The government failed to learn the lessons from previous aborted attempts to centralise procurement services when it set up the Crown Commercial Service (CCS), according to MPs.
The Public Accounts Committee (PAC) found that since it was set up in April 2014 the CCS has “failed to consistently deliver quality services to departments, and progress with centralising procurement has been slow”.
Whereas it was expected to be managing £13bn worth of spend on behalf of all 17 departments by now, it is in fact only managing £2.5bn of spend on behalf of seven departments.
And now a new target has been set for all departments to fully centralise common spending with the CCS by 2020.
The report said it had experienced severe difficulties in the programme to transfer procurement from departments and was yet to make the business case for how it would add value to departments.
And the service was accused of consistently overpromising what it could achieve to customers, weak communication and poor implementation of transition, often caused by poor governance and control.
Giving evidence to the PAC, Malcolm Harrison, chief executive of the CCS, admitted many of its problems had been caused by rushed spend aggregation.
Meanwhile, the Cabinet Office (CO) came under fire for failing to see the issues with the CCS’s performance early enough and acting “three to six months too slowly”.
One of the committee’s recommendations was that the CO should identify the factors that have caused its previous programmes to centralise services to fail and improve tracking of progress in the future.
However, while the CCS admitted its original targets had been overly ambitious it still believes that it can generate savings of 10% on average on all spend on common goods and services.
And the report said departments must understand the savings that can be achieved from centrally purchasing common goods and services and transfer appropriate spending to CCS as soon as possible.
The CO and CCS have been ordered to report back to the committee by October 2017 on the plans they have agreed with individual departments to fully centralise spending on common goods and services 2020.
According to the report the service lacked detailed plans from the beginning on how it would collaborate with departments and thus failed to gain their confidence.
One of the reasons for this poor performance was lack of a robust management information system to assess service delivery.
“CCS has recently started to invest in new systems to improve its data quality, which it believes will resolve some of the issues,” said the report.
While the report recommended the service publish key performance indicators it said that its management of procurement frameworks remains unsatisfactory.
“CCS has been unable to demonstrate its frameworks are the best in the market and there are signs that it does not manage the frameworks well,” said the report.
“CCS does not benchmark the prices it achieves on its contracts, so it cannot tell whether the end users achieve the best prices.”
In several cases, it continued to use expired frameworks, which contravene public procurement law and exposes the government to potential legal challenges.
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