Special report: The crowning glories

“I think this is a change; quite a big change,” says Home Office commercial director – and newly-appointed crown commercial representative – Bill Crothers. The appointment of ‘crown reps’, the government hopes, will lead to a more efficient relationship between the government and its main suppliers. But is this one small step towards lowering costs, or a giant leap to further centralisation?

Overseeing all the relationships between government agencies and the companies within their briefs, the crown reps will act as ‘pointmen’ with a set of key suppliers, attempting to ensure that the government acts as a single buyer rather than a series of individual departments.

Alongside these client-facing crown reps – who are mostly departmental commercial directors – hi-tech entrepreneur Stephen Allott and former software businessman Stephen Kelly will serve as thematic crown reps, working with small and medium-sized enterprises (SMEs) and on the mutualisation agenda respectively.

Covering a wide range of companies and many billions of pounds’ worth of contracts, the crown reps meet every month to take a strategic look at their suppliers’ activities, address points of conflict and observe market trends. Each crown rep’s portfolio broadly covers a field of supply, such as communications, facilities management or construction companies.
Attempting to strike a balance between departmental autonomy and central control, the crown reps view all contracts before they are signed to check that every department is getting the best deal and to avoid inconsistencies – such as one department signing a contract with a supplier whilst another part of government is taking the company to court.

The seven civil servants profiled here were all, to varying degrees, involved with the contract negotiations carried out with suppliers last summer by the Efficiency and Reform Group (ERG). These ‘Memorandum of Understanding’ (MoU) renegotiations were regarded as a success, with the government able to announce that it had exceeded its £800m savings target for 2010 within three months of establishing the ERG. Savings were achieved in the renegotiation process though the unification of disparate contracts held across government, with the aim of getting the best value for government as a whole from each supplier. Since the completion of the MoU negotiations these commercial directors have been formally named as crown reps, leading all future negotiations with their allocated suppliers in order to make sure that the government continues to act as a single purchaser.

This approach reflects the direction set by Cabinet Office minister Francis Maude, who is devoted to pressing suppliers to reduce their margins. Announcing the thinking behind the appointment of crown reps, Maude said: “We need better, more efficient relationships with suppliers over the long term. The value of a single representative acting on behalf of all departments became apparent during the contract renegotiations. It brought benefits for both sides, bringing a complete picture of a supplier’s portfolio of contracts to the discussions and identifying opportunities for synergy and cost removal.”

For their part, suppliers are keen to show support for the new approach. James Johns, director of strategy and civil government with IT company HP Enterprise Services, says: “Contrary to what some might think, suppliers do see the appointment of the crown reps as a positive thing. If they can help remove obstacles to suppliers treating government as a single client, this has benefits to all parties: lower costs to the departments, improved value for money for the taxpayer, and a better reputation for suppliers.”

Although squeezing supplier margins was one of the main aims of the negotiations, suppliers stress that the crown reps can also help increase government efficiency more broadly by championing good ways of cutting costs. Paul Scales, chair of the UK public sector board at consultancy and outsourcing company Capgemini, says: “I see one of the key roles of the crown reps as helping suppliers to share their best practice and ideas and knowledge across government.”

However, some suppliers express concerns that the move to appoint crown reps has been somewhat half-hearted. The reps are part-time, sharing their cross-government duties with their roles as departmental commercial directors. Unlike their private sector equivalents, their briefs comprise a portfolio of suppliers rather than a field of procurement, such as laptops or estate management: off the record, businesspeople suggest that this restricts the reps’ ability to foster competition between suppliers. And some firms have concerns that although there will be a never-ending quest to squeeze margins, the reps have not been asked to address the more fundamental questions around how government spends money.

If government is going to act as a single customer, suppliers suggest, it should also act as a single consumer rather than operating through the current myriad of departmental supply chains. Some businesses would like to see the remits of the crown reps expanded to tackle organisational inefficiencies such as the duplication of systems and processes across government: it’s all very well ensuring that no department pays over the odds for an existing service, they argue, but the big potential savings will only be found if the reps are given the task of lining departments up behind initiatives such as shared services and business process outsourcing.

Of course, departments require enough flexibility to realise their unique requirements, but they don’t necessarily need different back office IT systems or HR processes, the companies suggest. And crown rep Martin Bellamy acknowledges the potential for the reps to pursue some of these bigger reforms, suggesting that “this could include enabling suppliers to consolidate data centres across different departments, asking the question of whether there is a need for different service levels”.

The MoU process was a success, and the expectation will be that the crown reps can continue to achieve savings and streamline procurement. However, their mandate is a limited one, and they’re likely to tread carefully: interviewed by CSW, the crown reps have largely been eager to stress that they won’t ‘interfere’ in relationships between departments and suppliers. Although there is the potential for crown reps’ roles to expand in the future, on current plans their introduction looks like a useful tweak designed to eliminate the biggest variations in value for money across government, rather than a dramatic improvement in government’s ability to think and operate as a single organisation. This small step is welcome and will bring in savings for the taxpayer. The giant leap, however, is a long way off.

Martin Bellamy

Main job: ICT and change director, National Offender Management Service
Suppliers: Accenture, Steria and Cisco

Unlike the other crown reps, Martin Bellamy is not a commercial or procurement professional. Instead, he’s an IT man with considerable cross-government experience, having been director of the G-Cloud project to create a secure government cloud computing infrastructure.
Bellamy joined the civil service in 2003, working for the Department for Work and Pensions as IT director and chief information officer. In 2008 he moved to the Department of Health, and in 2009 was seconded to the Cabinet Office as director of IT strategy and policy, working for the government CIO on the G-Cloud.

For Bellamy, the role of the crown reps is to develop a “co-operative process with departments”. He does, however, emphasise that that there have to be “very clear expectations on everybody that saving money is really important”. During the MoU process, Bellamy says, he felt that the suppliers he was working with “could see the need and wanted to support the government’s intentions in achieving savings”. And they also had Francis Maude bending their arms: “without question”, says Bellamy, his personal commitment to the process was very valuable to the outcome.

He describes the appointment of crown reps as an “inflection point” in the relationship between the government and its biggest suppliers, representing a “distinct change in approach”. Bellamy says that other civil servants should be aware that the day-to-day relationship between suppliers and departments does not change with the imposition of crown reps – but in areas where difficulties arise or problems are looming, involving the crown reps could really help officials to “nip problems in the bud”.

Bill Crothers

Main job: commercial director, Home Office
Suppliers: IBM, Fujitsu, Logica and Capgemini

Bill Crothers joined the civil service in April 2007, having previously spent 20 years in the private sector – mostly at consultancy and outsourcing company Accenture.
Crothers’ first role within the civil service was driving through the implementation of the controversial National Identity Scheme, which was soon scrapped by the coalition government. He subsequently became involved with the Cabinet Office’s MoU renegotiation process – negotiating with some of the biggest hi-tech suppliers to government – and afterwards retained many of those companies in his portfolio as a crown rep, dropping Serco and Steria and adding Capgemini.

Crothers is forthright about the government’s approach to the MoU process, describing the talks as the “negotiation of embarrassment, in that [Cabinet Office minister] Francis Maude took a position that we were not trading anything. This was not us negotiating in a traditional sense, in that we give a contract extension in return for better terms”.

This didn’t prevent Crothers from taking a carrot-and-stick approach to the negotiations, which he set out over four stages. The first, achieving “folding money savings”, squeezed the supplier’s margins. The second involved ending the ‘gold plating’ and over-specification of particular contracts. The third meant looking at the allocation of goods and services – eg. the ratio of people to printers in civil service offices. Finally, the fourth stage involved asking the supplier for their own reform ideas across government. Crothers’ approach was to offer more potential business to the supplier only at the fourth stage, once they had made significant concessions on his first three hurdles.

Not a typical civil servant, Crothers says his private sector experience has helped him because he “understands the dynamics of how those guys [suppliers] work”: he speaks the language of the private sector, and knows how businesses operate.

Crothers thinks the introduction of crown reps is a big change; but he realises that “nobody responds well to imposition from the centre”, and seeks to reassure departments that “we are not from head office; we are here to engage in a pragmatic way and to help them”.

Vincent Godfrey

Main job: procurement director, Ministry of Justice
Suppliers: Serco, Carillion, Mitie, Interserve, GEO Group, Amey and Sodexo

Very much a procurement professional, Godfrey was previously head of procurement for the Prison Service. He took that job – his first in government – after working for the railway industry, where he focused on large outsourcing and infrastructure projects.

Godfrey’s portfolio of suppliers reflects his experience outside government working with facilities management and construction suppliers as well as operational outsourcers.
Leading some MoU negotiations with suppliers and playing an integral part representing the Ministry of Justice in others, Godfrey says that it was “important to reset the relationship [with suppliers] and never again be in a position where one department is getting a totally different commercial deal to another department for what is ostensibly the same thing... It was about being clear with suppliers that going forward the crown has to be treated as a single entity.”

Previously, the government was poorly equipped to deal with suppliers, argues Godfrey. He says that the new approach, far from constraining departments, actually involves less central control than was present under the auspices of the Office of Government Commerce (OGC). “In the past, OGC has been a step removed from departments and taken a top-down approach; it was a bit dysfunctional as a relationship. Now you have a central leadership team with the crown reps, but a departmental leadership team that is backing that up.”

Like Bellamy, Godfrey is clear that Maude’s direct involvement in the process has been highly beneficial. “We’ve not had, in my time in procurement, anything like the level of interest from the ministerial team that we have now,” he says. “It has had tremendous focus and that has really opened things up for us.”

Ann Pedder

Main job: commercial director, Foreign and Commonwealth Office
Suppliers: G4S, Balfour Beatty, Cable & Wireless, Global Crossing, Atkins and Detica

Ann Pedder is relatively new to the civil service, having been commercial director at the foreign office (FCO) for just 20 months. Previously she was, she says, “private sector through and through”, working at GE Healthcare and in global telecoms and aircraft industries. “Understanding what it is like to sit on the other side of the procurement process, I think, is very helpful,” says Pedder.

Pedder’s portfolio is mixed, comprising a mixture of companies that are key to the FCO’s work and others with which she negotiated during the MoU talks. During those negotiations, she says, she wanted to foster “the start of a different way of working”.
The introduction of crown reps has, according to Pedder, increased the government’s leverage in negotiations. She says that as a crown rep she is able to point out “where suppliers have different kinds of relationships and differing deals with diverse departments”.

Discussing the role of a crown rep, Pedder stresses that she is not there to “dive into the massive detail of the way departments work”, but instead to act as a point of contact between departments and suppliers, helping them both to overcome any problems.
Pedder suggests that the best way for civil servants to make the most out of their crown rep is to interact with them: this is not the imposition of another layer of centralised nitpicking, she argues, but something that allows departments to have someone negotiating on their behalf at the highest levels.

The introduction of crown reps is also beneficial, she adds, for those suppliers which are ready to “accept that there might be winners and losers and the competition may get harder”, but realise that with this new approach, “some of their innovative ideas get a faster route to market” within government.

David Smith

Main jobs: commercial director, Department of Work and Pensions, deputy chief procurement officer for government
Suppliers: HP, Telereal Trillium, Atos Origin, BT, Xerox, CSC and Vodafone

David Smith has spent 25 years working in public sector procurement, in a variety of different government departments. His portfolio consists mainly of technology companies, with the exception of the property company Telereal Trillium.

Currently the vice president of the Chartered Institute of Purchasing and Supply, Smith will become the institute’s president in November. He will be the first career civil servant to hold this position, which he describes as a “great honour”.
Having worked with the ERG on many of the MoUs, Smith was responsible for – and closed – 11 MoUs, producing savings for the taxpayer of around £250m.

The renegotiations with suppliers proceeded “very speedily”, says Smith. His approach was a “value-to-the-taxpayer proposition”. Smith was looking for a contribution from suppliers both in terms of improved service and savings back to the taxpayer. He found the suppliers very willing to engage with the renegotiation process, and tells CSW that “the suppliers were persuaded by ministers of their obligation to the process”.

The creation of crown reps, and the coalition’s approach to reforming procurement, represents a “fundamental step change”, says Smith. Like some of his peers, he highlights the approach of Francis Maude, who has “taken a personal responsibility for government’s third party spend”. This has “given a focus and an impetus; a ministerial desire that government must be considered as a single entity when dealing with its key suppliers”.

Without the deficit and the pressure on public finances, Smith suspects we wouldn’t have seen this kind of reform. “It would be unfair to say that the deficit and austerity measures have been ‘used’, but they have been the catalyst to catapult procurement to be particularly important to the government’s agenda,” he says. “Therefore there is a massive desire to get this right.”
Smith refutes the contention that departments’ particular needs, requirements and objectives are constrained by the new, cross-government structure, stating that he “always includes principal commercial leads from other Whitehall departments [in contract negotiations] where they have a role to play”.

David Thomas

Main job: commercial director, HMRC
Suppliers: Vertex, Capita, Royal Mail Group, Thales, Lockheed Martin and Northrop Grumman

David Thomas is another civil servant with considerable supply-side experience. He has been commercial director at HMRC since 2006 – but before that, he worked in the private sector in the gas, oil and electricity industries. He has responsibility for the BPO (business process outsourcing) specialists among government suppliers.

Unlike other crown reps, Thomas was not fully involved in all stages of the MoU negotiations. Although he was involved in the ‘first wave’, he declined involvement in the second wave due to work commitments.

Experience in negotiations on both sides of the table has given Thomas a valuable insight into the negotiation process, and an ability to see both sides of the argument when looking for ways forward. “I’ve seen many things in my life, but one thing that normally is true is that if one side says one thing and the other side says the other, both sides will be wrong in part,” he comments.

As a crown rep, Thomas sees his role as akin to that of a relationship guidance councillor, smoothing the interactions between departments and suppliers. Their ability to offer guidance and support can be very useful to some parts of government, he says – especially the smaller departments. The crown reps can also greatly speed up the process of resolving departments’ procurement problems, he adds – not least through their ability to speak directly to suppliers’ top executives, short-circuiting communications problems.

“There are times when the crown representative will have to get the club out and use it,” says Thomas. But he admits that “the civil service sometimes will be wrong, just as a supplier sometimes will be wrong – and it is my job to point out where that happens”.
Thomas believes that his “ability to talk to some of these suppliers is probably better because I’ve used slightly different language to someone who has been in the civil service for 35 years”.

He’s someone who knows the private sector well – and admits of government’s complex procurement machinery that “I don’t fully understand it, as a private sector individual – and nor do I seek to understand it.” That’s why he works so closely with the career civil servants among his crown rep peers, he adds hastily: “I know who to ask; people with a thorough knowledge of the machinery of government.”

Bill Yardley

Main job: head of projects, Defence Infrastructure Organisation, Ministry of Defence
Supplier: Babcock International Group

Bill Yardley is the crown rep with sole responsibility for engineering support services company Babcock’s deals with the UK government. This reflects his role in the Defence Infrastructure Organisation (formerly Defence Estates), which has a large portfolio with Babcock: the company manages some of the UK’s best known defence establishments, such as Devonport Royal Dockyard in Plymouth.

A qualified chartered surveyor, Yardley has moved “much more into programme and project management and the commercial world”. Like fellow crown rep David Smith, he is also involved with the Chartered Institute of Purchasing & Supply, where he is a fellow.

Having worked in the MoD since the mid 1990s, Yardley has had to rapidly develop an understanding of Babcock’s other work across government. He sees his appointment as a crown rep as a natural development of his role negotiating with Babcock during the MoU process, during which he discovered that individual departments were “themselves trying to take forward various efficiencies.” Aligning these initiatives, he says, “I was able to bring some coherence and consistency to the way government fronts up to suppliers.”

Yardley is keen to reassure other civil servants that the appointment of crown reps will not interfere too much with the way individual government departments go about their business with suppliers. “This is about building relationships between myself and Babcock, and also myself and the other senior people in other departments,” he says. “The intent is added benefit” – for all concerned.

Suppliers and departments might be apprehensive about the arrival of crown reps but, says Yardley: “I’m not in a position, and haven’t got the time or the resource or the knowledge, to get involved intimately in the relationships and the individual arrangements departments have with Babcock.” Yardley clearly thinks that the crown rep’s role is not about central control, but about improving relationships: “It is important that we listen to [departments], and let them help us.”

Focusing on the benefit to departments as a whole, Yardley advises other civil servants to “recognise and understand the role of crown reps”, and urges departments not to “see us as a threat.”