Crown Commercial Service – A Procurement Organisation on Steroids?

We mentioned the UK government's collaborative procurement organisation, Crown Commercial Service, and their annual report here last week, and this week we will be looking at it in more detail. But before we start, let’s just re-iterate that we are not “anti-CCS”. A good friend of mine (who works for the organisation) asked me “why do you hate CCS” a while back, which was a little upsetting really!

I did explain that I certainly don't "hate" CCS and I have great respect for many people who work there, up to the very highest levels. However, we do believe that centralising procurement is rarely the panacea some think it is, simply because it is fundamentally difficult for many reasons: we are concerned about tax-payers’ money being spent well, and most of the media just don’t care about / don’t understand procurement, or feel constrained in what they say because of conflicts of interest (e.g. Supply Management).

So we feel that someone needs to take a critical but constructive look at what is now probably the largest public procurement organisation in Europe, and report fairly on what they are up to.

Let’s start with some numbers – staff and salaries, because that is always interesting. The first point is that Matt Denham, who joined from Xchanging as Commercial Delivery Director (so he runs the sourcing teams in the core "letting frameworks" business) about 18 months ago, makes some 30% more on basic salary than Sally Collier, the CEO and his boss!

That’s because career civil servants who aren’t allowed hefty pay rises even on promotion always lose out to people brought in from outside. However, Collier does well out of her pensions, which notionally increased in value by no less than £97K last year. But her basic is a mere £115-120K, probably half what a large firm CPO would expect these days. (Denham makes £155-160K basic).

Director Matt James gets a £16.6K "accommodation allowance" which is a bit unusual; and whilst we are talking money, why does non-executive Rob Wilmot get £50-55K when all the other non-executives manage on £10-20K? (Perhaps he didn't make as much out of Freeserve as we thought?).

The real shock though is the sheer size of the organisation now. "SCS" stands for Senior Civil Service and covers the three top management levels of the civil service. SCS1 is the lowest, SCS3 the highest. If we go back to 2010/11, there were just five SCS1 (senior civil service) staff and one at SCS2 level (David Shields) running OGCbuyingsolutions.

That became the Government Procurement Services (GPS) in mid 2011. Then, to form CCS, other parts of OGC such as the Policy area were brought into the fold along with GPS in late 2013. But as far as I can remember, there was only one SCS1 in the Policy area (Collier herself) who came into CCS. There may have been a couple more SCS1s hanging around in OGC though who got pulled into CCS – but I don’t think we are talking more than a handful.

But guess how many SCS1s there re now in CCS? The answer is, amazingly, 57. Did you get close? That is made up of 46 permanent staff and 11 temporary. And as for SCS2 staff, there are now 8.

Just to get it in perspective, if we go back a couple of years, huge departments such as DWP and MOD had, I believe, two and three SCS2 staff respectively in their procurement functions.  DWP had maybe 8 SCS1s in total in procurement. And most Departments did not have a single SCS2 procurement person; their only SCS1 was probably the Head of Procurement.

Now, to be scrupulously fair, some of those senior CCS people have come from other central government departments (including DWP and MOD) where work has been transferred into CCS. It would be good to know just what that number is, but we don’t think it will be that many – as we say, many departments only had one SCS in procurement!

I cannot think that there has been another public sector organisation anywhere that has grown in senior staff in this way over the past two or three years. It is astonishing. And at an average total cost of employment (including pension, etc) of let’s say £150K per SCS1 and £200K for a SCS2, that is around an additional £10 million spent on senior procurement staff.

Well Hurrah!! (As Hugh Laurie would say in Blackadder). Most of you reading this are procurement people, as I am, so we should be very happy about this. We have never seen a single organisation I can think of, public or private sector, make a step-change investment of this magnitude in senior procurement people - more than 50 additional senior staff over less than two years.

The concern of course comes when we go beyond the "good news for the profession" argument, and ask, with our taxpayers’ hats on, what has this additional £10 million a year got us? Remember, we never saw a business plan or business case for CCS in the first place, or at least not one that my FOI request uncovered. So what does the Annual Report tell us about the return side of the equation? We’ll come back to that tomorrow.

Voices (3)

  1. Steve:

    Fairplay:

    No wonder that your good friend thinks you hate CCS. “Scrupulously fair” – big lol!

    For me this is just a rather sensationalist entree – it doesn’t purport to paint the whole picture after all – but represents just, in good commercial tradition, a piece of (negative) conditioning probably aimed at colouring whatever is to come on the other side of the ledger. Might have been better (fairer?) to publish the whole in one go.

    Yep, I obviously work for CCS, and proud of it – though not in the SCS ranks…. Whilst centralisation may not indeed be a panacea, there’s surely plenty not quite right with public procurement and commercialism. I personally get the CCS vision and whilst delivering it isn’t easy, benefits and a positive ROI have been delivered.

    As Secret Squirrel implies though, it might just be getting harder, but I doubt Matt Hancock will just sit there and let it happen – indeed the new Govt has already embarked upon a review of CO (incl. CCS) effectiveness and efficiency so a sharp sword is glinting and hovering above us all.

  2. Secret Squirrel:

    For me, things are about to get interesting…..

    £5.9bn saved……but against 09/10 baselines…….

    So now they will have to move to 14/15 baselines…. £1.6bn goes straight away as that’s continuing to measure the policy of ‘no’ consultants, most of the £2.4bn relating to ‘Crown negotiation’ goes as that’s all implemented, leaving the £1.9bn of ‘framework’ savings.

    Take away the nice headlines and I suspect the thin delivery will become quickly apparent.

  3. Bill:

    With this scale of investment, you would expect an exponential increase in performance. We haven’t seen it.

    The ‘Complex Commercial Transactions Team’ (CCST) is probably the most puzzling, and is likely to represent the largest single increase in the number of senior civil servants. When the idea was originally proposed (to a steering group comprising Commercial Directors) it was going to be called “The Big Deals Team”. I guess they gave up on the name when someone asked them to define a ‘big deal’. Whereas a ‘complex commercial transaction’ is much easier, and allows the CCS to get involved in pretty much anything it wants to…(upon acceptance of any proposed ‘consulting fees’)

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