Cabinet Office did not get departmental buy-in for shared procurement plans, says spending watchdog

National Audit Office report on Crown Commercial Service blames failure to achieve forecast procurement savings on “overambitious targets, poor planning, inadequate data and lack of buy in”


By Suzannah Brecknell

13 Dec 2016

The government’s attempts to reform central buying through the Crown Commercial Service (CCS) “have not been well managed”, according to the National Audit Office, and could have achieved more savings “if the CCS had been set on a sounder footing”.

The CCS was launched in April 2014, bringing in staff from the Government Procurement Service, with a mandate to buy common goods and services directly rather than simply creating frameworks for departments to use.

But a new report by the NAO says the Cabinet Office was too reliant on this mandate, and “severely underestimated the difficulty of implementing joint buying across government”.

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“The Cabinet Office relied on a Cabinet Committee mandate to get departments to transition their services quickly and did not focus enough on how it would manage them once they were transitioned," the report says.

CCS began delaying the dates when departments would transfer to its services just one month after it was launched, the NAO found.

By April 2016, CCS was managing some £2.5bn of spend directly – over £8bn less than it had originally forecast. At the same point, CCS was managing the spend of seven departments directly – ten fewer than it planned.

"It is not possible to show that CCS has achieved more than departments would otherwise have achieved by buying common goods and services themselves" –  National Audit Office

The NAO believes that the main causes for CCS’ failure to achieve forecast savings of £3.3bn from 2014 to 2018 were “overambitious targets, poor planning, inadequate data and a lack of buy-in by customers”.

Comptroller and auditor general Amyas Morse said: “Without a sound overarching business case or a detailed implementation plan, it is not surprising that the Crown Commercial Service rapidly ran into difficulties and soon had to reset its plans.

“It is particularly disappointing that the Cabinet Office has not tracked net costs and benefits. Because of this, it is not possible to show that CCS has achieved more than departments would otherwise have achieved by buying common goods and services themselves.”

Public sector organisations working with CCS saved £521m in 2015-16, the NAO found, but the actual net benefit of the CCS to date is not known.

The NAO concludes that the case for joint procurement of common goods and services remains strong, but Cabinet Office must build goodwill instead of using mandates to bring departments on board.

“For central government to achieve value for money from its common goods and services, it needs to finish the centralisation it began in 2014,” says the report.

“The events of the past two years have shown that, in practice, joint buying needs both a mandate and goodwill from departments.”

CCS must demonstrate that it is improving services for customers, says the report, while the Cabinet Office should “reiterate” the mandate for central governments to buy common goods through CCS.

"Poor service"

The CCS is currently carrying out a "reset" programme, the result of a review carried out in 2015 by Malcolm Harrison – a former chief procurement officer at Nestle, who would later become the CCS’ chief executive.

The NAO report says that: “From 2014 through to 2015, senior departmental commercial staff complained to us of CCS’s poor service and their lack of confidence in it to manage the transition and buy goods and services on their behalf.”

“The events of the past two years have shown that, in practice, joint buying needs both a mandate and goodwill from departments" – NAO

Most of the planned transfers of staff from departments to the CCS did not happen and, when they did, some departments had to re-hire staff to carry out roles they thought CCS would manage. 

The NAO reports that after transferring all procurement staff to CCS, the communities department had to hire three new staff members to “create an Intelligent Client Function to oversee CCS and bridge gaps in commercial capability left by the transfer of staff to CCS”.

The leadership of CCS has changed significantly since 2014 – only four of the original 11 board members remain, and in the last six months CCS has recruited four new senior managers.

The organisation's most recent People Survey results reflect positively on the changes. It has improved in every area apart from pay and benefits, with a 17-point increase – to 44% – in its score for leadership and managing change.

Overall engagement in the CCS rose by five points to 58%, and employees' perception of the organisational objectives and purpose rose by eight points points to 79%.

Departmental commercial officials also have increased confidence in the new leadership, according to the NAO.

“In general, departments were pleased by the focus on improving service quality and told us that the quality of the relationships between departments and CCS was improving,” says the report.

It cautions, however, that the CCS is implementing its new plans in an iterative manner, which makes it hard for customers and staff to understand and monitor progress.

John Manzoni, chief executive of the Civil Service, said: “The Cabinet Office will always set ambitious targets for the work we do right in the heart of government. CCS has made huge strides in recent months, and we expect to see more and more savings as the changes we make take hold across departments.

“From the centre we will increase skills and bring in the talent needed to make sure every penny of taxpayer’s money is used to its absolute maximum.”

Malcolm Harrison, chief executive officer of CCS, said: “CCS continues to enable central government and the wider public sector to achieve substantial benefits for the taxpayer from the procurement of common goods and services.

"I welcome this report, which rightly highlights the challenges CCS faced at its establishment, while acknowledging the positive progress we are now making.”

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