What’s next for government consultancy?
On the anniversary of the second Management Consultancy Framework, Proxima examines the steps taken by government commercial to deliver a successful procurement strategy, and asks whether MCF2 is delivering value for money
UK Government, and public sector, buys a lot of consultancy – with Brexit consultancy spending alone topping £97m in a year - Figures like this gesture towards both the lack of capacity and need for flexible capability within Central Government, as well as an ever-expanding pressure to improve and increase capability to deliver services enabling front line priorities.
In September 2018, Crown Commercial Service (CCS) released the long-awaited Management Consultancy Framework 2 (MCF 2). In this article, on the anniversary of its launch, Proxima examines how successful this framework has been in aggregating spend, and delivering value to those who use it.
What’s in a name…? An introduction to MCF 2
The MCF 2 framework intends to enable central government and the public sector to more easily buy consulting services. It has four separate lots, comprising general business, commercial and procurement, complex and transformation, and strategic consultancy.
The name gives it away… this framework replaces MCF 1, which was put out to market in September 2017 but was constructively criticised both for its strategy, and its execution. MCF 2’s strategy is designed to be much more aligned to UK Government’s Small and Medium Enterprise (SME) agenda – making it more accessible than MCF 1 to smaller and niche consultancy providers, as well as larger, more established consulting organisations.
The CCS MCF2 was touted at its procurement as a £2BN framework (running for 2 years to September 2020). Since then, an estimated £500M - £700M has been spent through the framework (the exact figure is difficult to come by). Out of a UK Central Government Consulting market size of between £1bn and £1.2bn pa…the spend is behind the curve.
So, where is all the spend?
MCF 2 is not the only route to market. Government Departments and the wider public sector can also let their own, or buy from other frameworks such as ESPO, YPO, and NEPO. G Cloud has also been used as a vehicle to purchase consultancy. Economic buyers can also direct award from MCF 2 (without competition) or single source, if they so choose.
CCS do not recommend either of these routes as securing the best value for money, however they are often faster than running even a mini competition. In both of these cases, they are classed as exceptions and must be tracked by the Department and reported to the Cabinet Office. Arguably, this should act as a deterrent and encourage competition for all suitable requirements, but with a political landscape which includes Brexit, there are undoubtedly more important things on the minds of those responsible for governing this spend. Agility must be available where possible.
MCF 2's intention was not just to aggregate spend, but to make it easier for government Departments and the wider public sector to buy consultancy services to get value for money. CCS even provide some support to Departments to run mini competitions, and provide a significant amount of boilerplate documentation designed to make the contracting process simpler and more consistent.
What can Government learn from the market on MCF 2?
The success of MCF 2 is clear- reflected in the volume of requirements and value of spend that runs through it. It has introduced a compliant way of engaging the market and buying consultancy services, encourages value for money by introducing a ceiling cap to rates which can be charged by suppliers for specific types of work, and it also takes a lot of day-to-day work out of tendering and contracting by creating significant process efficiencies across each Department that uses it. Finally, it comes with a defined governance structure which should allow for ‘exceptions’ to be effectively managed.
It’s an iterative process though, and when MCF 2 is replaced at its expiry, or before, the following should be considered in the future commercial strategy for this category:
- - Size isn’t everything: While a purpose of MCF 2 has been to promote or stimulate competition to deliver value for money, there may be too many suppliers to choose from, which makes it unwieldy as a commercial vehicle. It may also cause inefficiencies in the process, by making it too easy for significant numbers of suppliers to respond to requirements, often extending the time needed to evaluate responses. In addition, for some Departments, the number of suppliers may simply prove too difficult to navigate
- - Where’s the innovation? The framework is ideal for relatively simple requirements, which can be bought ‘off the shelf’ through a structured procurement, costed at either day rate or fixed price. Often the innovation from the market, that government needs to supplement its own commerciality and capability, is inadequately considered, or not sufficiently valued within pre-market engagement – which means the outcomes don’t meet the requirements
- - Market making and MCF 2 do not mix: It is difficult to stimulate the market within the current political landscape. The pressures of incoming IR35 legislation, increasing needs for commercial capacity across the sector, and a dwindling number of candidates for public sector work mean that MCF outcomes could be criticised as a ‘best writing’ competition rather than a ‘best value for the public purse’ competition
- - A quality vehicle still needs a driver: The one element that MCF 2, MCF 1, and before it ConsultancyOne, have not fixed is the Government’s commercial capability to consistently define what it is that is needed in terms of outputs, in a way that makes sense, drives value for money and maintains market appeal. Supported procurements aside, this is where Departments still have some lessons to learn in engaging their internal stakeholders to participate in the process
- - All lots are not created equal: While MCF 2 is undoubtedly more SME friendly than its predecessors, Lot 3 – complex and transformational consultancy - still does not lend itself to smaller organisations. The requirement to get on this Lot is to have had two £5m contracts in the past 18 months, awarded as a single contract rather than a number of pieces of work over that period. This made it near-impossible for SMEs to get onto this Lot, whilst the ‘Big 4’ do so with ease
- - Contractual terms may impact on value for money delivered: The associated terms and conditions for any call off under MCF 2 are onerous for suppliers (e.g. solicitation of employees, intellectual property, financial set off, termination for convenience, to name a few). This is undoubtedly reflected in how work is priced at the outset and managed through its duration.
Departments can still make strides forward by using MCF 2 appropriately
The strength of any agreement, particularly a framework, is in its usage. When aggregated, the UK government is the largest consumer of consulting services in the UK. More broadly, it’s in the Government’s commercial interest to make the CCS agreements the default option to procure common goods and services.
So how can government help Departments to make the most of MCF 2 to aggregate spend and deliver value?
- - Teach Departments how to use service filters effectively: Suppliers within MCF 2, while large in number, do not have the same competencies and attributes. The service filters should enable suppliers to be filtered in/out to make response management and evaluation more practicable. But often these are not used, or perhaps simply reach pre-engineered outcomes
- - Warm up suppliers through pre-market engagement: Engagement with the market prior to launching an official procurement process should be encouraged as a way of ensuring sufficient competitive dynamics, as well as soliciting insight around the shape of the solution, procurement approach and optimising value for money. It also enables suppliers to self-qualify, and avoid investing the time in responding to things that would not align with their strategic objectives. Market engagement has the added benefit of enabling suppliers to understand a requirement in person/detail, and therefore consider their response carefully and not ‘low bid’ through ignorance.
- - Start with the end in mind: Consider outputs not inputs. This is a step change for Government Commercial, and a capability that does not exist everywhere (this is changing, thanks to the work the GCF is doing). Starting with the outputs enables the suppliers to come with approaches which suit delivery. If buyers are too prescriptive, they will just get a well written essay in return – not a value for money solution and methodology. There is a fundamental mindset challenge here around buying products, services or solutions.
What’s next for Government and Consultancy?
Government will always need business consultants; the demand, and the longevity of the relationship, is not in doubt. MCF 2 represents real progress in Government in finding a consistent way of procuring consultancy services – something that should not be understated or dumbed down.
As with all central arrangements, though, the proof is in the spend through the agreement, and at such a small proportion of the total market spend for this sector, performance can definitely be improved.
Proxima's report is available to download here - The Capability Conundrum: Resourcing challenges in government commercial