Departments unwilling to accept Cabinet Office authority to centralise purchasing, suggest MPs

Centralised purchasing body still needs to develop full business case, according to committee

By Richard Johnstone

24 Mar 2017

The creation of the Crown Commercial Service was poorly executed and slow take up of centralised purchasing by departments means it only manages one-fifth of the spending it was expected to, a review by MPs has found.

Examining the development of CCS since it was formed in 2014, the Public Accounts Committee said that it had failed to gain the confidence of departments, which seemed unwilling to respect the authority of the Cabinet Office.

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CCS is intended to improve government’s management of commercial contracts through joint purchasing of common goods and services for departments, and creating framework agreements for use across the rest of the public sector. It was hoped that this could generate savings of up to 10% on common goods and services.

However, today’s report highlighted that the plan to transfer procurement from departments to the CCS had to be halted on two occasions, which means that it controls only £2.5bn of the expected £13.4bn of Whitehall spending, across just seven of the 17 planned departments. In addition, spending by the wider public sector through framework agreements was also below target, with only £6bn spent against a target of £7.5bn in 2015-16.

Committee chair Meg Hillier said this “dismal showing calls into question exactly how willing government departments are to accept the authority of the Cabinet Office in this area”.

She asked: “Is the case being made for CCS underwhelming, or is the message just not getting through? Is discipline across government too weak?

“There were clearly fundamental problems at the launch of CCS but even now it is unclear exactly how progress will be made during this Parliament and beyond.”

MPs highlighted that CCS did not have detailed plans from the start on how it would engage with departments, while it has still to develop a full business case.

The executive agency’s current performance remains unsatisfactory, the report added, but all departments should transfer appropriate spending to CCS “as soon as practicable” in order to unlock substantial savings. Both CCS and the Cabinet Office should respond to the committee by October setting out plans to centralise spending on common goods and services in full by 2020.

One of the CCS’s framework agreements had expired, meaning its use would contravene public procurement law and expose the government and any organisation using it legal challenge, the PAC revealed. Three other frameworks, including those covering consultancy services and temporary staff are set to expire this year, and these must be replaced.

MPs added that this was “the latest failure we have looked at of the Cabinet Office attempting to centralise services”. The creation of CCS had not learned from previous aborted schemes to centralise services, and CO must finally learn the lessons and ensure departmental buy-in for what it is trying to do, they concluded.

The Cabinet Office told the committee that CCS had helped departments save £1.9bn by 2014/15 against a 2009/10 baseline, and a further £521m in 2015/16.

Responding to the report, a Crown Commercial Service spokeswoman said: "The Crown Commercial Service has reported savings of £2.4bn for the taxpayer since its inception in 2014. With an experienced senior leadership team now in place, we are confident in our ability to deliver even greater value for the taxpayer moving forwards through the centralised procurement of common goods and services."

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