SERVICE OVERVIEW

SERVICE OVERVIEW

GOVERNMENT PROCUREMENT

SERVICE

The Past

• Buying Solutions was an Executive Agency of the Office of Government Commerce (OGC)

• A national Professional Buying Organisation (PBO) for UK public sector services.

• Remit was to maximise value for money and savings through framework agreements

• Spend through Buying Solutions - £7bn pa• NHS spend through Buying Solutions- £2bn pa

Strategic Review • “If you always do what you’ve always done, you’ll always get

what you’ve always got!!”

Background• Review – internal and external• There is a recognised need to implement centralised

systems and deliver greater quantifiable savings from centralised procurement effort.

• Increasing spend under central management <£2.5Bn to >£10bn and delivering the consequent savings

• Leverage total expenditure to benefit whole public purse• Tighter control and better demand management have led to

savings of approx £1.5Bn in 2010/11

Centralised Procurement:

1. Creation of Government Procurement - procurement for common goods and services to be mandated and centralised in central government

2. Formalised agreements between Cabinet Office and Depts

3. Accountability – Ministers, Perm Secs and Commercial Directors to be held accountable for channelling spend through GPS

4. Rename & transform Buying Solutions to Government Procurement Service to:

• Deliver expert sourcing, contract, category & data management

• Implement & operate the Govt procurement spend data warehouse

• Provide mechanism to fund GPS and help Dept’s to invest in improving capability of procurement staff

Key Recommendations

4 4

Government Procurement Service

• Executive Agency of Cabinet Office, retain trading fund status and supplier funding model

• Lead executive will be a MD

• A procurement service provider for the whole public sector

• Management of £9.7bn public sector procurement spend 2011-12

• Operating Board will have a customer representative

• Reduced headcount & accommodation

• Continue to operate in the following categories: energy, fleet, travel, office solutions, professional services, property/FM and ICT

Operational Priorities

• People: Development and continuous improvement of high quality professional teams at every level in the organisation

• Operational and financial efficiency

• Effectively and commercially managing public sector spend. Delivering in-year cashable savings and ongoing service level improvements

• Full eEnablement of our operations

• Becoming customer centric and delivering what our customers, need, want and value most

Mission

Reform Government Procurement through centralisation of common goods and services spend, to fund improvements in technology, processes and Government wide procurement resources to better manage total spend, in support of Departmental SR cost reduction targets.

“Savings for the Nation”

Vision Statement:

“To be valued as the integral delivery partner of Government Procurement, working with customers and suppliers to reduce public sector spending, improve value for money and deliver savings efficiently and effectively.”

To Deliver:

Making government work better

Savings for the Nation

Scope

Nine centralised categories:

• Energy

• Fleet

• ICT

• Learning & Development

• Media & Advertising

• Office Solutions

• Print

• Professional Services

• Travel

A centralised strategy for Property is now also being developed.

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Key Facts

• £7.6bn of public sector procurement spend in 2010-11.

• 1,350 suppliers including many SMEs.

• 14,500 customers across 1,400 organisations.

• 4,500 contracts.

• Over 80 EU-compliant framework agreements.

• 272 staff across two sites – Liverpool and Norwich.

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Targets

• £15bn of public sector spend under active management.

• Deliver savings within a minimum range of 5-8%.

• Reorganise and restructure to improve operational efficiency:

- reduce staff from 435 (budget FY 10/11) to 272.

- reduce non-operational staff to 15% of total headcount.

• Reduce operating costs by 30%. From £97K (budget FY 10/11) to £70k per FTE by FY 12/13.

• 30% reduction in procurement cycle times.

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Customer & Stakeholder Engagement

AC

TIV

ITIE

S

Category Development Sourcing Business Performance

ManagementeEnablement

PR

OC

UR

EM

EN

T

SE

RV

ICE

S

EU Compliant Procurements

Spot Buying

Contract T&Cs

Development

E-auctions

Project Management

Supplier Relationship Management

Savings Generation

Supplier Audit

Ready Access to Best Prices via Catalogues

SupportTransparency

Policy

Contract Compliance

Data Management & Reporting

Prompt Payment

Spend Monitoring

Contract Management

Market & Supplier Analysis

Capture Requirements

Implement Policy

through Procurement

Innovation in Procurement

& Technology

Governance

Demand Management

OverviewHigh Level Operational & Functional Delivery

Customer Support

Price Benchmarking

Service Offerings Category Development

Activity What we do

Capture requirements Engage with stakeholders to understand current and future demand/requirements within in each category

Market & Supplier Analysis Capture market intelligence from a variety of external & internal sources

and use this to create category expertise and source plans. Assess the ability of the market to meet requirements and fulfil demand.

Governance Develop category strategies with short, medium and long term

objectives. Obtain approval and support from PEB and ePEB.

Manage Demand Influence and impact demand through the implementation of policy and associated procedure

Work with stakeholders to identify alternative products/solutions.

Innovation in Procurement & Technologies

Review and evaluate alternative mechanisms for sourcing and delivering solutions.

Encourage and/or lead the adoption of innovative products as appropriate

Implement Policy through Procurement

Ensure that all aspects of Government policy are taken into account during the development of category strategies, including level of SME involvement, sustainability, ethical sourcing and support for apprenticeships

Monitor the outcomes.

Service Offerings Sourcing

Activity What we do

EU compliant procurements

Ensure that the specification meets the requirements of the stakeholders as identified in the category strategy and source plan

Ensure that PQQ, ITT and evaluation criteria are clear and allow suppliers to differentiate themselves from their competitors

Ensure that all procurements are conducted with probity and transparency

Project Management

Ensure that each procurement is professionally project managed and delivered on time.

Manage resources effectively including ensuring that external evaluators are properly briefed.

e-Auctions

Run e-auctions where the market conditions are appropriate during the OJEU process and/or a further competition stage.

Manage customer engagement to gain commitment, rationalising requirements where possible to obtain best possible prices.

Contract T&Cs Development

Develop standard terms & conditions for each category and sub-category that provide clarity and protection.

Engage with suppliers through trade bodies such as Intellect to ensure that T&Cs are not excessively onerous and lead to higher prices.

Customer Service & Support including spot buying

Provide customers with access to great deals through e-catalogues. Provide sourcing advice to customers and/or source on their behalf

(running further competitions, e-auctions etc.)

Service Offerings Business Performance Management

Activity What we do

Supplier Relationship Management

Monitor and rate supplier performance against agreed metrics. Work with suppliers to identify areas for improvement and to

develop improvement plans. Work with suppliers to identify process/contract changes that will

deliver savings for the public purse.

Spend Monitoring

Monitor customer actual spend against transition plans, identifying contract leakage and establishing why it has occurred.

Work with customers to resolve any issues/problems.

Savings generation & price benchmarking

Develop savings methodologies for each category or sub-category and gain HMT approval.

Ensure that data is captured to support these methodologies. Calculate the savings generated and monitor against targets. Ensure that centralised deals remain competitive by benchmarking

against the market.

Contract Management & supplier audit

Ensure that suppliers are meeting their contract commitments, including how they manage their supply chain (e.g. promptly pay their sub-contractors, source ethically)

Negotiate/manage contract changes including improvements in price where there is provision in the contract to do so.

Service Offerings eEnablement

Activity What we do

Ready access to best prices via catalogues

Ensure that centralised deals are easily accessible through the Government eMarketplace (GeM)

Assist customers with transition/implementation

Contract compliance Manage the catalogue content & customer permissions to ensure

that users only have access to the centralised deals. In accordance with Departments’ transition plans.

Prompt Payment Enable the prompt payment of invoices by ensuring that there is

integration with customers’ ERP systems.

Data management & Reporting Capture all transactions through GeM and monitor to ensure that

customers are achieving optimum VFM.

Support transparency policy

Ensure that all opportunities and contract awards (over the agreed thresholds) are published as required by the transparency policy/

Work with suppliers to remove any clauses in contracts that would prevent transparency.

Financial Model

Key principles:

Government Procurement Service is a not-for-profit executive agency of the Cabinet Office with trading fund status.

It does not receive any central funding.

It recovers it costs by collecting a small commission from suppliers based on the value of transactions through its contracting arrangements. The average is currently 0.5% with the intention to move to a maximum of 0.5%.

What it means for NHS Customers

Committed to Health – dedicated relationship managers Opportunity to aggregate & benefit from the leverage of the whole

public purse Access to best value deals through e-catalogues Department of Health represented on Extended Procurement

Executive Board Building Customer Board across the NHS More transparency Access to MI on spend and savings Continue to work with DH on QIPP Simpler average Supplier Commission model Access to NHS specific frameworks in addition to general portfolio NHS specific best practice roadshows


A practical example – office supplies

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5Departments represented 83% of CG spend in Office

Supplies

5 suppliers accounted for

99% of total CG business

6 separate contracting

vehicles

‘As was’ Model

144 individual CG contracts

15,000 individual product items

2,600,000 data lines over 18 months

Drivers for change:1.Aggregation2.Efficiency3.Environment4.Resources

Single contracting

authority

2Suppliers

Volume bound contract

1

product price for Government

3,500

individual product items

Model ‘Now’

Delivering real, cashable saving in

region of 12-29%

Benefits• Greater aggregation and commitment leads to improved public

sector leverage with suppliers and better prices.

• Simple & quick access to best value deals through Government Procurement Portal (website) and e-catalogues on the Government eMarketplace (GeM).

• Greater transparency and visibility of procurement activities and prices achieved.

• Greater efficiency and removal of duplication.

• Consolidated, Government wide view on spend and savings.

• Investment in procurement capability across Government.

• Greater sharing of knowledge and category expertise.

Summary Before After

• Frameworks & MoUs

• Perceived “let & forget”

• Commission

• Processes

• Communications

• MI/Spend/Savings

• Customer Service Desk

• frameworks, MoUs, & central contracts

• transparent, formal contract, supplier, data and customer management

• reinvest to improve capability and supporting technology •new improved LEAN processes e-enablement tools

• e-Zines for Health

• Improved MI. Benchmarking data/ approved methodologies

•Customer centric team – 22 staff with dedicated Health team

Need help?

Customer Service Desk

• Dedicated team – 0345 410 2222

– Lines open between 8.30 – 17.30

– Head of Customer Service Health – Joan Murray

– [email protected]

Second Line support

• Category specialists available to take your call

• Provide detailed advice on using a framework

mailto:[email protected]

Documents

SERVICE OVERVIEW