People matter, results count.

Collaborative Procurement The Opportunities and Challenges

The Local Government Group & Cabinet Office Seminar on Public Sector Reform

Andrew Smith and John Collington

Points to Cover in 35 Minutes

Progress and Lessons • Central Government – JC

• Local Government – AS

Common Emerging Themes• Collaborative Procurement Models

• Joint Interests

• Making it Real

• Risks and Issues

Q & A and Discussion

AS

Changes to Central Government Procurement Landscape

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Jun ‘10

> Commitment to Procurement at highest levels

> Greater focus on cost reductions - emergency budget

> Crown negotiations with top suppliers

> Centralised Procurement – Target Operating Model

> New central category strategies - being implemented

> Government Procurement Reform strategy produced

> Government’s first CPO position appointed

Jul ’11

> Launch of

JC

Government Procurement: Mission - 2011/13

Reform Government Procurement through centralisation of common goods & services spend, to fund improvements

in technology, processes and Government wide procurement

resources, to better manage total procurement spend, in support of

Departmental cost reduction targets.

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Mission

JC

Procurements Contribution to First Year Savings

£800m through renegotiating contracts and £360m from

centralised procurement

£870m on consultancy (down 70%) and £500m on agency

staff (down 40%)

£400 million on advertising and marketing

spending

£300 million from smaller Civil Service (17,000 FTEs

down)

£90 million from property controls and 10%

carbon emission reduction from Government

estate

£400 million from reviewing major projects and £300 m from ICT controls

Savings in 2010/11 – Communicated by MCO and COO

UNCLASSIFIED

JC

£2.5bn of the £3.75bn

Lessons and Barriers to Overcome - CG

In spite of progress and Ministerial commitment

There are still too many cynics and sceptics

Data integrity remains an issue

Inertia/reluctance to changing practice

JC

Spend Under Management

Sustainable Savings

Investment to Improve

Which if unaddressed will impact:

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Progress in Local Government Delivery of Phase 1 of LGG Workstream

• Quick Wins

• Big Wins

• Proposed strategy to deliver Phase 2 – the NPA

LG examples of best practice – NIEP

• CAP thinking

• Joint working with Cabinet Office / DCLG / DoE / DfT

Networks and connections improving

AS

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Lessons and Barriers to Overcome – LG

AS

Barriers are political and cultural – not technical

Sovereignty and adoption are key issues

People misinterpret localism and leverage

The need to compel rather than mandate

No current coherent strategy

The risk that LG does not get its act together

The risk that political aspirations with CG cannot be aligned UNCLASSIFIED

Points to Cover in 35 Minutes

Progress and Lessons • Central Government – JC

• Local Government – AS

Common Emerging Themes• Collaborative Procurement Models

• Joint Interests

• Making it Real

• Risks and Issues

Q & A and Discussion

AS

Collaborative Procurement Models

Principal Focus:• Market aggregation• Market making• Developing category spend

Principal Benefits:• Maximise buying power of government • Delivery of sustainable savings • Leveraging capability and volumes• Driving policy through procurement

AS

Collaborative Procurement Models

Localism & Leverage

i) National Procurement Agency would create the interface with the Government Procurement

Services

ii) Local Authorities have access to a range of arrangements by category of spend

iii) Local decision remains with local government

iv) Local and Central government bring market strength together – market segmentation and shaping

AS

Joint Interests

AS

• Both sectors need to operate from effective spend and supplier data: becoming a more informed and powerful client sector

• Best value from: increased volumes, improved market share, best deals, joint use of technology and capacity, deployment of private sector contribution, SME participation, Working together where it makes sense (e.g. market shaping, best deals)

• (Probably) one of the biggest initiatives ever taken in this landscape – ambition of both sides

• Delivering government policy through procurement: providing local economic, social and environmental benefit – localism and leverage

Making It Real

JC

Complexity

Sav

ings

Pot

entia

l

• Dependent on a willingness to share and leverage knowledge, experience, data and commitment !

Risks and Issues

JC

Local Government does not get its act together

Central Government falters from the strategy

Political aspirations on both sides cannot be met

Adoption!

Invest to save approach

Importance of governance

Risks and Issues

High Level Indicative Governance Model

AS

Governance

NPA GPS

Joint Venture

Private Sector Markets Category Sharing Business Best Deals Management Development

LGG & ERG

16

Thanks for listening

Any questions??

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