Crown Commercial Service Annual Report – A Mixed Bag for Public Procurement Aggregator

The Crown Commercial Service published its annual report and accounts yesterday. Although he was in place when last year’s was published, this is really the first report of CEO Malcolm Harrison’s reign, and shows an organisation still very much in transition, but delivering pretty good performance against most of its key measures.

However, as Harrison continues to unwind the strategy put in place by his predecessors, the cynics will recall that these reports are always positive, even those from two or three years ago when previous management were transferring work from departments to CCS without a clear operating model or understanding of how that work could be delivered properly. CCS is now unwinding much of that approach, which is taking much time and effort.

Malcolm Harrison

Anyway, the other problem here for the external viewer is the adjustments from previous years’ basis for measurement, so making comparisons is somewhat difficult. So last year’s report (2015/16) said “£12.8bn of public sector procurement business was channelled through our centralised arrangements. Central Government spend was £6.8bn and wider public sector spend was £6bn”.

In 2016/17, the report says, “£12.4bn of public sector procurement spend was channelled through our commercial  arrangements including frameworks - £6bn from central government, £6.4bn from the wider public sector”.

So that looks like a decline (£12.8B to £12.4B). But the press release says, “this is an increase of £1.1bn compared to £11.3bn in 2015/16 on a like-for-like basis”. Digging through the report this seems to be around taking out from those figures some of the transactional work from departments that was (or maybe still is ) done by CCS – “£1.0bn on administrative and contract management activities”.  All a little confusing though.

Spend by central government through CCS deals and frameworks was well ahead of plan anyway; for the wider public sector, just below plan.  But in terms of benefits, the picture seems positive;  “we have identified commercial benefits worth £430 million for central government departments and the use of our deals has helped the wider public sector achieve £295 million commercial benefits”. That appears to be well up on last year.

We will come back in another article and look at the finances in more detail – the organisation is profitable prior to “other operating costs” but the ultimate bottom line is an £6.4 million loss.  The overall income of the organisation at £73.4M has risen by close to 10%, as has the cost base prior to those other costs (£66.3M to £71.6M). That is driven by staff costs which are up over 10% too, while numbers are minimally down, from 790 to 780. So you don’t have to be a genius to work out that cost per head is up significantly.

That is emphasised by the table showing number of staff and salary bands. We can see that Harrison is now on £200K a year; not surprising really given the role, private sector background and pedigree. The bigger surprise is that four other people are earning £180-200K as well and two earn £160-170K. Last year there were only two staff over £160K; now there are seven. We assume they are mainly the new top-level category leads.

The report says “we have utilised the new 'Government Commercial Specialist' terms and conditions to offer a more competitive salary package to secure these new hires”.  This reflects the new flexibilities introduced through the formation of the Government Commercial Organisation, which we understand means staff can trade off pension for salary. So these folk may receive high salaries but may not be part of the still very generous central government pension scheme (which has a real value of at least 30% of salary).

The scores from the staff survey seem to be going in the right direction, but the “net promoter” score shows how much CCS still must do to re-build confidence in central government. The score is minus 41, better than last year’s -50 but if we understand the mechanism correctly that means 70% (ish) of those surveyed are not positive about CCS against 30% who are. Interestingly, the score in the wider public sector is +2. That suggests it is the more direct work that CCS does for departments that is still the problem rather than the frameworks used by the WPS.

Anyway, more to come once we have been through the report with our forensic magnifying glass …

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