Crown Commercial Service 'not value for money'

13 December 2016

The Crown Commercial Service (CCS) has “not yet achieved value for money”,  the UK’s public spending watchdog has said.

In a report, the National Audit Office (NAO) said the government's joint buying service had failed to integrate or standardise the services brought under its remit, and at times could not demonstrate to its customers they were getting the best deal.

NAO also said the Cabinet Office (CO) rushed through the transfer of departmental procurement functions to CCS and did not focus on how it would manage them once centralised.

It said it was impossible to tell if net savings had been achieved. 

“Without a sound overarching business case or a detailed implementation plan, it is not surprising that the Crown Commercial Service rapidly ran into difficulties and soon had to reset its plans,” said Amyas Morse, head of the NAO. 

It was “particularly disappointing that the Cabinet Office has not tracked net costs and benefits”, he added, making it impossible to see if CCS has achieved more than if departments had been buying for themselves. 

CCS has realised savings of £521m in 2015-16 based on what would have been an equivalent spend the previous year. But the NAO said this could not be compared to a government CCS plan of £3.3bn net benefit over four years because of differing measuring methods.

The report also pointed out CCS’s current leadership believes the £3.3bn savings is unachievable because the plan overestimates the amount of goods and services appropriate for centralisation.

CCS directly manages the spend of seven government departments, 10 fewer than originally planned, and had spent £2.5bn by April 2016, £8bn less than forecast. 

An additional £12.8bn of public sector spend went through its frameworks in 2015-16. Seventy-eight percent of its frameworks are due to expire in 2016-17.

The report said: “Although shared services normally carry out the same service for many customers, CCS agreed different services for each of the different departments that transitioned and did not focus on improving the quality of services once transitioned.”

CCS had also extended frameworks without market testing or competition, and on occasion allowed departments to buy off of expired frameworks, it said.

In a statement, the CO said CCS leadership “recognised the issues highlighted in this report in the operational review conducted in late 2015 and have already put in place a change programme to address the shortcomings of the original implementation”. 

Malcolm Harrison, CEO of CSS said: “CCS continues to enable central government and the wider public sector to achieve substantial benefits for the taxpayer from the procurement of common goods and services.

“I welcome this report, which rightly highlights the challenges CCS faced at its establishment, while acknowledging the positive progress we are now making.” 

Harrison became CEO on 1 November 2016. Before that he served as interim CEO after his predecessor Sally Collier resigned in May.

The NAO report said there was still a strong strategic argument for joint buying and recommended that:

  • CCS work with departments to build support and goodwill for joint buying
  • CO and CCS should clearly lay out market priorities
  • CO should review accountability and governance arrangement within CCS
  • CO and CCS should to communicate a clear “benefits realisation plan” for improvements

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