The latest Performance Review of the Government Procurement Service (GPS)
paints an extraordinary success story for David Shields, its managing director, who departs at the end of the month
Ostensibly covering 2012/13, it shows the progress from the latter days of its predecessor, Buying Solutions, in 2009/10. It reports that managed spend through GPS arrangements rose from £7 billion to £11.4 billion – against a target of £10 billion and annual savings rose from £487 million in 2010/11 to £1.2 billion in 2012/13 – against a target of £860 million.
In case there are any sceptics wondering about the savings figure, last year the National Audit Office endorsed the GPS savings figure and the way it was measured – a rare accolade. So we can assume that the £1.2 billion is realistic.
These savings came from an enormous range of goods and services, including travel (£115 million), Microsoft (12 per cent on licensing costs), consultancy (£40 million), furniture (£29 million), insurance (in conjunction with local government - £3 million), tyres for NHS and police (£5.5 million), legal services (£35 million) and temporary labour (£78 million).
GPS, under Shields, pioneered ‘lean procurement’ for the public sector and reduced contracting lead times from an average of 200 down to 91 days
, partly through the help of a new e-sourcing suite. This showed itself in the managed spend per employee that rose from £18.4 million to a peak of £35.1 million and total cost per full time employee reduced. This is reflected in a commission charge to customers reducing from 0.55 per cent to 0.33 per cent.
Long-term and potentially fundamental changes in public procurement may result from the alliances built up over this period. GPS teamed up with the research councils to offer pan-government contracting for research and construction projects. Alliances were developed with various bodies in the wider public sector, including two local government consortia – the Eastern Shires Purchasing Organisation and Yorkshire Purchasing Organisation. The migration of the Home Office’s Procurement Centre of Excellence to the GPS supports the drive to streamline procurement in central government. And having taken over the provision of a procurement service to the Cabinet Office, the GPS was poised to take on the procurement of several smaller departments, thus supporting the Civil Service Reform Programme.
The GPS also managed to make a ‘profit’ of £9.7 million. Originally this was being reinvested in public procurement, but some now goes to help fund the Efficiency and Reform Group in the Cabinet Office and to HM Treasury. One hopes that Chancellor George Osborne is appreciative.
The GPS has ambitious targets for 2013/14, including £2.9 billion demand and cash savings and increasing spend under its management to a minimum of £13 billion. The momentum generated by the increasing respect for GPS in the wider public sector, the alliances built and, assuming the financial settlements being agreed between central government departments and Treasury require much greater use of the GPS, the spend target should be exceeded substantially.
The GPS has become big and influential enough to be the foundation upon which public sector procurement can be transformed. This means interesting times ahead and the report acts as a CV most people would like to have.