Commercial Reform

Commercial Reform

Matt JamesDirector of Commercial Advice, Crown Commercial Service

2 Commercial Reform

Better commercial practices saved the Government £3.8bn in

2012/13

Circa £187bn spend p.a. on goods and services across the public

sector

Circa £40bn spend p.a. on goods and services in Central

Government

Commercial landscape

Reforming the landscape

Retained departmental commercial activities

Common but complex transactions – joint working with depts

Transfer of additional commercial activities

CG & WPS Spend &

Procurements currently

transacted

3 Commercial Reform

Developing managed services and building world class commercial capability

Transferring operations - 4 trailblazer depts circa £5bn

of spend

Extending our involvement in complex commercial

activities e.g IT/BPO

Strengthening functional leadership and improving

commercial capabilityInfluence and service

Crown Commercial Service: three key inter-related service areas

Indirect Advisory

Building the Commercial Profession

Direct Buying

4 Commercial Reform

New DNA for commercial activitiesBus

iness

need

identi

ficati

on

Suppli

er re

lation

ship

manag

emen

t and

nego

tiatio

n

Execu

tion o

f

sour

cing s

trateg

y

Marke

t ana

lysis

Sourci

ng st

rateg

y

Suppli

er

identi

ficati

on

Finali

satio

n of

contr

act

Contra

ct

manag

emen

t

£

Goal

High

Low

Time spent on value added activity

Before going to market

ProcurementProcess Contract and

supplier management

Managed Commercial Services delivered centrally - once on behalf of Government

Developing requirements that

shape markets and the supply base to

Government

Improving contract and supplier management

capability through application of new

standards

Simplifying process and reducing

turnaround times & supplier bid costs

Before

Key objectives driving all that we do

6 Commercial Reform

• Excellent fully managed commercial services in central government and increasingly becoming the service provider of choice in the wider public sector

Service

• Clear and compelling savings for all our customers leveraged through demand aggregation and innovative deals with suppliers both large and small

Savings

• Managing and influencing significantly higher levels of spend on common goods and services across the public sector

Spend & Reach

• Expert commercial advice provided by highly capable people informed by deep market knowledge and experience – on an increasing number of key government projects

Impact

Vision Enthusiasm Governance

ENGAGEMENT, MANAGEMENT AND LEADERSHIP

Responsive

Reliable

Relationships

We have a ‘customer centric’ culture

We understand our customers

We exceed expectations

We deliver an exceptional experience

We must create a culture which drives and encourages excellent customer service

7

Establishing a customer-centric service

7 Commercial Reform

Getting the best deals

8 Commercial Reform

• Greater opportunities will arise through better pipelines to aggregate customer demand and requirements when going to market.

• Aggregating demand does not mean aggregating supply

Aggregating requirements to get the best

deals

• Price benchmarking is currently being rolled out across category teams to test and challenge the deals we have in place.

• Key to driving continuous improvement and increased savings as well as growing the business - particularly in the wider public sector.

Leveraging market

knowledge and

benchmarking our prices

Delivery model for goods and services

Corporate structures aligned towards delivering an outstanding customer service

Category Management Pillars

People Corporate Services BuildingsTechnology

Commercial Contract Management Contract delivery, optimisation and management

Supplier Performance Management Performance analysis, tracking spend and savings

Sourcing & Operations Best in class e-platforms, clear and efficient processes

Functional delivery

Supplier Innovation Cross-category innovation in supply chain management

9 Commercial reform

Early examples of CCS in action

10 Commercial Reform

• Managed service provides access to a pool of 175 agile digital services suppliers (84% are SMEs and 38% are new suppliers to government).

Digital Services Framework

• £2bn worth of energy procured and delivered across the public sector in 2012/13 with savings to the public purse in excess of £109m. investing in innovative contracting models for long term energy requirements.

Energy Facilities Management

• New contracting model being procured. Estimated savings over current model in the region of 10% to 15% (up to £350M) over the life of the vehicle (4 years).

G- Cloud

• 4th Generation contracting vehicle in place providing access to 1000 suppliers (84% are SMES). £64m of spend transacted through G-Cloud since inception in April 2012 via circa 4000 procurements.

• 63% of business by value has been won by SMEs.

Customer-centric services: Fleet Portal

• Online system collating vehicle technical data including for Cars & LCVs

• Allows customer access for vehicle purchase and leave quotations to determine best value solution and support Direct Award

• Direct link to Vehicle Lease suppliers for live financing quotes

Fleet framework agreements

• RM859: Vehicle Purchase – extended until October 2014 (new procurement underway)

• RM858: Vehicle Lease – expires May 2015 (new procurement underway)

• RM955: Supply and Fit of Tyres – live from August 2012 for up to 4 years

• RM956: Vehicle Conversion & Reconditioning Services – live from September 2013 for up to 4 years

12 4 Crown Commercial Service – Fleet Team

Management of strategic suppliers

13

1. Cost Reduction - Targeting saving of £1bn through supplier engagement in 2013/14

Sing

le c

usto

mer

app

roac

h su

ppor

ted

by a

team

of C

row

n R

eps

2. Performance Management - Create a more rigorous and effective process for performance management of all strategic suppliers

3. Deep Dive Commercial Capabilities - Disaggregation of contracts & Long run innovation ideas

Econ

omic

Gro

wth

Def

icit

Red

uctio

n

Publ

ic S

ervi

ce R

efor

m

Commercial Reform

Circa 50% of the £40bn of central government spend is with circa 50 suppliers

We expect our suppliers.....


To embrace competition

To be innovative through proposals

for how we can improve services

To be transparent through open book

accounting

To demonstrate high levels of

corporate responsibility

To deliver what we are asking for as

an intelligent client

To deal effectively with CCS as one customer - the

Crown

To make a reasonable but not

excessive profit

To provide opportunities to

SMEs in the supply chain

To deliver savings for taxpayers

Policy Delivery – SMEs

SME CROWN REP - Stephen Allott – ‘voice of SMEs’

OPPORTUNITY - Developing ways to make it easier to find opportunities to do business with Government – Contracts Finder is being refreshed to make this process even better

REFORM - Negotiating simpler, more flexible EU public procurement rules Supporting the commercial community to implement and comply with the legal and policy framework

COMMITMENT - All departments have developed action plans and targets to increase their spend with SMEs and deliver their contribution to the 25% aspiration

COMMUNICATION - SMEs given new channels of communication including Mystery Shopper, SME Panel, Crown Rep

Implementing a wide range of measures to level the playing field for small companies, charities and voluntary organisations to be in the best possible position to compete for government contracts.


Main reforms from new EU directives


Greater Freedoms

Allowing negotiation with

suppliers - relaxation of

the rules on the competitive negotiated procedure

Simplification & reduced red

tape

Assessing suppliers

credentials - greater use of

self-declarations

Reduced times for suppliers to

respond to adverts/tenders

New, improved or clearer rules

Electronic Marketplaces &

Dynamic Purchasing

System

Poor performing suppliers –

ability to exclude

Skills & experience of

individuals (consultants,

lawyers & architects etc)

to be taken into account

Social and environmental

aspects

Greater Flexibilities

Public Service Mutuals &

Social Enterprises –

contracts reserved before

exposure to competition

New EU Commitment

Review the effects of the

EU thresholds

• Together - significantly changing the face of public procurement

• Implementation by the end of 2014

Lord Young reforms


ReportGrowing

Your Business’

- May 2013

These were accepted by government and new legislation is being introduced this year.

Abolishing PQQs for low value contracts and a standardised PQQ for high value contracts

Mandating that 30 day payment terms are passed down the supply chain

Mandating that all public sector contracts are readily accessible online

Reporting on all new spend with SMEs/VCSEsImpact

Whole of public sector

Building Commercial Expertise Across Government Civil Service Capabilities Plan - Priority Skills Area

18

Developing Expertise

Developing a culture of confidence and judgment

Interchange with industry

Skills assessment tool and further L&D opportunities

Retaining Expertise

Active career path management

Designing a commercial talent programme

Non-monetary rewards

Attracting Expertise

Commercial recruitment hub

Developing commercial Fast Stream scheme

Fast Track apprenticeship programme

Commercial Reform

“A must attend’ programme for all commissioning leaders.” Francis Maude Minister for the Cabinet Office

• Development programme for people responsible for delivering transformation of public services

• Combination of input from experts and practical, peer-led learning

• Focus on commissioning for outcomes and across organisational boundaries

• Gives knowledge, networks and confidence to do things differently - emphasis on ‘hearts and minds’ rather than process and rules training

• Terrific feedback from participants – supporting them in delivering real change

19

Next wave begins in September 2014; get in touch if you are interested [email protected]

Commissioning Academy

Commercial Reform


Concluding thoughts......

Documents

Commercial Reform