Written evidence submitted by the Office
of Government Commerce
Under key goal 1 (delivering value for money
from third party spend) did you, as promised in your Annual Statement
2008 document (P10), identify by end 2008 the target
for value for money savings over the CSR07 years and, if
so, what is it?
The CSR07 target for value for money from
third party spend across common goods and services is £4 billion
per annum by 2010-11 when compared to 2007-08 spend.
Under the Operational Efficiency Programme (OEP), announced in
the budget earlier this year, we anticipate that savings will
be £7.7 billion per annum by 2013-14. This includes
£1.6 billion savings on the collaborative procurement
of IT. These savings were also identified in the OEP as part of
the savings available from work to reform back office operations
and IT.
Did you complete a further Public Sector Expenditure
Survey in 2008-09 (P11) and, if so, what were the main findings?
The PSPES survey of procurement spend for 2008-09 was
completed at the end of October and the results are currently
being analysed. High level results for PSPES 2008, to category
level, will be published in by March 2010.
To what extent are the top contracts within each
procurement category fully compliant with the best value for money
criteria (P12)?
Value for Money calculations for Collaborative
Procurement are performed in strict accordance with Treasury VfM
Guidelines which were published at the start of the CSR07 period.
The way in which benefit is calculated for each deal is documented
and quality assured by a central programme office in the Office
of Government Commerce (OGC), and supported by third party management
information.
Under key goal 2 (delivering projects to
time, quality and coast, realising benefits) have you now rolled
out the "starting gate assurance tool" you were piloting
and appraising during 2008 for new high-risk policy initiatives
(P16)?
OGC formally introduced Starting Gate reviews
from April 2009 after successfully piloting the approach.
To date, 13 Starting Gate reviews have been carried out for
nine departments/agencies with a further six reviews in the immediate
pipeline (ie to end March 10). The OEP recommended that Starting
Gate reviews should be introduced for all major IT enabled projects.
OGC has also introduced a radically different approach to Gateway
Reviews based on delivery confidence rather than "urgency
of recommendation". It now escalates to the Permanent Secretary
and the National Audit Office (NAO) as soon as a project is reported
as Red for delivery confidence rather than waiting for a second
Red—often with over a year's gap. OGC has also introduced
Assurance of Action Plans (AAP) to assure confidence in the plans
for recovery on projects which are Amber/Red or Red. To date,
10 pilots have been undertaken. Latest feedback from Senior
Responsible Officers (SROs) indicates extremely strong approval
for the new processes and their impact on delivery confidence.
Under key goal 3 (getting the best from the
Government estate) what progress have you made towards your goal
of achieving savings of £1-£1.5 billion per year
in the running of the civil estate (P21)?
The delivery of savings under the High Performing
Property initiative is being calculated and monitored via the
movement in the cost of the central Government estate each year.
This calculation was done for the first time
for the State of the Estate in 2008 (SOFTE) report
that was laid before Parliament on 1 June 2009. The calculation
comprised of using as the first baseline, the cost of the estate
in 2003-04 which was the year that the current drive to improve
the central Government estate started (with Sir Michael Lyons'
reviews of Government relocation and improvements on the management
of public sector assets), compared to the second baseline of 2007-08—the
latest year for which costs were available. The difference between
the two amounts to £532 million which is being scored
as the actual savings achieved since HPP was introduced against
the target of between £1 billion and £1.5 billion
by 2013.
The estate cost exercise is being repeated for
2008-09 and the results will be reported in the SOFTE 2009 report.
Under key goal 4 (delivering sustainable
procurement and sustainable operations on the Government estate)
what progress have you made [during 2008-09] towards reducing
Government carbon emissions, waste arising and water consumption
from offices (P22 of the Annual Report)
The latest performance results, for the year
2008-09, for sustainable operations on the government estate (including
carbon emissions, waste arisings and water consumption) are due
to be published by the OGC in December 2009 (covering the
period 2008-09).
The results for the year 2007-08 showed
the Government receiving a "green" rating from the Sustainable
Development Commission for its progress against four of the major
targets, on carbon from travel, waste arisings and recycling and
on water. However, future progress needed to be urgently made
on carbon emissions from offices, which SDC rated as "amber",
at a total reduction of 6.5% against the 1999 baseline. The
government's delivery plan for sustainable development in government,
last updated in July 2009 showed that plans are now in place
to ensure that the target for a 12.5% reduction is exceeded when
it falls due in 2010-11. A further update will be published in
December 2008.
What hard evidence can you point to, to counter
allegations that you lack the necessary clout to change Departmental
culture?
The powers available to OGC to change departmental
culture does include some mandation of process or delivery but
also includes: influence through transparency; escalation such
as Treasury's MPRG; benchmarking; engagement with the Ministerial,
Permanent Secretary and Professional communities; and importantly
governance of collaborative processes. There are many examples
in each of these categories ranging from the Procurement Capability
Reviews (PCRs) process, through to Collaborative Procurement Category
Boards, and personal objective setting for Commercial Director
community, which I will be happy to discuss at my next committee
hearing.
With respect to the specific example you quoted
of the NAO report on complex procurement I would point out that
the NAO identified a lack of systemic assessment of skills for
projects outside those in the £200 bn portfolio of Government's
major projects. By definition it recognised that there is an assessment
for these major projects. This is an important initiative which
has been developed since the last time the Committee sat to review
OGC. As a result of this process I can assure the Committee that
it is not the case that all of these Major Projects are at risk
through skills and capability gaps and indeed this was recognised
by the NAO in the summary and main body of its report. It also
clearly identified the Departments as having primary responsibility
for skills and capability development, supported by OGC.
There is much to be done but progress is being
made and I look forward to discussing areas for development with
the Committee in the near future.
What are you doing to ensure that the relevant
departments act to address these deficiencies (as identified by
the PCRs)?
Each department has been required to publish,
as part of the PCR process, an action plan which sets out how
the departments will act to address the issues identified in the
Review. I meet with Permanent Secretaries on a six monthly basis
to review action against those plans.
Where the PCRs have identified issues that affect
the government procurement service as a whole, OGC is now in the
process of setting up cross-departmental best practice sharing
groups on key cross-government issues—for example Supplier
Relationship Management.
Has the ruling affected the conduct of subsequent
Gateway Reviews and, if so, how?
The High Court hearing delivered its ruling
in April 2008 following an Information Tribunal hearing in
2007. The High Court quashed the original Information Tribunal
ruling on a point of parliamentary law and ordered that the case
go back to a re-constituted Tribunal. This second Information
Tribunal ruled in February 2009 that the ID cards reviews
should be released since the public interest in the ID cards scheme,
at the time of the initial FOI request, outweighed the public
interest in protecting the Gateway process.
Both the Judge at High Court and the final Information
Tribunal stated that they did not disagree with the Ministry of
Justice working assumption that directs that Gateway reviews under
two years old will, in most cases, have key information withheld
when requested under FOI. The Information Tribunal also stated
in it's ruling that neither it nor the Information Commissioner
believe that all Gateway reviews should be published.
The ruling has not, thus far, materially affected
the conduct of Gateway reviews, nor has it necessitated a change
in the way in which the OGC responds to FOI requests for Gateway
reviews, which remains to follow the MOJ working assumption.
Have your staff cuts since 2007 left you
with insufficient capacity?
I believe that OGC, which currently had a headcount
of around 300 staff, has sufficient capacity to carry out
its functions.
Whilst it is true that plans to enhance the
efficiency of OGC were implemented in 2008, reducing staff by
20%, we have since the OEP created and are well advanced with
plans to recruit teams to address two new collaborative procurement
categories—facilities management and construction—and
the implementation of the Glover report on Small and Medium Enterprises.
What actions have Buying Solutions taken to address
the concerns expressed by the PAC Committee in June 2007?
Prior to the report, Buying Solutions were already
undertaking a major consolidation of framework agreements as well
as concluding that a number of uneconomical frameworks would not
be renewed. During financial year 2008-09, Buying Solutions managed
£5.35 billion of Public Sector expenditure through 80 framework
agreements, whilst maintaining a customer-centric portfolio of
goods and services. During financial year 2009-10, Buying Solution
growth in managed spend to date is 25% higher than the previous
year. Reviewing framework requirements is an ongoing part of our
operating model and is also carried out in the context of the
broader collaborative governance. We aim to balance customer requirements;
operating efficiency and special needs.
Buying Solutions has continued to invest in
both the Government Procurement Card and Memorandum of Understandings
(MoUs) in line with its vision of Savings for the Nation. In 2009 a
revised MoU was signed with Microsoft giving even greater savings
to the UK public sector and work has commenced on a similar renewal
with the Oracle MoU. In addition we have also embarked on a framework
for supported workshops which will enable pubic sector organisations
to acquire goods and services from this specialised sector.
How much did it cost to re-band as Buying Solutions,
and what has it achieved?
The cost of re-branding Buying Solutions was
£28,000. The purpose of the re-branding was to enable the
organisation to differentiate itself from the OGC thereby clarifying
the respective roles of both bodies. In addition it enabled Buying
Solutions to increase the organisation's relevance and support
to the wider public sector and not be seen simply as part of central
government. In terms of achievement, Buying Solutions is in the
process of undertaking a brand tracking exercise designed to measure
awareness and understanding across the public sector which will
give evidence-based achievement data.
December 2009
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