The Crown Commercial Service Contents

2Current Performance

Centralising procurement of common goods and services

9.The original business case was based on the Crown Commercial Service (CCS) centrally managing £13.4 billion of purchasing on behalf of all 17 departments over four years, generating £3.3 billion of net savings. But in practice tensions built up quickly with departments and the transition programme stopped twice; in May 2014 and again in 2015. By October 2016, CCS managed only £2.5 billion of spend on common goods and services on behalf of 7 departments. Furthermore spend from the wider public sector in 2015–16 through framework contracts was £6 billion against the original target of £7.5 billion.10

10.CCS told us that departments supported the concept of central buying but were not confident in the services they were signing up for. CCS had been badly designed from the start and the transition process had also been executed poorly. For example, some activities, such as the intelligent client function, which should have remained with departments, had been transferred to CCS. CCS also considered that the categories of common goods and services to be transferred to CCS had not been specified correctly. For example, jet fuel was labelled as a common good while in reality this is a highly specific product.11

11.The Cabinet Office told us that CCS had had different arrangements with each department and had focused heavily on increasing the volume of transactions transferred from departments instead of assessing what activities should be carried out by CCS. It also believed the Civil Service did not have the experience to transfer procurement from departments to CCS at the pace that was set out. Following an operational review in 2016, CCS has now redefined its operating model, but still needs to set out how it will work with departments.12

12.The Cabinet Office believed that central buying could generate savings and value by getting more volume through the centre. CCS supported this and told us that on average it could generate 10% savings on common goods and services. The Cabinet Office told us that in 2015–16 CCS helped departments to save £521 million against a 2014–15 baseline and in 2014–15, it helped save £1.9 billion against a 2009–10 baseline.13

Performance has been poor

13.In addition to the difficulties setting up CCS, it has also displayed weaknesses in other areas, such as: customer focus and effective communication, leading to departments doubting CCS’s capability to deliver quality services; providing reports to departments on CCS’s service performance; and control over processes. CCS’s internal audit team found weaknesses in stakeholder engagement, market and business intelligence, and supplier and contract management. CCS told us that a lot of issues were due to the problems with the operating model that was established at the start.14

14.The National Audit found: that CCS did not have a current business case for the proposed changes or quantified the benefits that CCS would achieve from them; that it had not set clear expectations on time frames for improvements to its operations and services; that it did not have a full baseline of CCS activity; that its governance was insufficiently clear and that CCS had not prepared a clear strategy to build commitment from its customers. CCS confirmed that at the time of the review, the NAO assessment had been correct and that a full business case for how it will work with departments was not yet in place.15

15.CCS told us there had been improvements in their performance. For example, CCS said that, even though customer satisfaction was still negative, it was trending in the right direction. It also said that staff engagement had improved from 49% to 54 %, which it believed showed increased confidence in the leadership team. The Cabinet Office and CCS now believe that CCS is set up for success. However, it still needs to develop a business case that demonstrates how it will work with departments and how much volume it will carry out. It agreed in February 2016 to invest in new systems which will improve data quality and management information.16

Management of procurement frameworks

16.CCS produces and manages buying frameworks for common goods and services. In 2015–16, CCS had about 110 frameworks allowing public sector organisations to buy goods and services such as office supplies, training, legal services and vehicles. Framework agreements define what will be purchased (such as maximum price and quality of services) and are valid for a certain number of years. In 2015–16 departments bought £6.8 billion of goods and services through CCS frameworks.17

17.Departments can use frameworks to buy common goods and services either directly, or by conducting a short competition among the framework suppliers. As a result, procurement frameworks can be quicker and more efficient for buyer and seller, and can provide better value for money. However, CCS could not show that its framework deals were always the best available. Aside from lacking complete and consistent information on its frameworks, CCS did not consistently benchmark its frameworks against other deals in the market. CCS told us it had remedied the database issue since the summer and that it had improved its management of frameworks. However, when we asked CCS about benchmarking prices, it told us that it did not collect information on the prices on contracts and that how it really knew whether it was competititve was through “those call-offs and those contracts which are done underneath the frameworks”.18 CCS told us that the end users were involved in setting the requirements for the frameworks, and that this ensured that their needs were taken into account. The Cabinet Office added that the accountability for whether a contract was value for money lay with the end user, and that CCS’s role was to help end users to buy goods and services that fulfilled their needs.19

18.CCS has failed to renew or replace all framework agreements before their final expiry dates and before all extension options were used. For example, in 2015–16, CCS had extended framework agreements beyond their expiry dates in areas such as traffic management technology, printing and the supply and fit of tyres. CCS told us that, at the moment, CCS had one expired framework and that there would be three more frameworks that would be extended beyond their final expiry date. This would include the frameworks for consultancy services and temporary staff. Increasingly CCS has been extending its framework agreements. CCS’s internal audit team found that CCS had been unable to provide assurance that it kept framework extensions to a minimum. CCS told us that frameworks were designed to be extended, and that CCS did continual market testing.20

19.The Cabinet Office told us it was content that government had done everything to buy common goods and services legally. However, extending frameworks beyond their final expiry date and issuing contracts under them contravene public procurement rules. CCS told us that extending frameworks should not happen, but that it occurred as CCS was not using its resources effectively. CCS said that by September 2017, all frameworks would be replaced. When it extended frameworks beyond their final expiry date, CCS told us it always engaged with clients and suppliers and took legal advice. It felt it was important that it still had a framework in place so that its customers could continue to buy the goods and services needed.21

10 Qq 2, 26, 57, C&AG report, paras 1.23, 1.24, Figure 7 and Figure 10

14 Qq 4, 8, 9, 12, 13, 18, 19, C&AG report, paras 1.7, 1.28, 2.17, 2.18, Figure 9 and Figure 15

15 Qq 62, 95, C&AG report, para 3.17 and Figure 18

17 C&AG’s Report, paras 1.3 and 2.2

21 Qq 88, 91, 168, 169, 170, C&AG report, para 2.14 and Public Contracting Regulation 2015

22 March 2017