National Audit Report on Crown Commercial Service; “Not Yet Value For Money”

The National Audit Office report on Crown Commercial Service (CCS), the UK central government’s buying organisation, was issued today. It takes a pretty critical view, with headlines like “central government has not yet achieved value for money from its central buying”. And in a critique of previous management and Ministers, “the Cabinet Office severely under-estimated the difficulty of implementing joint buying across government”.

In many ways, that is not unexpected; even Bill Crothers, the outgoing Government Chief Commercial Officer, acknowledged that the move to centralise much of the procurement carried out by individual departments had been rushed and poorly planned when we interviewed him a year ago.

The NAO report goes further; it lays out a number of detailed criticisms, and it is clear that the new CCS management, led by Malcom Harrison, has basically disowned large parts of the strategy and approach put in place by Crothers, Sally Collier as CEO of CCS and the Minister of the time, Francis Maude.

Collier was in a difficult position; she had experience in procurement policy and projects but had never run a major operational procurement delivery team before her appointment in that CCS role. Neither had Crothers of course, having spent most of his career as an Accenture Partner in other areas. The final architect of what turned out to be a heavily flawed plan was the Minister, Francis Maude. His impatience and  “just flipping do it” message led to the rushed move with CCS trying to deliver very complex outsourced procurement services to the Departments.

Harrison, or “the independent expert” as the NAO report calls him, is driving the “reset” of the programme. He has got deep operational procurement experience as we described here. Incidentally, he has been acting CEO at CCS since March – the NAO report says he was appointed CEO in November 2016, which was the permanent appointment date and makes it sounds like he is very new in the job. Whilst we certainly cannot and should not apportion blame to him given what he inherited, he has been in the hot-seat for nine months now so probably has a little less time to sort it out than that November 2016 date suggests!  About a year, we reckon …

Back to the report; at first sight it is thorough and insightful, as we now expect from NAO, but we will have a more detailed look and report further next week. Much of it will be no surprise to most observers, although some eyebrows will be raised at points like number of frameworks that have been extended by CCS in a manner that contravenes procurement regulations. We had that suspicion from what we heard on the grapevine, but it is interesting to see the cold, hard facts.

The report does suggest that departments are gaining more confidence in Harrison and his new emerging senior team, although it does say more needs to be done in communicating the new strategy and plans. It also highlights some interesting unresolved issues, which we will definitely come back to later.

The “conclusions on value for money” start like this; “The government’s reforms to central buying have not been well managed. Although CCS customers can save money by using CCS deals, we would have expected more savings would have been delivered if CCS had been set on a sounder footing. As a result, central government has not yet achieved value for money from its central buying”.

We are pretty sure Harrison (and his boss, John Manzoni) would not argue with this. Indeed, Harrison is still new enough in the job that he can perhaps use this report to strengthen his hand in getting the resource, assistance and funding he needs to make CCS work. Whilst we always suspected Maude and Crothers were too gung-ho about the centralisation plan, no-one is suggesting that every department should buy every chair, laptop or legal service individually, so some sort of central buying organisation must be the right thing to do and must be made to work.

In a sense though, it would have been good if NAO had been able to intervene earlier. It is a problem with any auditing body; they come along and point out the problems when they have already become evident, rather than stopping them at source. When the “Cabinet Committee Mandate” in 2014 pushed through the initial centralisation idea, that would have been the perfect time to point out the lack of plans, appropriate resources or agreed operating model for the new CCS.

Equally, the report is too early to give a view on the success of new regime in CCS; we are certainly seeing a “year zero” change of approach, so that has to be given some time to work (or not). So whilst current management will not be delighted by the findings, they can legitimately say “yes, we agree with much of this, we’re sorting it out”.

But how will we know whether the revised approach is proving more successful? It is not the usual NAO way of working, but in this case we wonder whether a progress report in a year’s time would be useful? Anyway, more to come soon from us on the report.

Voices (2)

  1. Nick Drewe @ Market Dojo:

    This comment was interesting, “Although CCS customers can save money by using CCS deals, we would have expected more savings would have been delivered if CCS had been set on a sounder footing. As a result, central government has not yet achieved value for money from its central buying”.

    I think there has long been a bit of a misconception that aggregated buying automatically creates better value for everyone buying from the aggregated deal.

    Yes it increases the attractiveness of the contract to the supply market & offer them some opportunities to streamline operations and yes that can encourage suppliers to fight tooth and nail for that contract to the extent of offering what is to them a rock-bottom price, but it by no means equates to the best price in the market as a whole, especially not across the whole requirement.

    Aggregated contracts across the government can become behemoths, worth many millions. Only large suppliers pass the PQQs to be allowed to have a go at winning such contracts. This can cut out the smaller, more agile and innovative suppliers that can offer even better value but only for their sub-set. Over time you then create an oligopoly with the only solution being to dis-aggregate the contract once more to incentivise others to compete. Just look at the Capita situation.

  2. Secret Squirrel:

    There shouldn’t be any surprises here.

    CCS was created with no business case and no plans. It was then led by people who had no ideas of the complexities of procurement or operating in Whitehall. It followed that up with a massive expansion of staff with no experience of operating in government.

    I’m very sceptical that the changes being made now will have the desired effect. Its mandate is questionable, the modus operandi debatable and the outcomes unknown driven by a mantra of ‘agile’ leading to no known finishing point.

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