Administration and expenditure of the Chancellor's departments, 2008-09 - Treasury Contents

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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