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Commercial Reform
Matt James
Director of Commercial Advice, Crown Commercial Service
2 Commercial Reform
Commercial landscape
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
Better commercial practices
saved the Government £3.8bn in
2012/13
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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
Strengthening functional
leadership and improving
commercial capability
Extending our involvement
in complex commercial
activities e.g IT/BPO
Transferring operations - 4
trailblazer depts circa £5bn
of spend
Developing managed
services and building world
class commercial capability
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Crown Commercial Service: three key
inter-related service areas
Indirect
Advisory
Direct
Buying
Building the
Commercial
Profession
New DNA for commercial activities
£
High
Time
spent on
value
added
activity
Managed Commercial Services delivered centrally - once on behalf of Government
Before going
to market
Developing
requirements that
shape markets and
the supply base to
Government
Procurement
Process
Simplifying process
and reducing
turnaround times &
supplier bid costs
Contract and
supplier
management
Improving contract and
supplier management
capability through
application of new
standards
Low
Before
Goal
Key objectives driving all that we do
Service
• Excellent fully managed commercial services in
central government and increasingly becoming the
service provider of choice in the wider public sector
Savings
• Clear and compelling savings for all our customers
leveraged through demand aggregation and
innovative deals with suppliers both large and small
Spend & Reach
• Managing and influencing significantly higher levels
of spend on common goods and services across
the public sector
Impact
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• Expert commercial advice provided by highly
capable people informed by deep market
knowledge and experience – on an increasing
number of key government projects
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Establishing a customer-centric service
Vision
We have a ‘customer
centric’ culture
Responsive
Enthusiasm
Governance
We understand our
customers
Reliable
Relationships We exceed
expectations
We deliver an
exceptional experience
ENGAGEMENT, MANAGEMENT AND LEADERSHIP
We must create a culture which drives and encourages excellent customer service
Commercial Reform
Getting the best deals
Aggregating
requirements
to get the best
deals
Leveraging
market
knowledge and
benchmarking
our prices
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• Greater opportunities will arise through
better pipelines to aggregate customer
demand and requirements when going to
market.
• Aggregating demand does not mean
aggregating supply
• 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.
Delivery model for goods and services
Category Management Pillars
Technology
Functional delivery
People
Corporate
Services
Buildings
Commercial Contract
Management
Contract delivery, optimisation and management
Supplier Performance
Management
Performance analysis, tracking spend and savings
Supplier Innovation
Cross-category innovation in supply chain management
Sourcing & Operations
Best in class e-platforms, clear and efficient processes
Corporate structures aligned towards delivering an outstanding customer service
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Early examples of CCS in action
Digital Services
Framework
• Managed service provides access
to a pool of 175 agile digital
services suppliers (84% are SMEs
and 38% are new suppliers to
government).
G- Cloud
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Facilities
Management
Energy
• £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.
• 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).
• 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
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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
•
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Crown Commercial Service – Fleet Team
3. Deep Dive Commercial Capabilities Disaggregation of contracts & Long run
innovation ideas
Circa 50% of the £40bn of central government spend is with circa 50 suppliers
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Public Service Reform
2. Performance Management - Create a more
rigorous and effective process for
performance management of all strategic
suppliers
Deficit Reduction
1. Cost Reduction - Targeting saving of £1bn
through supplier engagement in 2013/14
Economic Growth
Single customer approach supported
by a team of Crown Reps
Management of strategic suppliers
We expect our suppliers.....
To embrace
competition
To be innovative
through proposals
for how we can
improve services
To deliver savings
for taxpayers
To provide
opportunities to
SMEs in the supply
chain
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 demonstrate
high levels of
corporate
responsibility
To be transparent
through open book
accounting
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SME CROWN REP - Stephen Allott –
‘voice of SMEs’
OPPORTUNITY - Developing ways to
Policy Delivery – SMEs
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.
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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
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
Electronic
Marketplaces &
Dynamic
Purchasing
System
Poor performing
suppliers –
ability to exclude
Reduced times
for suppliers to
respond to
adverts/tenders
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New,
improved or
clearer rules
Greater
Flexibilities
Public Service
Mutuals &
Social
Enterprises –
contracts
reserved before
exposure to
competition
New EU
Commitment
Review the
effects of the EU
thresholds
Skills &
experience of
individuals
(consultants,
lawyers &
architects etc)
to be taken into
account
•Together - significantly
changing the face of
public procurement
Social and
environmental
aspects
• Implementation by the
end of 2014
Lord Young reforms
Report
Growing
Your
Business’
- May
2013
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
Impact
Whole of
public sector
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Reporting on all new spend with SMEs/VCSEs
These were accepted by government and new
legislation is being introduced this year.
Building Commercial Expertise Across Government
Civil Service Capabilities Plan - Priority Skills Area
Attracting Expertise
Developing Expertise
Retaining Expertise
Commercial recruitment
hub
Developing a culture of
confidence and judgment
Active career path
management
Developing commercial
Fast Stream scheme
Interchange with industry
Designing a commercial
talent programme
Fast Track apprenticeship
programme
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Skills assessment tool and
further L&D opportunities
Non-monetary rewards
Commissioning Academy
“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
• Gives knowledge, networks and
confidence to do things differently emphasis on ‘hearts and minds’
rather than process and rules
training
• Focus on commissioning for
outcomes and across organisational
boundaries
• Terrific feedback from participants –
supporting them in delivering real
change
Next wave begins in September 2014; get in touch if you are interested
[email protected]
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Concluding thoughts......
Commercial Reform