Cabinet Office makes major revamp of spend controls for commercial and technology

Written by Richard Johnstone and Sam Trendall on 2 May 2018 in News
News

Newly updated policy implements a pipeline model which could make it easier for departments to self-approve 'business-as-usual' spending

Photo: PA

The Cabinet Office has overhauled the application of spend controls for commercial and digital and technology spending and implemented a lighter-touch “pipeline” model offering the potential for departments to more easily dedicate government money to “business as usual” spending.

The latest guidance, version 5 of the Cabinet Office policy on controls that have been in place since 2012, said departments can qualify for additional freedoms if they outline all future planned commercial spending and digital and technology spending plans for 15 months.

These pipelines should record all future commercial spend activity worth £10m or more, or changes to existing contracts where the value of the variation will be above £10m, as well as planned digital spend over £100,000 and technology spend over £5m, as well as any novel or contentious digital and technology spend.

Departments are also required to create assurance boards for commercial and digital and technology to oversee the pipelines and ensure that the department’s practices are in line with the government’s Commercial Operating Standards and digital principles.

Departments should consider representation from GDS and Crown Commercial Service on the commercial assurance board, as well as being open to periodic observation by the Cabinet Office’s Government Commercial Function, while the technology board must have Cabinet Office representation through GDS.


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Once these regimes are in place, these assurance boards will be able to mark spending as ‘assured’ by an organisation’s internal assurance board. Such a board can self-approve planned spending by measuring it against publicly available GDS assessment criteria. Departments are advised that they can “start spending money” on any projects deemed to be assured.

This represents a significant loosening of the current controls that were put in place by then Cabinet Office minister Francis Maude as part of the government's efforts to cut the deficit, where departments need specific prior approval from the Cabinet Office for any commercial spend with a supplier worth £10m ​or more, and for digital expenditure above £100,000. Approval is also currently needed for spending of more than £1m on services from Whitehall’s two independent shared service centres such as current or new back office or administrative systems, and any technology expenditure above £5m, and approval is needed before projects entered the discovery phase.

Controls will still apply to spending on advertising, marketing, and communications of more than £100,000, consultancy projects worth upwards of £1m, and property rental contracts of more than £100,000. Learning and development services worth in excess of £10,000 or "outside the core curriculum" of a department must also attain approval.

The controls policy also requires all redundancy and compensation schemes to be approved by the Cabinet Office. Government agencies must also "submit quarterly recruitment forecasts and accompanying narrative" to the Cabinet Office.

Relaxing controls

The idea of relaxing the controls for technology was mooted 18 months ago by then-new director general of the Government Digital Service Kevin Cunnington.

As of March 2017, Cunnington indicated that GDS was trialling the use of a model whereby Whitehall departments and other government agencies maintained a 15-month pipeline of planned digital and technology spending for ongoing monitoring and, if necessary, intervention.

This model has now been fully implemented, with an updated policy document published by the Cabinet Office. In the new system, central government organisations can, largely, self-approve projects they believe fall under the category of “business as usual spend”.

Under the new policy, once organisations have completed the “triage” phase of the process, wherein project spending has been self-assessed and entered into the pipeline, they can enter the approval process, during which spending will be assessed as falling into one of four categories: assured; monitor; control; or pending. These criteria are designed to assess projects in seven areas: compliance with minimum pipeline standards; whether the project is built on user needs and research; use of engagement, governance, and scrutiny; adherence to the government's technology or commercial guidance; use of established resources and capabilities; relevance and collaborativeness of the project; identification and monitoring of the project's benefits.

If a department measures its planned spending against the assessment criteria and finds that “the spend activity does not currently meet all required standards but is not contentious”, the project should be marked as ‘monitor’. In this case, the department or agency in question should “put a plan in place to make sure activities meet standards within an agreed timeframe”, which is subject to approval by representatives from GDS or the Cabinet Office’s central business partner.

Departments can begin spending money on sub-£10m projects assessed as being ‘monitor’ once they have gained approval from an independent “joint assurance board” featuring teams from the Cabinet Office.

If a department or agency believes that its planned “spend activity is novel or contentious or is unlikely to meet all the required standards”, it should mark this project as ‘control’. Control spending will be subject to recommendations – and, in most cases, required conditions – from the “GDS senior technology adviser” attached to the department in question for technology projects, or subject to an in-depth Cabinet Office review for commercial schemes.

In both cases, the project will ultimately be submitted for approval directly to the Cabinet Office minister. This submission will be jointly made by GDS and GCF if the planned spending exceeds £10m. If a project is subject to both technology spend controls and the separate controls applied to commercial projects, then it must attain approval from both GDS and GCF.

Departments can only spend on control projects once the Cabinet Office minister – currently David Lidington – has signed off on the plan. In some cases, the approval will be subject to certain conditions imposed by the minister.

The pipeline model may create more work for departments – particularly in the short-term. But it should, ultimately, allow them to more easily spend money on business-as-usual projects.

The government guidance stated: “It may take time for you to create a pipeline, and you need to maintain it on an ongoing basis to comply with the spend controls.

“If you need help developing a commercial pipeline you can work with the GCF Central Commercial Team [and] a GDS senior technology adviser will work with your organisation to develop a pipeline.”

The guidance on digital pipelines stated: “Where your organisation can identify less complex areas of repeat, commoditised, or routine digital and technology spend in the pipeline, you should show this. You may work with the Cabinet Office to categorise these areas of spend as ‘assured’, if this approach meets the GDS spend controls pipeline assessment criteria.”

It is understood that the new policy aims to allow departments to roll out the Government Transformation Strategy, while still striving to promote technology reuse and minimise unnecessary spending.

In response to CSW’s sister title PublicTechnology seeking comment, a government spokesperson said: "The new digital and technology spend controls will strengthen GDS collaboration with departments. The same rigour will still be evident in the new pipeline approach to planned digital and technology spend, which encourages GDS and departments to engage earlier. This means GDS will have more time to support departments to design the best approach. The forward-look will make it easier for central government to identify potentially contentious spend."

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Richard Johnstone and Sam Trendall
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Richard Johnstone is CSW's deputy and online editor and tweets as @CSW_DepEd

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