Where Next For Crown Commercial Service? Tough Decisions Required

We wrote here about Malcolm Harrison’s departure from the UK government’s central buying organisation, Crown Commercial Service, and with Peter Lawson, one of Harrison’s key lieutenants, departing too, it is a good time to take stock of what CCS should be trying to achieve.

Harrison spoke at the Procurex South event the other week (get his slides here) and we heard good reports of his session. He talked about four priorities; digital and Crown Marketplace, SMEs, closer collaboration with the wider public sector, and capability development.

Let’s look at that SME question and the wider public sector goal in terms of markets and CCS future direction. Central government has failed to meet its aspirations on SME spend, so rather than thinking of new ways of fiddling the figures, it’s about time there was some serious thought applied to the issue.

One problem is that the more you centralise and the more power CCS holds as departments are “mandated” to use its contracts, the more potential there is for market distortion. If there are several key frameworks for consulting services, or IT equipment, then a supplier who fails to get a place on one can try again for the next. But once there is only one game in town, a supplier can be locked out of the market for years if it fails to win a place. That can literally be the final straw for smaller firms in particular. That also leads to the situation where CCS is very likely to be challenged by unhappy suppliers, which adds to the resources and cost of running the organisation.

One way round that is the Digital Marketplace (G-Cloud) model – allowing almost unlimited numbers of suppliers to win a place on a “framework” by just meeting some threshold requirements, and renewing it regularly. But hang on a minute! Wasn’t the whole point of giving CCS its mandate in central government that it could then go to the market with “committed spend”, which would drive better value from suppliers?

But why should a firm applying to G-Cloud or any such loose framework worry about pricing? It doesn’t matter in terms of winning a place. Better put your investment into sales effort and persuading customers they don’t even need to run a call-off competition, just give you the business directly.

In reality, CCS just cannot be positive for SMEs. The whole idea of an aggregating national procurement body, closing down markets for years on end, is anathema to young, innovative, local, smaller firms. And no-one is fooled by claims that “50% of our suppliers are SMEs” – it is the spend going to the firms that matters, not just being listed.

CCS continues to pursue ambitions to grow in the wider public sector. We suspect Harrison shared our view on this – that it should be done carefully, and only where the wider public sector (WPS) really wants CCS “help”. But there are others, we believe, including perhaps some of the very commercial bunch of non-execs that CCS now has, who take a simplistic and frankly ill-informed view that CCS should act like a private sector firm and “grow business” in health and local government.

CCS should work in the WPS as and when it is the right strategy for the taxpayer – not where it thinks it might make a few quid. And bigger challenges lie ahead for CCS if Labour do well at the forthcoming local elections – don’t expect Corbyn-supporting councils to like the idea of using CCS contracts, which  put money in the pockets of a Tory Cabinet Office!

There is also a lack of clarity over the CCS digital strategy. The Purchasing Platform is actually pretty impressive – we’ll have more on that soon, having had an interesting update on it recently. But much of the work behind that was carried out by CCS people who left last year. The new approach from Matt Denham and Amabel Grant was initially around the mega-Marketplace and the “concession” model – but everything has gone quiet there. As we commented here, we seem to be heading back towards a more pragmatic, possibly category by category approach. But progress has been a little slow.

Again, that is in part because CCS is just so central, and so big, it simply must get things right or it is a major “scandal” and a major waste of money. It is this balance between size, bringing theoretical economies of scale and the ability to invest, versus the paralysis and bureaucracy that can arise from an organisation of such importance.

So, what should happen next? We’re not suggesting another 180 degree handbrake turn like the one Harrison rightly executed to stop the daft centralisation that was going on when he arrived. So while it is tempting to propose a break up of CCS into perhaps 4 or 5 regional bodies, I’m not sure the benefits would justify the huge hassle.  There is certainly an argument for taking the procurement policy / regulation element away from the operational CCS core. And clearly, CCS should not be immune from the cost pressure on every public sector body.

But we would look hard at its range of activities, and focus on those spend categories where it is clear a national and central approach really delivers benefits. Drop any “targets” for wider public sector sales, stop duplicating what is better done by other sectors and collaborative buying groups, and rationalise the number of contracts. Get the digital strategy debate out into the open and invite contributions from others. Continue the focus on operational competence and internal capability. And watch out for the next Carillion …

Voices (2)

  1. Stephen Heard:

    Interesting commentary as I was right in the middle of the creation of OGC Buying Solutions and then Buying Solutions and the growth figures were pretty impressive.

    2003/4 saw the stewardship of £2bn worth of public money delivering £321m of savings and this grew to £5.4bn throughput with £732m savings in 2008/9.

    OGCBS also introduced a range of new “products” in Postal Services, Merchant Acquiring, Legal Services, Translation Services and Travel etc.

    Oh and we also reduced our costs and started to issue quarterly rebate cheques to our customers who never complained.

    OK it wasn’t perfect with the same old argument over mandating and double counting of savings but not as bad as some folk make out with hard working teams doing some really good stuff that has left a positive legacy.

  2. Secret Squirrel:

    “But there are others, we believe, including perhaps some of the very commercial bunch of non-execs that CCS now has, who take a simplistic and frankly ill-informed view that CCS should act like a private sector firm and “grow business” in health and local government.”

    Ah…..a return to the Alison Littley years. They were such a great success…..

    “The new approach from Matt Denham and Amabel Grant was initially around the mega-Marketplace and the “concession” model – but everything has gone quiet there.” You could call it Zanzibar

    “There is certainly an argument for taking the procurement policy / regulation element away from the operational CCS core.”

    I’ve an idea. We could call the procurement policy / regulation element the Office of Government Commerce and the operational element OGCBuying.Solutions/Buying Solutions/Government Procurement Service.

    I’m afraid that CCS has returned to the past and failed models. Such a shame. The slimmed down, focused GPS had much greater success. Why? Because it was concerned with the commercial outcomes in terms of the external market. Drive value there and the rest happens. It didn’t need relationship managers. It didn’t need mandation. It didn’t need whizzy marketplaces. It delivered good value to the public sector at low costs. The customers then came.

    So a suggestion to the incoming CEO/MD. Don’t get hung up on the flashy.
    Stick to your knitting. Drive out anything (and anyone) that isn’t driving value to your end customer. Do it based on evidence. Do that and you’ve got a recipe for success.

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