National Audit Office on Improving Government Procurement (part 1)

We featured an initial view of the UK’s National Audit Office report into “Improving government procurement  “ last week.  One immediate point of interest is how little media interest it has raised! Will NAO will be disappointed by that? On the one hand, any organisation wants to see good work recognised. On the other hand, NAO produces thoughtful, research and fact driven reports, and must get frustrated when months of careful work gets summarised as “Home Office in Chaos” on the front page of the newspapers. That hasn’t happened here.

And this is certainly the most considered analysis so far of how the government’s procurement reform programme is going, particularly the centralised procurement element of it. It’s worth noting though that this report doesn’t cover every angle – IT procurement has been considered separately, and NAO also reported on the sustainability agenda has recently (our review to follow).

In overall terms, the programme is recognised as bringing a greater focus to central government procurement. The Government Procurement Service is a step forward from OGCbuyingsolutions (we agree) ; “Departments report better engagement and enhanced capacity in the new organisation; feedback also echoed by the suppliers interviewed”. And there is praise for “clearer lines of responsibility at the centre” with the creation of the government CPO role.

GPS and Cabinet Office will also be pleased that NAO have given their collaborative savings numbers a clean bill of health – although (as we’ve pointed out before), the majority of the savings, £1.8 billion against £426 million, come from demand management, largely in consulting and temporary labour, rather than commercial and price reduction activities.

Indeed, although NAO don’t make a particularly big deal out of it, it is shocking and impressive to see by just how much spend on the basket of “common categories” has fallen over the last 2 years, from £13.9 Billion in 09/10 to £7.5B in 11/12. But of course the irony is that this makes it harder for GPS to achieve their targets for spend going through their organisation because there is much less total spend  to go for. On that basis, increasing the GPS share of that from 20% to 40% across Whitehall is pretty impressive. And if GPS can achieve £5.3B out of the £7.5B this year, I would suggest that is a very strong achievement.

However, simply centralising the spend does not in itself demonstrate value, and the NAO report doesn’t (and was never intended to ) look at actual value achieved. What it does give though is a detailed review of how the centralised collaborative procurement of “common categories” has been working – and it is a mixed review.

Some departments feel that their needs haven’t always been taken into account by GPS, or the final contracts don’t meet their needs. There are issues with contract management and a variable performance across s different categories – Energy and Fleet getting particularly positive mentions.

Now some of this may be historical – certainly one of the central contracts I’ve heard most strongly criticised was let by a Department, not GPS. But NAO are perhaps a little kind in terms of the timescales within the programme. Almost three years into this government, several of the categories are still far from sorted, and it might have been interesting to see some more analysis of why (for instance) ConsultancyONE has taken quite so long!

NAO are very good though in terms of identifying that better planning and analysis should have taken place before the programme was launched. So there was no real analysis behind the targets, and no consideration of the differing needs of different organisations. So the collaborative spend for some departments is way below the forecast.  NAO are also insightful on the governance of the programme, and how that has not supported activities as well as it should:

“Governance structures have grown organically, resulting in duplication between groups and boards, and their purpose and remit are unclear.”

Generally, departments don’t feel they have had enough input into how the programme has been developed and implemented. Supplier reporting has been improved, but there are also issues still with spend data, particularly from “arms length bodies” and similar, although the situation is much improved. There is also some lack of clarity in terms of how GPS can hold departments to account – and vice versa.

It seems a pretty fair view overall of the collaborative programme – some definite progress, but many outstanding issues and questions. And of course (as NAO point out) there are sometimes good reasons why departments can’t participate in the collaboration – such as being locked into their own long term contracts.

In part 2 we’ll look at issues around people and wider policy objectives, in particular the perennial question of spend with smaller suppliers. Then we’ll come back to NAO’s recommendations in part 3.

 

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