Cabinet Office’s procurement reforms start to pay off

By Tony Collins

Attempts by the Cabinet Office to reform the way central government buys goods and services are beginning to pay off says a report of the National Audit Office today. SMEs are also winning a larger share of government business, says the report.

“The current procurement strategy is the most coherent approach to reform to date,” says the NAO in its report Improving government procurement. “The creation of a Chief Procurement Officer and associated positions has formed clearer lines of responsibility at the centre, and there is now a mandate for departments to use central contracts.

“The Government Procurement Service has improved capability and functionality as the delivery body for centralised procurement, having undergone positive changes from its legacy organisation, Buying Solutions.

There will be significant benefits to government if this approach is implemented successfully. The strategy outlines potential savings for government through better-negotiated central deals, aggregation of demand and standardisation of requirements. Centralisation should also enable procurement resource savings in departments.”

SMEs

Some SMEs are benefitting from the Cabinet Office reforms. Says the NAO, “The government aspiration to achieve 25 per cent of spending with SMEs by 2015 has opened up opportunities; the proportion of expenditure with SMEs has increased from 6.8 per cent in 2010-11 to 10 per cent in 2011-12. However, the poor quality data on SMEs means that these figures are difficult to verify…”

Savings

Central government, excluding the NHS, spent around £45bn buying goods and services from third parties in 2011-12. This has fallen from £54bn in 2009-10, adjusting for inflation. The NAO also says, “We have confidence in GPS’s reported £426m savings for central government in 2011-12 through reduced prices.”

Cabinet Office doesn’t enforce its will

The report highlights a fundamental problem that limits all attempts by the Cabinet Office to cut the costs of spending on IT and other goods and services: it does not enforce its will, and departments still have accountability to Parliament for their spending.

“Current mechanisms do not address the inherent tension between the mandate for government departments to use central contracts, and departmental accountability for expenditure and operational risk,” says the NAO. “The mandate is not enforced, and there are no sanctions in place if departments do not comply.

“The Cabinet Office does not hold departments to account for transferring expenditure to the central contracts, and for reducing their own procurement resources. As service users, departments are largely unable to hold the Government Procurement Service to account for performance. Governance structures have grown organically, resulting in duplication between groups and boards, and their purpose and remit are unclear.”

The NAO concludes that “either the Cabinet Office will need to create more potent levers, or it will have to win ‘hearts and minds’, and demonstrate that it has the capability and capacity to deliver a high‑quality central procurement function.”

Comment:

If winning hearts and minds is the Cabinet Office’s preferred route – instead of sanctions – reforming central government will be a long and slow process, and the will to reform may in any case evaporate after the next general election. A hint that changing central government is like pulling teeth comes in a blog post on the Government Digital Service which mentions efforts to persuade officials in central departments to move their websites to a single central website, GOV.UK.

Kathy Settle, Deputy Director at GDS, refers in her post to “exemptions bids”, in which government organisations make a bid to keep their own websites and not move onto GOV.UK. She hints that the negotiations with some departments and agencies have been long and difficult.

Settle says, “We have looked at this a number of times now over the last few months. Wednesday was the final day where we actually made the decision about who is on and who is off. We have now got a big list of organisations that need to move by April 2014.”

If it is proving impossible to move all government websites to GOV.UK – which is not a ground-shaking change –  what hope is there for a major simplification and reform of central government IT-based administration?

That said Francis Maude and his colleagues at the Cabinet Office should be congratulated for the reforms that are starting to work, evidence for which is in today’s NAO report. To make a big difference though, the Cabinet Office will need to enforce its mandates.

As MP Richard Bacon puts it,

“The Cabinet Office is now making some real progress in improving government procurement. Lines of responsibility are now clearer than in the past and it is welcome that more small and medium-sized enterprises are winning government business.  Big names do not necessarily mean best value.

“There is much the Cabinet Office still needs to do to get the most out of these reforms …[it]  needs to decide whether it is ultimately more likely to get results from obstinate departments through persuasion or compulsion”.

NAO report: Improving government procurement.

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