Commercial Reform

1. Commercial Reform Matt James Director of Commercial Advice, Crown Commercial Service

2. Commercial landscape Circa £187bn spend p.a. on goods and services across the public sector Circa £40bn spend p.a. on goods and services in Central Government Better commercial practices saved the Government £3.8bn in 2012/13 Commercial Reform

3. Reforming the landscape Strengthening functional leadership and improving commercial capability Extending our involvement in complex commercial activities e.g IT/BPO Influence and service Transferring operations - 4 trailblazer depts circa £5bn of spend Developing managed services and building world class commercial capability Commercial Reform

4. Crown Commercial Service: three key inter-related service areas Commercial Reform

5. £ New DNA for commercial activities Managed Commercial Services delivered centrally - once on behalf of Government Procurement Process Contract and supplier management High Before going to market Time spent on value added activity Improving contract and supplier management capability through application of new standards Developing requirements that shape markets and the supply base to Government Simplifying process and reducing turnaround times & supplier bid costs Low Before Business need identification Contract management Supplier identification Finalisation of contract Sourcing strategy Goal Supplier relationship management and negotiation Execution of sourcing strategy Market analysis

6. Key objectives driving all that we do Commercial Reform

7. Establishing a customer-centric service We must create a culture which drives and encourages excellent customer service Responsive Reliable Relationships

8. Getting the best deals Commercial Reform

9. Delivery model for goods and services Category Management Pillars Technology People Corporate Services Buildings Functional delivery Commercial Contract Management Contract delivery, optimisation and management Supplier Performance Management Performance analysis, tracking spend and savings Supplier Innovation Cross-category innovation in supply chain management Sourcing & Operations Best in class e-platforms, clear and efficient processes Corporate structures aligned towards delivering an outstanding customer service

10. Early examples of CCS in action Energy Facilities Management • Managed service provides access to a pool of 175 agile digital services suppliers (84% are SMEs and 38% are new suppliers to government). • £2bn worth of energy procured and delivered across the public sector in 2012/13 with savings to the public purse in excess of £109m. investing in innovative contracting models for long term energy requirements. • New contracting model being procured. Estimated savings over current model in the region of 10% to 15% (up to £350M) over the life of the vehicle (4 years). G- Cloud • 4th Generation contracting vehicle in place providing access to 1000 suppliers (84% are SMES). £64m of spend transacted through G-Cloud since inception in April 2012 via circa 4000 procurements. • 63% of business by value has been won by SMEs. Digital Services Framework Commercial Reform

11. Customer-centric services: Fleet Portal • Online system collating vehicle technical data including for Cars & LCVs • Allows customer access for vehicle purchase and leave quotations to determine best value solution and support Direct Award • Direct link to Vehicle Lease suppliers for live financing quotes

12. Fleet framework agreements • RM859: Vehicle Purchase – extended until October 2014 (new procurement underway) • RM858: Vehicle Lease – expires May 2015 (new procurement underway) • RM955: Supply and Fit of Tyres – live from August 2012 for up to 4 years • RM956: Vehicle Conversion & Reconditioning Services – live from September 2013 for up to 4 years 4 Crown Commercial Service – Fleet Team

13. Cost Reduction - Targeting saving of £1bn through supplier engagement in 2013/14 Management of strategic suppliers Economic Growth Deficit Reduction Public Service Reform Single customer approach supported by a team of Crown Reps • 2. Performance Management - Create a more rigorous and effective process for performance management of all strategic suppliers 3. Deep Dive Commercial Capabilities - Disaggregation of contracts & Long run innovation ideas Circa 50% of the £40bn of central government spend is with circa 50 suppliers Commercial Reform

14. We expect our suppliers..... To embrace competition To be innovative through proposals for how we can improve services To deliver savings for taxpayers To provide opportunities to SMEs in the supply chain To deliver what we are asking for as an intelligent client To deal effectively with CCS as one customer - the Crown To make a reasonable but not excessive profit To demonstrate high levels of corporate responsibility To be transparent through open book accounting Commercial Reform

15. Policy Delivery – SMEs • SME CROWN REP - Stephen Allott – ‘voice of SMEs’ • OPPORTUNITY - Developing ways to make it easier to find opportunities to do business with Government – Contracts Finder is being refreshed to make this process even better • REFORM - Negotiating simpler, more flexible EU public procurement rules Supporting the commercial community to implement and comply with the legal and policy framework • COMMITMENT - All departments have developed action plans and targets to increase their spend with SMEs and deliver their contribution to the 25% aspiration • COMMUNICATION - SMEs given new channels of communication including Mystery Shopper, SME Panel, Crown Rep Implementing a wide range of measures to level the playing field for small companies, charities and voluntary organisations to be in the best possible position to compete for government contracts. Commercial Reform

16. Main reforms from new EU directives • Together - significantly changing the face of public procurement • Implementation by the end of 2014 Commercial Reform

17. Lord Young reforms Report Growing Your Business’ - May 2013 • Abolishing PQQs for low value contracts and a standardised PQQ for high value contracts • Mandating that 30 day payment terms are passed down the supply chain • Mandating that all public sector contracts are readily accessible online Impact Whole of public sector • Reporting on all new spend with SMEs/VCSEs • These were accepted by government and new legislation is being introduced this year. Commercial Reform

18. Building Commercial Expertise Across GovernmentCivil Service Capabilities Plan - Priority Skills Area Attracting Expertise Commercial recruitment hub Developing commercial Fast Stream scheme Fast Track apprenticeship programme Developing Expertise Developing a culture of confidence and judgment Interchange with industry Skills assessment tool and further L&D opportunities Retaining Expertise Active career path management Designing a commercial talent programme Non-monetary rewards Commercial Reform

19. Commissioning Academy “A must attend’ programme for all commissioning leaders.” Francis Maude Minister for the Cabinet Office • Development programme for people responsible for delivering transformation of public services • Combination of input from experts and practical, peer-led learning • Focus on commissioning for outcomes and across organisational boundaries • Gives knowledge, networks and confidence to do things differently - emphasis on ‘hearts and minds’ rather than process and rules training • Terrific feedback from participants – supporting them in delivering real change • Next wave begins in September 2014; get in touch if you are interested • servicedesk@cabinet-office.gsi.gov.uk Commercial Reform

20. Concluding thoughts...... Commercial Reform