The Crown Commercial Service – new and exciting or moving the deckchairs?

Not entirely unexpectedly, the UK’s Cabinet Office announced today -  “the intention to  create a new ‘Crown Commercial Service’, which will bring together Government’s central commercial capability into a single organisation.  We expect this will bring together Government Procurement Service and other teams in the Cabinet Office. It will work with departments and wider public sector organisations to ensure maximum value is extracted from every commercial relationship and drive up the quality of service. We intend to establish the Crown Commercial Service in autumn 2013, building on the evolution of Government Procurement Service over the last two years.”

This was all flagged a while ago, and I can’t see anything actually significant that is new or unexpected in the announcement, although the governance is going to be strengthened  with a Commercial Reform Governance Board, chaired by Sir Bob Kerslake (top civil servant, on the way out according to many commentators after negative No. 10 briefing recently), and board members represented by a mix of Director Generals and departmental Commercial Directors.

The new organisation will be an Agency and a Trading Fund – as we previously pointed out, any successor to Government Procurement Service (GPS) had to retain that status if it wanted to keep earning revenues.  (Which does beg the question perhaps as to why we needed a new structure at all?) Funding arrangements haven’t yet been worked out though.

It’s really  GPS, the other procurement stuff like Policy that was within Cabinet Office, the new “Complex Transactions Team”  plus a stronger mandate  that says departments must use the Crown Commercial Service (CCS) for these categories. In total, the spend going through CCS from central government is likely to be some £10 Billion annually - this is a significant amount, but to get it in perspective, it is around the same as the national spend on social care through local authorities, or what MOD spend on defence equipment.

CCS has however been pitching to get more spend from departments, and certainly the major players have been resisting this. There’s no sign of core defence spend going into CCS, or Welfare to Work contracts from DWP, or Legal Aid and probation services from Ministry of Justice.

And in some sense this is a “back to the future” moment.  You may remember my interview with Mike Acheson when he retired from the Department of Transport in 2011. His career went back beyond Buying Solutions and its predecessor, the Buying Agency, to the Crown Suppliers and even before that to the PSA.  So whether or not we think this is a good move now, take the spin about bold new ideas with a pinch of salt. What goes around, comes around.

Acheson first moved into procurement in 1979 when he joined the Property Services Agency (PSA). They managed government buildings, and as part of that bought goods and some services to support their property management role. Acheson was responsible for Heating Oil, the biggest buyer in Europe for that commodity...  PSA was THE buyer for government of these commodities... The Supplies Division of the PSA operated as a trading fund from 1976 and in 1984 was renamed The Crown Suppliers.”

I’m also not sure the clients of Crown Suppliers and PSA were always too happy with the products they were forced to take (“the civil service office chair”) , so one challenge for CCS will be satisfying departments who may feel aggrieved that they have no choice – in CCS, just as in the days of the PSA, Maude has created what will look to customers like a monopoly supplier.

There’s also the danger in any organisation, including CCS,  of complacency setting in once it has that monopoly position. CCS will have to guard against that.  And there is still the mystery of David Shields departure; clearly, there were things about the plans that he wasn’t too happy with, leading him to step down from his role as MD of the Government Procurement Service just a few weeks ago. Indeed, I suspect there is a hidden agenda and a longer term game-plan here. Where is this all leading? A little more detective work needed but I have my theories..!

However, to be positive, there are certainly some areas like Energy where good work has already been done by GPS. A stronger mandate may help drive better results here and elsewhere.  One of our tasks as an interested observer will be to assess independently just how well CCS works – and we wish Sally Collier and everyone in the organisation good luck. Ultimately, it’s all about spending taxpayers money wisely, so we all have an interest in their success.

Voices (6)

  1. Final Furlong:

    A little more detail in the FT. Bill says it will be “running all, or a lot, of ICT”.

    (Perhaps he keeps forgetting that he’s speaking to a journalist!)

    I hear that he’s articulated the difference between ‘commercial’ and ‘procurement’ in the comms out to Departments. If anyone reading this has seen this definition, please could you post it here, as I’d be fascinated to see it.

    http://www.ft.com/cms/s/0/31c6a8e8-f380-11e2-942f-00144feabdc0.html#axzz2ZzAzxR2c

  2. Mike:

    How is CCS going to resource the Complex Transactions Team when presumably the departmental talent is staying put to deal with their “unique requirements”? This suggests some influx of expertise to staff CCS but it’s unclear where the additional capacity and capability is coming from, given that one of the outcomes is to reduce the need for external advice and I haven’t noticed a recruitment drive by Cabinet Office for commercial experts.

    Not sure either how this will further strengthen commercial leadership or the Procurement profession or improve overall commercial capability – certainly not by the Autumn if Chapter 4 of the Reform Plan is anything to go by.

    Ideas on a postcard…..

    1. Bill Atthetill:

      The CCS solution is an idea which could quite easily fit on a postcard. (I guess they had to keep it simple.)

      A good question Mike. ‘Complex’ suggests a group or team of highly skilled, very expensive people, especially if their initial, prime focus is upon ICT. It is clear that it will include ‘contract management’ – as part of a ‘through-life’ model. It is also clear, from discussions across the patch, that they haven’t yet sought and acquired agreement on funding for the new ‘agency’ and all of the associated investment in staff etc, so it is a little unusual to announce a strategy and accompanying proposal without obtaining sign-off on the proposed funding. And, I am told, there will be no staff reductions, both within GPS or Departments, so all new headcount.

      Still, they will buy and manage, once.

  3. Keith Bratley:

    GPS has been pushing for some time under Dave Shields to brand itself as a centre of expertise for government buying and try to spread its influence that way.

    The carrot approach has failed and Maude now wields the stick.

    The problem remains that government depts. procurement teams largely don’t trust the capabilities of the GPS procurement teams and, based on my recent experience, with good reason.

  4. Dave Sheldon:

    In my mind it’s just the rearrangement of seating.

    The Government brought in Sir Peter Gershon in 2000 which was followed by this further report in 2003 to produce, develop and deliver a change to government procurement which did not deliver the new processes required to deliver the savings required – I don’t see this as any more significant change than that.

    Is it just me that thinks that single government contracts will be much too unwieldy and move contracts to large monopoly suppliers both of which will not achieve the savings intended?

  5. Bill Atthetill:

    The idea that each Government Department was responsible for buying the same ‘common goods and services’ was always insane. Equally, the amount of money flushed away on massive IT systems that never worked or that never talked to other massive IT systems elsewhere in Central Government was also insane. The complex transactions team should address ‘complex’ ICT requirements across Central Government and only move on to other categories once they’ve nailed it. Focus is the key to success.

    However, the notion of this new CCS organisation sourcing specific requirements within markets such as health, defence, social care, justice, policing etc is just as insane.

    And picking up on your point Peter about history repeating itself, we all know how Einstein defined insanity….

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