CCS Business Plan – Increased Supplier Charges, Selling More To Wider Public Sector

The CCS Business Plan for 2016/17 which was published recently has caused wider interest for two principal reasons.  The first is the move away from charging the central government departments a fee for the managed services that are being undertaken, with the shortfall more than made up by increased charges to suppliers. As we pointed out here, the costs of the organisation are set to rise some 20% compared to last year, funded by the supply side.

There has been some push-back from the market on this, but most suppliers will just grin and bear it, we suspect, and build a slightly higher cost into their modelling for their own pricing and bidding strategies. So ultimately, this does come back to the budget holders. But CCS charges are not out of line generally with other collaborative bodies, so can probably stand a small increase - as long as the organisation does not see this as an easy source of endless extra revenue. The other point is the objective to do more business in the wider public sector.

“We also aim to grow our wider public sector business by 20%, targeting both existing and new commercial products at local authorities, the NHS and other areas of the public sector, in order to generate commercial benefits including savings of between £200m and £250m”.

We do find this surprising. Recent comments suggested a retrenchment if anything for CCS, and the perception that their service delivery to central government clients still needed some further work. Is going after more, wider, public sector work not a distraction from this? Is this a political desire, perhaps the need to declare ever-growing "savings" in Cabinet Office - or is it that presenting a shrinking organisation is just not motivating for anyone involved? Or might this be part of positioning CCS for eventual sale or conversion to a Mutual?

It also raises some questions about the relationships with the other collaborative bodies in the wider public sector, who are already sometimes wary of CCS ambition. That includes organisations such as ESPO and YPO in the local authority and schools’ world, the various University consortia, and a host of collaborative health organisations, some public sector themselves, some private.

We got this comment from Andy Davies of the London Universities Purchasing Consortia, speaking on the record on behalf of all the English consortia in the sector.

"We believe in the power of collaboration and we look forward to developing our relationship by working together with CCS for the benefit of higher education and our other members, in what are going to be testing times ahead.

"We think we can help CCS work toward their targets in the WPS with our strong network and our valuable route to market.  But for that to work best the CCS offering has to be complementary, rather than duplicatory, and we must be prepared to share the benefits of our efforts."

We also spoke to a senior executive from another buying organisation, who did not want to be identified. (S)he said that "we are not worried about the competition" - if CCS could do better deals "good luck to them".  But collaborative bodies working together is surely the right way forward, and is working pretty well in many areas, so a more aggressive approach might threaten this. "CCS does have a tendency to tell the other buying organisations what they are going to do, rather than discussing how we can work together better".

They also said that "the inconsistency and turnover is an issue with CCS - we talk about a category, then when we chase up the action points that person has left CCS and someone who knows nothing about what is happening is in place".

The projected savings of £200 - £250 million from the wider public sector was also doubtful - "we just don't believe it". As we have noted previously, at any given time, half the local authorities in the country are of a different political persuasion to the government, so using a Cabinet Office organisation that is going to claim "savings" that are actually made by the budget holders in councils, hospitals or whatever will be another contentious point in some circles.

Our view is that CCS needs to be very careful here. If CCS starts treading on toes, they may see areas where their frameworks are well used now threatened by other collaborative organisations moving into those areas and marketing against CCS more vigorously. The whole basis of collaboration is fragile.

The potential new categories quoted in the Plan are "waste management, supply teachers and social care delivery”.  Well, social care is perhaps the most challenging public sector market of all; huge and operating at national, regional, local and super-local levels. It is very hard to see that a national central government body can possibly gain enough understanding of that quickly to really make a difference in the near term. A strategy for social care procurement, involving local authorities, health, and central government could and probably should be developed and CCS could certainly take the lead on that. But that's a two-year task in itself and is miles away conceptually from letting a few quick frameworks.

CCS has set itself a “non-target” of increasing wider public sector business by "up to 20% growth” but of course "up to" includes zero. ("Lose up to 40 pounds with our amazing new smoked haddock and Tequila diet"!)  We will see how close to 20% CCS can achieve; no doubt in a year's time we will either be eating our words or saying "we told you so"! In many ways, we hope it is the former, but fear it will be the latter.

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First Voice

  1. Stephen Heard:

    As a previous executive director at CCS (Buying Solutions then), and now in the NHS, I await their foray into NHS procurement with I know what!

    The demise of centralised NHS procurement was the direct result of Buying Solutions market interference in 2005 and the resultant NHS Supplies arrangement has not been exactly successful!

    Whatever happened to Pro5, the alliance formed by ESPO, NEPO and three other local authority buying organisations who banded together to fight off competition from Buying Solutions? Will they reform now and attract even more member organisations as they circle the wagons?

    I would much rather see CCS using their strategic procurement expertise, rather than their transaction processing, to advise NHS organisations on the challenges of collaboration and the new clinical delivery models predicated in the NHS Five Year Forward View.

    The lack of a robust procurement input is one of the main causes of the collapse of the UCP contract as identified by the NAO in their much awaited report today, which I’m sure Peter will have something to say on very soon. I was also involved in that fiasco but this time on the provider side so I’ll keep my comments until I see what Peter has to say on that one.

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