First “Government Procurement” central contract announced.. and the winner is….

A landmark for UK central Government procurement yesterday - the announcement of the first centrally managed contract "awarded by Government Procurement" as the Cabinet Office website says. Except it wasn't actually awarded by the Cabinet Office - the contracting authority is Revenue & Customs, but it can be used by other organisations, and it is being badged as part of the central procurement initiative under Government Procurement and John Collington.

"Under the new arrangements the HMRC print contract will be available to all Government Departments in a deal that is expected to save £21m and will replace 140 contracts with a single contract".

The announcement goes on to say that the HMRC "Print Vendor Partner contract" is based on a Managed Service Provider (MSP) approach and was awarded to Williams Lea, with effect from 1 July 2011. So they will act as a central manager to the second tier supply chain. "This enables departments to harness the expertise within the market and to aggregate and leverage spend ...."

What do we think about this? There are definitely pros and cons around using a MSP in the print arena - I've done it myself in the past and it can work well. And Williams Lea are an experienced and respected firm. But it's not necessarily the right approach for every organisation (for instance, if 80% of my total print spend is through one contract / vendor, what added value do I get from putting that through an MSP?)

So it will be interesting to see how many organisations make use of this contract and if the theoretical Government Procurement "mandate" will be pushed in this case with those who don't use it. Which also raises the question of commitment.  The best deals come from committed volume - it's not clear, other than HMRC themselves, how much up-front committed volume was on the table here.

We also don't know as yet what the terms and conditions look like - how good a deal is it? And the "expected to save £21M" can't be more than a finger in the air estimate, given both the lack of clarity in terms of volume and the nature of print contracts. Specifications change, prices I suspect won't be fixed given the volatility of pulp prices etc, so accurate baselining and measurement of real "savings" is very difficult, and predicting those savings in advance nearly impossible. But of course this is politics as well as procurement, so I appreciate they have to say something!

On the positive side, it's impressive that the original contract notice was published at the end of October, and the contract went live July 1st. That's 8 months from start to finish for what is a fairly complex tender and contract. I'm sure Collington and David Thomas (CPO at HMRC)  feel that there's more that can be done on the "lean procurement" front, but this is not bad going.

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  1. Final Furlong:

    Good news indeed.

    Good news too, that they’ve selected a provider synonymous with best/better practice in the private sector. Private sector has, for some years now, steadily migrated away from buying print themselves to a model where they hand over all print buying to Williams Lea – often, on a global basis. Williams Lea has, over a number of years, rid itself of print ‘manufacturing’ (owning print factories) and steadily migrated over to dominating print markets. Though the notion of ‘retrospective rebates’ springs to mind and one hopes that HMRC has (like some of the smarter purchasers in private sector) ensured that they have captured all of this in their cost/pricing model. I am aware that Williams Lea also like to dominate the paper markets… Made me wonder if HMRC actually managed to find (up to) 10 print buying bidders that it could shortlist, who are capable of managing £250 million of spend. (Did you quickly find yourselves in a one horse race chaps?)

    I’m curious about two things: the £150-250 million figure on the OJEU – does this represent the spend of all print across the whole of central Government (I noted the link on the OJEU, indicating the notion of including EVERY central government body). And, secondly, like yourself Peter, what does £21m saving represent? A saving over the life of the initial two year contract (which can be extended for a further 24 months) measured against the £250 million – that’s just less than 10%?

    The last time I looked at HMRC (and thinking about that dodgy 09/10 baseline that ERG is using) they’re trying to automate everything to the end user (and mandating it). So are these savings off-set against the investment HMRC are making in the related e-platform? And against HMRC’s new demand profile (which in some instances will be 100% compliance to a browser-based solution – VAT being a good example).

    The note on the Cabinet Office website also mentions ‘process efficiencies’ – please don’t tell us that the £21m also incorporates some dodgy ‘impossible to measure’ figure for process savings…140 contracts being replaced by one indicates some notion of ‘other efficiencies’.

    Government Procurement (not ERG) has publicly committed to saving 25% of £13 billlion by March 2013. So, only £3.229 billion to go… (Though this figure could reduce to £2.429 billion if one includes the £800m that the CCR team has already put back in the purse by negotiating with Government’s top suppliers…but then that must be off-set against the £800m that the MOD paid to its aircraft carrier builder for extending the contract over the same CSR period – so, £3.229 billion then).

  2. PlanBee:

    HMRC has access to a number of print centres, which were internal to them before being outsourced as part of an overall contract. Due to the seasonal nature of the tax process, these centres run at <50% of potential capacity, and are not used for any other customers. Consequently HMRC probably pays all the costs for these centres.

    Now it is true that these facilities cannot do multi colour 'marketing' style print, but why does the cynic in me assume that some of the work outsourced to Williams Lea could have been done in these centres, utilising resources that they have already paid for. And why are they not promoting the spare capacity to other departments, rather than promoting a deal with an external provider.

    By the way, I have no problem with Williams Lea, a sound well managed company.

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