Crown Commercial Service Annual Report – What About Delivery?

We wrote yesterday about the salary and staffing issues following the publication of the Annual Report from the UK central government's collaborative procurement organisation, Crown Commercial Service. We highlighted the astonishing leap in the number of senior staff over the last couple of years. But what has been delivered with all these additional high-flying procurement professionals?

“CCS has helped departments and the wider public sector to secure £5.9bn of savings against a 2009/10 baseline through implementing better commercial practices.”

Huge savings, is the basic answer, but unfortunately savings that are almost totally non-verifiable. Whilst CCS started out with good intentions on savings measurement (with the estimable Carl Meewezen, a genuine numbers man himself, taking the lead on this), there were signs a while back that political imperatives were coming into play, with a desire to keep showing big numbers by tweaking the savings methodology.

And now, as most savings are still measured against a baseline of 2009/10, the number is increasingly opaque. There are a lot fewer civil servants around central government for a start (30%+), so you might expect third-party spend to show some "demand management" savings because of that, independent of any procurement activities! The savings from the “beating up suppliers” programme, which was largely 2011/12 activity, are also still counted, year after year. (We also heard some interesting stories on that front recently which we will save for another day, but bring the veracity of those numbers into sharper question).

Anyway, we don’t disbelieve the numbers, we just cannot say without much closer examination whether they are realistic. There are some nice examples given of savings activity, but they are only brief narrative sentences really – for instance (from the Report):

  • G-Cloud is showing an average of 20% savings against prior legacy based, single vendor agreements.
  • £85m of savings delivered through supporting central government departments on software audits.
  • Buying vehicles through our centralised fleet deal achieved on average 5% savings compared to those offered by leasing and fleet management companies to large corporate buyers.
  • Schools and colleges are also saving upwards of 40% on their print and copying costs by switching to our centralised deal.

Other metrics given in the Report include this:

£15.1bn of public sector procurement spend was channelled through our centralised arrangements, which is a £1.9bn increase on 2013/14. Directly managed spend increased from £0.6bn in 2013/14 to £2bn in 2014/15 and in doing so, the number of Whitehall departments that benefit from this service increased from four to seven.

That answers in part the question – what have the 50 additional senior people we discussed yesterday been doing? The Annual Report does not really expand on this but we can draw out a few points with a little analytical detective work. Many, we understand, have gone into the “internal consulting” arm of CCS, the Complex Transactions Team, who are hired out to help public bodies with their more complex procurement task and projects. But there is only limited visibility of what they have been doing – a couple of nice examples of success again - but little in the way of hard facts. It would be interesting to know, for example, what their utilisation has been (a key measure for may consulting organisation), or total days billed or similar.

What we can see though from the Report is that the division titled Managed and Advisory Services, which includes this consulting arm and (we believe) the people servicing the departments who have outsourced activity to CCS, had revenues of £ 20.790 million, and costs of £24.415 million. So this division lost almost £4 million. However, to balance this, the traditional "frameworks" part of the CCS business made some £6 million, leading to the organisation in total making around £2 million profit.

The margin on the frameworks remains at around 0.33%. Whilst some customers still object to this, it is not something we worry about. It's pretty low really in terms of the margin any collaborative buying organisation makes to pay for its activities. The poor performance and losses of the advisory division will be a bigger worry for the CCS Board.

And while we're talking about the Board, we said last week that we would be calling for the resignation of a CCS Director. And that is... non-exec Jon Thompson, MOD Permanent Secretary, who only turned up for one out of the six Board meetings he could have attended since his appointment. Surely he is supposed to represent the voice of major CCS clients? Thompson is a very impressive chap in my experience, but if he isn't going to turn up to the Board ... resign, resign, we cry!

We'll have more to come in part 3 ...

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