Bill Crothers Speaks – Frameworks Back in Fashion?

So now I am really confused. Bill Crothers, the UK government’s Chief Commercial Officer, spoke at last week’s Procurex conference and whilst I could not attend, I got a press release referring to his speech. (Available to read here ProcurexBillCrothersPR_1.0)

There is some good stuff there, with positive messages. He said that the Civil Service would be recruiting between 70 and 100 graduates by this September under the flag of the Crown Commercial Service (CCS), the Cabinet Office’s executive agency responsible for improving government commercial and procurement activity.

“We need to improve our capability – we want to ‘grow our own’ by bringing in graduates at a greater volume than before into commercial profession. There’s now a graduate stream dedicated to commercial.”

Crothers also acknowledged problems in government procurement in the past but stressed that improvement is ongoing:

“We had some difficult contracts and delivery against contracts – frankly we weren’t a good client. I call it the three ‘Is’ – we were indecisive, incoherent and inconsistent – we weren’t a well-organised client and it was very difficult to do business with us.

“We are better organised today than we were. But we still have a long way to go, this is a journey – and it will take another five or ten years.”

Interesting – is he pitching for being in that job for another 5 or 10 years then?! But one slightly odd note comes in his comments in government needing some new major suppliers – I don’t disagree with that sentiment but he says this:

“We want to hear from individuals who don’t have public sector experience – we want the best from other industries using new technologies, operating on thin margins to be more innovative. That’s the sort of supplier we want”.

What exactly does he mean by “operating on thin margins to be more innovative”?

I don’t get that because innovation does not go with thin margins. Why do firms innovate? To create dominant market positions that enable them to make better margins. Take Apple as a great example. Or indeed most successful tech or pharma firms, businesses that operate with margins Serco and G4S can only dream of. If CCS is really going to look for highly innovative firms prepared to operate on thin margins (and get beaten up on a regular basis by Ministers and officials), then they will have a long and fruitless search, I fear.

The other questionable element of the reported comments relate to the apparent growing importance in his eyes of framework agreements:

“The amount of spend that goes through the CCS frameworks is £15 billion, that’s an eye-watering amount of spend. The more we can [establish] frameworks as great commercial vehicles for everyone in the public sector to use, the more common goods and services CCS will be responsible for in buying and management.”

Hang on, hasn’t CCS been saying for several years that we need more committed spend and less money going through frameworks? The whole CCS model of taking over the common categories from Departments was driven by a desire to aggregate the demand and take spend to the market with commitment – because we all know you get better value if you do that. I have heard Sally Collier describe this as a key part of the CCS mission. But if all CSS is going to do is let lots of frameworks then we’re back to the models used by their predecessor organisations.

And as always, we would be delighted if anyone in CCS or Cabinet Office feels like explaining the thinking here with more clarity - a guest article is always at your disposal!

Voices (8)

  1. Secret Squirrel:

    Been waiting for that, Bill Atthehill.

    Isn’t it all good fun? And a jolly good waste of money. But still, as long as Sally Collier keeps telling everyone “There’s no better place to be” and you can recruit SCSs (yet more) at the same time as laying staff off, it must be great…..

  2. Bill Atthetill:

    When Boil Critters (Bill Crothers) first arrived in the GPS, he publicly announced that, within a few years, frameworks would be obsolete, to be replaced by an organisation providing an ‘end to end managed service’. He has completely failed and he knows it, hence the ‘side-step’ to become Chief Commercial Officer. It is rumoured that he has recently started criticising the CCS himself, arguing that it isn’t delivering – perhaps this is why they are shedding headcount and are now pursuing graduates.

    The CCS is simply a giant framework factory that generates income – any surplus income (profit) flows back into ‘Treasury’ (Cabinet Office) which it then spends on the ‘Complex Commercial Transactions Team’ – a team comprising people from various government commercial teams who have been absorbed through Bill’s original grand plan. They spend most of their time annoying commercial and procurement directors across central government in a desperate attempt to find work and justify their existence.

  3. Secret Squirrel:

    Stephen,

    I didn’t say they were ‘ripping off’ any one. I pointed out that is you want to stand up a big organisation as a trading fund and lots of it doesn’t produce income, you need to find somewhere to generate the income. Hence Crothers’ apparent flipflop from frameworks are bad to we need more spend under frameworks.

    That said, I’m not sure what CCS does to justify much of its framework charging. It can’t be setting up frameworks (unless internal procrastination and timewasting is legitimate cost). The one I saw this week was so extensive. It had 4 responses required to assess the quality.

    SS

  4. Trevor Black:

    In addition to the plethora of trendy terminology so endorsed by procurement which doesn’t mean a jot to our stakeholders I am pleased that we can now add the “hokey cokey” which at least means something to those who have become terminally confused.

  5. Stephen Heard:

    Well here we go again with the old argument that CCS or GPS or BS or OGCBS are ripping off public sector organisations by making too much money through frameworks.

    Well when I was there we started giving quarterly refunds to customer organisations funded by frameworks once the trading arm’s running costs were taken care of. They were also to go to funding free procurement training and other procurement industry enhancements.

    The real challenge with frameworks is the relinquishing of control by other public buying organisations to give real scale to enable this to be leveraged by UK public sector. If they are to be reinforced then it only works if public sector organisations are mandated to use them. Yes that old chestnut again

  6. Helen Lumb:

    Totally agree Peter, my brother’s pharma network of companies is innovating in business because of their approach to alliances across Europe and the rest of the world. Wouldn’t work on a thin margin!

  7. Chris Keeler:

    I can just see suppliers who don’t currently sell to government licking in their lips at the prospect of spending a fortune to participate in ridiculous and over-long procurement exercises and then being treated like scum by the Cabinet Office once they’ve won in order to earn “thin margins” from doing government work. Do you think there’s something in the water at Horseguards Road that makes them spout this sort of drivel?

  8. Secret Squirrel:

    Ah, Peter…..It’s easy.

    “The amount of spend that goes through the CCS frameworks is £15 billion, that’s an eye-watering amount of spend. The more we can [establish] frameworks as great commercial vehicles for everyone in the public sector to use, the more common goods and services CCS will be responsible for in buying and management.”

    When you’ve got £15bn through frameworks, you’re making £45m in revenue. Which you need to support your monstrosity filled with SCSs and Grade 6s.

    Now OK, some of that magnificent overhead will be covered by ‘managed service’ fees but they won’t cover the organisation’s cost.

    So you need to grow your revenue from outside of central Government. Which means frameworks.

    And you need to make your managed service cheap to run. Which means frameworks.

    And you need income to support ‘policy’, ‘mystery shopping’ and all the other wrap around services which need to be paid for out of the trading fund now. Which means frameworks.

    Love them or loathe them, CCS without frameworks and funded by a trading fund fails without frameworks

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