTI are users of this system.

  13.  Value for Money measures have been developed by OGC to enable measurement of the £1 billion VFM improvements to be achieved across central Government over a three-year period. Like OGDs, DTI is actively participating in this exercise.


  14.  DTI has ministerial and policy responsibility for e-Commerce and competitiveness, giving a lead to industry and across Whitehall on e-Business. Part of doing business electronically is e-Procurement, being led in Government by OGC, so DTI is fully engaged with those initiatives. OGC have engaged a number of Departments to pilot test e-Procurement solutions and a separate system for electronic tendering. DTI is itself an OGC pilot Department for both e-Procurement and e-Tendering. The e-Procurement pilot in DTI is assisted by resourcing from OGC, these developments being of mutual benefit to DTI and OGC. DTI is represented on the OGC led Cross-Departmental E-procurement Advisory Group.


  15.  The Department, its Agencies and executive NDPBs, are relatively minor players in PFI/PPP, with eight signed projects. The Department is a member of the PFI/PPP Interdepartmental Group which is chaired by OGC. It consults OGC about specific issues arising from its projects and matters of general policy concern. It also provides OGC with input on various policy matters concerning the development of PFI/PPP and the statistics required by Parliament on a twice yearly basis.


  16.  In the recent round of Machinery of Government changes, DTI has inherited from former-DETR, responsibility for sponsorship of the construction industry. There will now therefore be newly forged links between DTI and OGC on best practice in construction. OGC and its predecessor CUP, led, with DETR, on major reviews of construction industry practice.


  17.  OGC manage the Government Procurement Service (GPS) for procurement practitioners across central Government. DTI has a seat on the GPS Management Board which addresses issues such as skills development, training, qualifications, recruitment and retention, remuneration and career opportunities. Examples of some of the major issues currently being addressed are project and contract management skills shortages, the broadening and synthesising of commercial skills in Government through a Commercial Skills Strategy, eg mainstream procurement, construction/building and facilities management, IT/IS procurement, and PFI/PPP and financial skills. The issues facing DTI on these are replicated across many Departments, so a collective approach, where that can be achieved, is highly beneficial. DTI seeks to ensure representation at conferences, seminars and workshops facilitated by OGC for the benefit of departmental staff.


  18.  DTI acts as a conduit on the flow of information from OGC to DTI Agencies and executive NDPBs. Similarly, information to be fed back to OGC from those bodies is collated and co-ordinated by DTI. OGC has recently put in place a structure of customer managers, to provide single points of contact for Departments to improve the interface between Departments and OGC and to "troubleshoot" as necessary. From DTI's point of view, this has proved to be a very positive move given the breadth of activity which the Department is now engaged in with OGC.

5 November 2001

previous page contents next page

House of Commons home page Parliament home page House of Lords home page search page enquiries index

© Parliamentary copyright 2002
Prepared 23 May 2002