Last year the UK government made £2bn in commercial benefits as part of the major procurement transformation underway, the chief commercial officer told delegates at the CIPS Annual Conference.
That is the equivalent of four teaching hospitals, or two frigates, or any number of police cars, quantified Gareth Rhys Williams, government chief commercial officer, as he described how he is enhancing commercial expertise.
Government spend covers everything from prisons and data centres to dog grooming and security. Central government alone spends £44bn, he said: “If you add in defence and large parts of the NHS, you can easily get to £100 billion. We have one project just now to save £180 million just in jobcentre estates. That gives you an idea of the size of the challenge,” he said.
The overall aim is to cut £4bn through the transformation, and any money saved goes back into something else to benefit the taxpayer, he said. Newspaper reports of government procurement that went badly wrong, including the G4S and Serco security issue a few years ago, highlighted the need to change. “If we can improve delivery and value we stay out of the Daily Mail, and benefit the citizens,” he said. “It’s not about removing from vendors, it’s about taking out waste,” he added.
The transformation is based on three elements: the right people, the right structure, and the right systems. “We have been missing on most of these dimensions for quite a while,” he said. A commercial function has been created, which will build expertise, professionalism and method. A function is a relatively new concept in government, where departments often operate as silos, said Rhys Williams. “This is like many businesses have HR functions, finance functions and so on,” he said. It is not being set up to be a separate group, but to work with departments. “We are here to help the permanent secretaries - who are a bit like a CEO - spend their money in the most effective way,” he said.
The 4,000 commercial staff in central government will be part of the Government Commercial Function, but many will still sit within their own departments, focusing on their specialism. “We should only buy submarines, drugs, pensions in one place,” he said, while some common purchases, such as energy and facilities management, will be handled centrally, under the Crown Commercial Service. This is a change to previous plans, but has proved to be a better balance, according to Rhys Williams.
A training programme for staff has been set up, as well as benchmarking to improve the systems and processes. Senior staff will be appointed into the smaller Government Commercial Organisation.
The changes started with key government departments, and will roll out to arm’s-length organisations, such as the Driver and Vehicle Licensing Agency and the Nuclear Decommissioning Authority, and local government.
Rhys Williams put out a request for help from the delegates. As they move into training and accrediting about 5,000 contract managers, Rhys Williams needs to find these people and find people who can train them. “If you think you are up for a new challenge, let me know,” he said.