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Martin Sykes

Martin Sykes. Executive Director Supplier and Government Marketplace Development Directorate. Topics to be covered. OGC – a brief history SMEs in the UK marketplace Aggregation E Procurement. NOVEMBER 1998: Review of Procurement in Central Civil Government.

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Martin Sykes

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  1. Martin Sykes Executive Director Supplier and Government Marketplace Development Directorate

  2. Topics to be covered • OGC – a brief history • SMEs in the UK marketplace • Aggregation • E Procurement

  3. NOVEMBER 1998:Review of Procurement in Central Civil Government “To review civil procurement in Central Government in the light of the Government’s objectives on efficiency, modernisation and competitiveness in the short and medium term and to report as soon as possible” Office of Government Commerce

  4. OGC GOVERNANCE • Created in April 2000 • “Of” but not “in” HM Treasury • Chief Secretary of the Treasury is the responsible Minister • Supervisory Board • New Chief Executive – John Oughton

  5. Value for Money • OGC helped to realise £1.6 billion value for money gains in 3 years up to March 2003 • Target for 3 years to March 2006 is £3 billion

  6. SOURCES OF VFM IMPROVEMENTS • Greater focus on quality & whole life costs • Reducing process & transaction costs • Co-ordinating departmental & Government purchasing power • Wider involvement of professional procurement staff • Gateway reviews - improvements in cost & schedule performance of major projects • Better exploitation of assets

  7. Emerging role • Our core area of operations is central civil government – not the defence or health areas • Increasingly working across the wider public sector and local authorities

  8. Government Marketplace • Government needs to get more out of markets • Kelly review – looking at long term capacity of industry to deliver and optimising competition • We need to increase competition – partly by levelling playing field for SMEs • Ensure drive for efficiency does not result in a narrow approach to aggregation • Develop e procurement techniques

  9. SME Procurement Pilots • May 2003: Independent reviewof SME involvement in public sector highlighted key barriers: • Difficult to find out about opportunities • Limited SME understanding of public procurement • Resource-intensive tendering processes • Aggregation and bundling • Perception of risk in engaging SMEs

  10. Background to the Pilots • Review produced 11 recommendations to drive creation of a more level playing-field in government marketplace • June 2003: West Midlands & London Borough of Haringey Projects launched to pilot a number of the recommendations • Representative cross section of UK SMEs • Involvement of a number of central, regional & local government partners

  11. SME Procurement Pilot Selection of Activities • Web portal for below threshold opportunities • Practical training and advice • SME workshops on how to tender • Workshops to raise buyer awareness of SMEs • Standardising pre-qualification process – self-certification model • Encouraging prime contractors to provide visibility of subcontracting opportunities

  12. Aggregation • Aggregation of demand does not necessarily lead to aggregation of supply

  13. Aggregation • Aggregating requirements can strengthen departments’ negotiating position with suppliers… • …but aggregating across government could distort markets, by developing a situation where too few suppliers are operating… • ..and without people of the right calibre many of the potential benefits of aggregation can be missed

  14. E Procurement – business driversImproved control and lower risksBetter knowledge of what we spend money onMore efficient – so lower costsBetter supplier relationshipsEnables procurement staff to focus on high value procurement – 80/20But must be careful to reduce transaction costs – not increase bundling

  15. E Procurement – aggregation issues • eProcurement gives us much better information on what we are spending and with whom • It delivers dramatically lower process costs • BUT – a danger that if we use information to bundle requirements we could distort competition • Process cost reductions sufficient to support many suppliers

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