Central buying of IT and other services is a bit of a shambles – just what Sir Humphrey wants?

By Tony Collins

Cabinet Office entrance

Like the Government Digital Service, the Crown Commercial Service was set up as a laudable attempt to cut the huge costs of running central government.

The Cabinet Office under Francis Maude set up the Crown Commercial Service [CCS] in 2014 to cut the costs of buying common products and services for Whitehall and the wider public sector including the NHS and police.

It has a mandate to buy commodity IT, other products and services and whatever can be bought in bulk. It has had some success – for example with negotiating lower prices for software licences needed across Whitehall. The skills and knowledge of its civil servants are well regarded.

But, like the Government Digital Service, CCS has had limited support from permanent secretaries and other senior officials who’d prefer to protect their autonomy.

It has also been hindered by unachievable promises of billions of pounds in savings. Even CCS’s own managers at the time regarded the Cabinet Office’s plans for huge savings as over-optimistic.

Yesterday [13 December 2016] the National Audit Office published a report that questioned whether CCS has paid its way, let alone cut public sector costs beyond what civil and public servants could have achieved without it.

CCS employed 790 full-time equivalent staff in 2015/16 and had operating costs in one year alone of £66.3m

This was the National Audit Office’s conclusion:

“CCS has not achieved value for money. The Cabinet Office underestimated the difficulty of implementing joint buying for government. With no business case or implementation plan CCS ran into difficulties. Net benefits have not been tracked so it cannot be shown that CCS has achieved more than the former Government Procurement Service would have.

“However, the strategic argument for joint buying remains strong and CCS is making significant changes to improve future services.”

Some of the NAO’s detailed findings:

• The public sector spends £2.5bn directly with CCS – £8bn less than originally forecast.
• Seven departments buy directly through CCS – 10 fewer than originally forecast
• The forecast of £3.3bn net benefits from the creation of CCS over the four years to 2017-18 are  unlikely to materialise.
• The National Audit Office says the actual net benefits of CCS to date are “unknown”.
• The Cabinet Office did not track the overall benefits of creating CCS.
• Most of the planned transfers of procurement staff from central departments and the wider public sector to CCS haven’t happened.
• Where some of the workforce has transferred, some departments have rehired staff to replace those who transferred.
• Departments continue to manage their own procurement teams, although they use CCS’s frameworks.
• CCS was set up with the power to force central departments to use its bulk buying services. But that power wasn’t enforced.
• The National Audit Office says it is “no longer clear whether CCS has a clear mandate that requires all departments to use it for direct buying… it no longer has a clear timetable or expectation that further departments will transfer staff or buying functions to CCS”.

It’s all a far cry from the expectations set by a Cabinet Office announcement in 2013 which said that CCS will “ensure maximum value for the taxpayer is extracted from every commercial relationship”.

The then Cabinet Office minister Francis Maude said at the time,

“The new Crown Commercial Service will ensure a step change in our commercial capability, giving government a much tighter grip on all aspects of its commercial performance, from market engagement through to contract management.”

Comment

Why CCS has failed so far to make much difference to Whitehall’s costs is not clear. It seems to have been hit by a combination of poor management at the outset, a high turnover of senior officials and ludicrously high expectations, combined with a civil service reluctance in central departments and the wider public sector to cede control over procurement to CCS –  even when it comes to common products and services.

The NAO report is a reminder of a fundamental flaw in the way government works: central departments can’t in practice be forced to do anything. They are a power unto themselves. The Cabinet Office has powers to mandate a change of practice and behaviour in central departments – to which Sir Humphrey can shrug his shoulders and change nothing

Even the Prime Minister is, in practice, powerless to force departments to do something they don’t want to do (except in the case of the miscarriage of justice that involved two Chinook pilots who were eventually cleared of gross negligence because the then defence secretary Liam Fox, through a series of manoeuvres, forced the MoD to set the finding aside).

The CCS may be doomed to failure unless the Cabinet Office rigorously enforces its mandate to make government departments use its buying services.

If the Cabinet Office does not enforce its power, Sir Humphrey will always protect his turf by arguing that the products and services his officials buy – including IT in general – are specific and are usually tailored to the department’s unique and complex needs.

Much to the relief of Sir Humphrey, Francis Maude, the battle-hardened enforcer at the Cabinet Office, has left the House of Commons. He has no comparable replacement.

Are all central initiatives aimed at making  a real dent in the costs of running Whitehall now doomed to failure?

Sir Humphrey knows the answer to that; and he’s wearing a knowing grin.

Crown Commercial Service – National Audit Office report