House of Commons - Government Procurement - Public Administration Committee

Government Procurement - Public Administration Committee Contents

5 A strategy for reforming government procurement

83. In August 2010, the Prime Minister commissioned Sir Philip Green, Chief Executive of the Arcadia Group, to conduct a review of government efficiency. The Green Review, published in October 2010, found that the Government was "failing to leverage both its credit rating and its scale" and that there was inefficient buying by individual departments, with significant price variations across departments for common items, such as printing or computers.[128] The Review highlighted a fundamental problem: that "Government acts as a series of independent departments rather than as one organisation" and that "there hasn't been a mandate for centralised procurement".[129] We discuss the efficiency of the Cabinet Office "mandate" later in this report.

84. Responding to the findings of the Green Review, the Cabinet Office has established the Efficiency and Reform Group (ERG) to coordinate initiatives to increase efficiency across Government, and re-established the Government's central buying agency, the Government Procurement Service (GPS), formerly known as Buying Solutions. The Cabinet Office has set itself a target of reducing the £13 billion cost of central Government's procurement of common goods and services by 25% over four years from 2009/10.[130]

^85.The Cabinet Office's written evidence to us stated that it was implementing reforms on three broad fronts:

a) buying common goods and services, with the GPS expanding its role in centrally managing procurement spending;

b) strategically managing major suppliers to enable Government to act as a single customer; and changing procurement policy "to simplify processes to make them swifter and cheaper"; and

c) making it easier for businesses, in particular small and medium-sized enterprises (SMEs), to do business with Government.[131]

86. The Chief Procurement Officer, Bill Crothers, explained in oral evidence his objectives for reform: "One is spending less—getting the inefficiency out and getting better performance. Another objective is better competition. Competition is key […] A third is sustaining the change".[132] The Chief Operating Officer for Government, Stephen Kelly, reinforced this position. He argued that "overall what we want is to ensure that we continue to improve public services to citizens but at a much reduced cost".[133] Mr Kelly went on to emphasise the importance of a "much more consistent, consolidated, and holistic view of the supply market place".[134] Among the future plans for procurement reform were "expansion of the Crown function for […] larger suppliers" and continued focus on "aggregation and volume purchasing acceleration". [135]

87. The Cabinet Office also has plans to expand the role of the GPS beyond management of central contracts for common categories of goods and services. The GPS's performance review for 2012/13, published in May 2013, comments that "one of the key ambitions for next year is the delivery of an end-to-end managed service offering whereby GPS will undertake responsibility for departments' procurement activities. This will start with Cabinet Office and HM Treasury transitioning their in-house procurement functions to GPS, followed by other departments".[136]

88. A number of witnesses highlighted however that the Cabinet Office has not published their strategy for how procurement across Government and the public sector should be organised. Andrew Coulcher, Director of Business Solutions at the Chartered Institute of Purchasing and Supply, told us that there was, as yet, no "blueprint for procurement success".[137] He said that:

[...] there needs to be an overarching view of how government procurement needs to organise itself [...] I do think we need to be far more joined up than we are at a national, regional and local level in order to deliver a service that is more capable, provides better outcomes and better value for money, and is more sustainable than it is today.[138]

89. We received a mix of views on what that blueprint might be and in particular what role might be played in the future by the Government's central purchasing agency, the GPS. The Government's Chief Operating Officer endorsed in his evidence to the Committee an expanded role for the GPS, with greater formalised control over the procurement of all but the most complex and unique items purchased by Departments. He argued that "it would offer much better value for the taxpayer, much better transparency, better data, better negotiating power, better competition, and it would be better for Departments".[139] Francis Maude, agreed that:

[...] there is a case for a much more cohesive Crown commercial service [...] we are talking about whether we should end up with something much more like a Crown commercial service, which would be more cohesive with a stronger mandate to the centre, and where we would not have the same sort of duplication that we have currently across the system.[140]

90. He nonetheless also implied that the roles and responsibilities of the Cabinet Office versus that of individual government departments within a reformed system of central government procurement remained under discussion. He said:

[...] we are talking about a much more unified and cohesive service; it is not a single agency. Things would still be done in some departments, but smaller departments should not have their own commercial service [...] I do not think that there is a standard, one-size-fits-all approach.[141]

91. The procurement consultant and former civil servant Colin Cram argued for the establishment of a central Crown procurement agency with far-reaching powers to organise, coordinate and aggregate procurement spending across the public sector. He told us that "an integrated, coherent procurement organisation for public sector procurement" would "get rid of this silo working, not only within central Government, but right across the public sector".[142] The Chartered Institute of Purchasing and Supply provided some support to Mr Cram's case, stating that:

[...] the notion of a centrally managed professional procurement capability could deliver other direct and indirect benefits such as: a common approach to professionalization [...] Improved resource management [...] Alignment on common processes, contracting methodologies, tools and improved data management.[143]

However the Institute echoed the view of other witnesses pointing out that there are limits to the benefits of centralisation. They stated that other forms of consolidation of spending such as "the use of consortia, shared services and commissioning" and "cross-Department working" could be very effective.[144] Peter Smith was more critical of the idea of a Crown procurement agency, pointing out that its size and complexity would necessarily make it inefficient, stating "how difficult and time consuming it has been for the Government Procurement Service to put together frameworks in areas such as professional services to satisfy just central Government".[145]

92. The Government has failed to set out a clear strategy for public procurement. There remains a lack of clarity about the Government's longer term policy for the consolidation of government and wider public sector procurement. The future role, responsibilities and accountability of the Cabinet Office and the Government Procurement Service and its relationship with government departments and the wider public sector also remain unclear. The issue of accountability will be addressed in much more depth in our inquiry into the Future of the Civil Service but failures of procurement or contract management are ultimately a failure of Government whatever the failures of contractors may be. The Cabinet Office should issue a clear strategy on the organisation of procurement across Government and the wider public sector which sets out its objectives for procurement and how and when they are to be achieved, in response to this report.

Data and Management Information

93. We heard in evidence that good data and management information was vital if the Government was to make defensible, evidence-based decisions on what the structure of Government procurement should be.[146] The Chief Procurement Officer told us that sharing data—for example on spending, prices, margin and performance—and developing robust analysis across government departments was vital to hold suppliers to account and ensure the best deals can be reached.[147] This view was echoed by the Chief Operating Officer, who said that "to act in the best interest of the taxpayer, we have to have really good quality management information and data at the centre [...] then we need to have capability and really good analysis".[148]

94. Historically, access to data on procurement spending across Government has been poor, and the need for progress on improving cross-government procurement data has long been recognised.[149] Sir Peter Gershon's 1999 review of civil procurement pointed to the lack of "good common measurement systems" across Government and hence the lack of appropriate data on which to base strategic decisions.[150] To remedy these shortcomings, Gershon recommended the establishment of the Office of Government Commerce to act as a central organisation to coordinate procurement policy. This body, he suggested, should define, in conjunction with departments, "common ways of recording what is bought, the associated prices and sources of supply".[151]

95. The Minister told us about difficulties he had faced:

They have different [management information] systems in different departments. The first problem is that a lot of departments did not collect in one place what they were spending and with whom. When we formed the coalition Government three years ago, we did not know who our biggest suppliers were. I had to write to the chief executives of the 20 companies we thought were the biggest suppliers to Government to ask them how much business they were doing with Government. When the returns came in, the results were very different from what we had speculated about. In one case, the actual amount of business a particular company was doing was about 15 times more than we had thought.[152]

96. Since 2010, the Cabinet Office has taken steps to improve the quality of management information available to it from departments on procurement across central Government. In its written evidence, it drew attention to its recent work to address shortcomings in the quality of the data, "including setting clear data standards; simplifying and strengthening the quarterly data summary reporting formats; improving quality assurance mechanisms; establishing clearer accountabilities for management information quality; and improving the management reporting of data".[153] The Cabinet Office told us that the quality and timeliness of management information which Government had collected on procurement spending within central Government had:

improved dramatically [...] As a result Government has visibility of procurement spend by category, sub-category and supplier for the first time, ensuring performance against individually established targets and aspirations can be tracked and managed. To aid transparency Departments publish key procurement data on a regular basis.[154]

97. Nonetheless the Cabinet Office recognised that there remains "a lot more that could be done" and "there is still much better data and [management information] capability that we need to improve".[155] Bill Crothers told us that there remained various improvements which he would like to make to the Cabinet Office's database on procurement spending across government departments:

It is not as timely as we would like [...] It is not complete; it is at the 90% level, so it I would like it to be complete, and it has got some aspects in it that need to be normalised. Suppliers appear in several places as different types of suppliers, because they use different names [...] It is also quite linear. It is not easy to visualise and use it, it is just clunky.[156]

98. We received evidence from a number of sources pointing to more fundamental limitations of the Cabinet Office's procurement data and analysis. For example, Colin Cram suggested that the data analysis carried out by the Cabinet Office should cover much more of public sector procurement "given the importance of the £200bn public sector procurement spend, one would expect such an analysis to be done at least once a year throughout the public sector".[157] The CBI argued that within government procurement "there is a need for an increased focus on internal performance assessment".[158] The International Association for Contract and Commercial Management pointed out the Government's tendency to focus on collecting data on how spending is managed and noted that "there is little consolidated data relating to outcomes", not least because the technical systems are not in place and that therefore the "required management information is lacking".[159]

99. We recognise that from a very low baseline the Cabinet Office has made progress in collecting and improving the quantity and consistency of data available to it on the procurement spending by individual government departments. Nonetheless it is appalling that after three years of trying, the Cabinet Office database remains incomplete, "clunky" and does not use the latest data. The Cabinet Office should publish a plan and timeline of no more than a few months for the complete implementation of a system to collect consistent and comparable data on procurement spending across government departments and agencies.

100. Once this is complete, the Cabinet Office should also plan to extend its data collection exercise beyond central Government to identify what further data it could collect to improve its understanding of the performance of government procurement. The Cabinet Office should publish its analysis of the performance and spending data it collects on procurement activity by departments and agencies on a quarterly basis and where possible the wider public sector. It should use this analysis to inform and justify its proposals for the future organisation of government procurement.

128 Cabinet Office, Efficiency review by Sir Philip Green: Key Findings and Recommendations, October

2010, p 4 Back

129 As above, p 5 Back

130 National Audit Office, The Efficiency and Reform Group's role in improving public sector value for money, HC 887 Session 2010-2011 25 March 2011, p 20 Back

131 Ev w75 Back

132 Q 468 Back

133 Q 428 Back

134 Q 428 Back

135 Q 469 Back

136 Government Procurement service, Performance Review 2012/13 June 2013, p 9 Back

137 Q 4, 344, 368 Back

138 Q 368 Back