Commercial Reform
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Transcript of Commercial Reform
Commercial Reform
Matt JamesDirector of Commercial Advice, Crown Commercial Service
2 Commercial Reform
Better commercial practices saved the Government £3.8bn in
2012/13
Circa £187bn spend p.a. on goods and services across the public
sector
Circa £40bn spend p.a. on goods and services in Central
Government
Commercial landscape
Reforming the landscape
Retained departmental commercial activities
Common but complex transactions – joint working with depts
Transfer of additional commercial activities
CG & WPS Spend &
Procurements currently
transacted
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Developing managed services and building world class commercial capability
Transferring operations - 4 trailblazer depts circa £5bn
of spend
Extending our involvement in complex commercial
activities e.g IT/BPO
Strengthening functional leadership and improving
commercial capabilityInfluence and service
Crown Commercial Service: three key inter-related service areas
Indirect Advisory
Building the Commercial Profession
Direct Buying
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New DNA for commercial activitiesBus
iness
need
identi
ficati
on
Suppli
er re
lation
ship
manag
emen
t and
nego
tiatio
n
Execu
tion o
f
sour
cing s
trateg
y
Marke
t ana
lysis
Sourci
ng st
rateg
y
Suppli
er
identi
ficati
on
Finali
satio
n of
contr
act
Contra
ct
manag
emen
t
£
Goal
High
Low
Time spent on value added activity
Before going to market
ProcurementProcess Contract and
supplier management
Managed Commercial Services delivered centrally - once on behalf of Government
Developing requirements that
shape markets and the supply base to
Government
Improving contract and supplier management
capability through application of new
standards
Simplifying process and reducing
turnaround times & supplier bid costs
Before
Key objectives driving all that we do
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• Excellent fully managed commercial services in central government and increasingly becoming the service provider of choice in the wider public sector
Service
• Clear and compelling savings for all our customers leveraged through demand aggregation and innovative deals with suppliers both large and small
Savings
• Managing and influencing significantly higher levels of spend on common goods and services across the public sector
Spend & Reach
• Expert commercial advice provided by highly capable people informed by deep market knowledge and experience – on an increasing number of key government projects
Impact
Vision Enthusiasm Governance
ENGAGEMENT, MANAGEMENT AND LEADERSHIP
Responsive
Reliable
Relationships
We have a ‘customer centric’ culture
We understand our customers
We exceed expectations
We deliver an exceptional experience
We must create a culture which drives and encourages excellent customer service
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Establishing a customer-centric service
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Getting the best deals
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• Greater opportunities will arise through better pipelines to aggregate customer demand and requirements when going to market.
• Aggregating demand does not mean aggregating supply
Aggregating requirements to get the best
deals
• Price benchmarking is currently being rolled out across category teams to test and challenge the deals we have in place.
• Key to driving continuous improvement and increased savings as well as growing the business - particularly in the wider public sector.
Leveraging market
knowledge and
benchmarking our prices
Delivery model for goods and services
Corporate structures aligned towards delivering an outstanding customer service
Category Management Pillars
People Corporate Services BuildingsTechnology
Commercial Contract Management Contract delivery, optimisation and management
Supplier Performance Management Performance analysis, tracking spend and savings
Sourcing & Operations Best in class e-platforms, clear and efficient processes
Functional delivery
Supplier Innovation Cross-category innovation in supply chain management
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Early examples of CCS in action
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• Managed service provides access to a pool of 175 agile digital services suppliers (84% are SMEs and 38% are new suppliers to government).
Digital Services Framework
• £2bn worth of energy procured and delivered across the public sector in 2012/13 with savings to the public purse in excess of £109m. investing in innovative contracting models for long term energy requirements.
Energy Facilities Management
• New contracting model being procured. Estimated savings over current model in the region of 10% to 15% (up to £350M) over the life of the vehicle (4 years).
G- Cloud
• 4th Generation contracting vehicle in place providing access to 1000 suppliers (84% are SMES). £64m of spend transacted through G-Cloud since inception in April 2012 via circa 4000 procurements.
• 63% of business by value has been won by SMEs.
Customer-centric services: Fleet Portal
• Online system collating vehicle technical data including for Cars & LCVs
• Allows customer access for vehicle purchase and leave quotations to determine best value solution and support Direct Award
• Direct link to Vehicle Lease suppliers for live financing quotes
Fleet framework agreements
• RM859: Vehicle Purchase – extended until October 2014 (new procurement underway)
• RM858: Vehicle Lease – expires May 2015 (new procurement underway)
• RM955: Supply and Fit of Tyres – live from August 2012 for up to 4 years
• RM956: Vehicle Conversion & Reconditioning Services – live from September 2013 for up to 4 years
12 4 Crown Commercial Service – Fleet Team
Management of strategic suppliers
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1. Cost Reduction - Targeting saving of £1bn through supplier engagement in 2013/14
Sing
le c
usto
mer
app
roac
h su
ppor
ted
by a
team
of C
row
n R
eps
2. Performance Management - Create a more rigorous and effective process for performance management of all strategic suppliers
3. Deep Dive Commercial Capabilities - Disaggregation of contracts & Long run innovation ideas
Econ
omic
Gro
wth
Def
icit
Red
uctio
n
Publ
ic S
ervi
ce R
efor
m
Commercial Reform
Circa 50% of the £40bn of central government spend is with circa 50 suppliers
We expect our suppliers.....
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To embrace competition
To be innovative through proposals
for how we can improve services
To be transparent through open book
accounting
To demonstrate high levels of
corporate responsibility
To deliver what we are asking for as
an intelligent client
To deal effectively with CCS as one customer - the
Crown
To make a reasonable but not
excessive profit
To provide opportunities to
SMEs in the supply chain
To deliver savings for taxpayers
Policy Delivery – SMEs
SME CROWN REP - Stephen Allott – ‘voice of SMEs’
OPPORTUNITY - Developing ways to make it easier to find opportunities to do business with Government – Contracts Finder is being refreshed to make this process even better
REFORM - Negotiating simpler, more flexible EU public procurement rules Supporting the commercial community to implement and comply with the legal and policy framework
COMMITMENT - All departments have developed action plans and targets to increase their spend with SMEs and deliver their contribution to the 25% aspiration
COMMUNICATION - SMEs given new channels of communication including Mystery Shopper, SME Panel, Crown Rep
Implementing a wide range of measures to level the playing field for small companies, charities and voluntary organisations to be in the best possible position to compete for government contracts.
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Main reforms from new EU directives
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Greater Freedoms
Allowing negotiation with
suppliers - relaxation of
the rules on the competitive negotiated procedure
Simplification & reduced red
tape
Assessing suppliers
credentials - greater use of
self-declarations
Reduced times for suppliers to
respond to adverts/tenders
New, improved or clearer rules
Electronic Marketplaces &
Dynamic Purchasing
System
Poor performing suppliers –
ability to exclude
Skills & experience of
individuals (consultants,
lawyers & architects etc)
to be taken into account
Social and environmental
aspects
Greater Flexibilities
Public Service Mutuals &
Social Enterprises –
contracts reserved before
exposure to competition
New EU Commitment
Review the effects of the
EU thresholds
• Together - significantly changing the face of public procurement
• Implementation by the end of 2014
Lord Young reforms
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ReportGrowing
Your Business’
- May 2013
These were accepted by government and new legislation is being introduced this year.
Abolishing PQQs for low value contracts and a standardised PQQ for high value contracts
Mandating that 30 day payment terms are passed down the supply chain
Mandating that all public sector contracts are readily accessible online
Reporting on all new spend with SMEs/VCSEsImpact
Whole of public sector
Building Commercial Expertise Across Government Civil Service Capabilities Plan - Priority Skills Area
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Developing Expertise
Developing a culture of confidence and judgment
Interchange with industry
Skills assessment tool and further L&D opportunities
Retaining Expertise
Active career path management
Designing a commercial talent programme
Non-monetary rewards
Attracting Expertise
Commercial recruitment hub
Developing commercial Fast Stream scheme
Fast Track apprenticeship programme
Commercial Reform
“A must attend’ programme for all commissioning leaders.” Francis Maude Minister for the Cabinet Office
• Development programme for people responsible for delivering transformation of public services
• Combination of input from experts and practical, peer-led learning
• Focus on commissioning for outcomes and across organisational boundaries
• Gives knowledge, networks and confidence to do things differently - emphasis on ‘hearts and minds’ rather than process and rules training
• Terrific feedback from participants – supporting them in delivering real change
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Next wave begins in September 2014; get in touch if you are interested [email protected]
Commissioning Academy
Commercial Reform
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Concluding thoughts......