Government Procurement Reform National Procurement Conference, Oslo, Norway 15 November 2012 Sally Collier UK Governme

1. Government Procurement Reform National Procurement Conference, Oslo, Norway 15 November 2012 Sally Collier UK Government Deputy Chief Procurement Officer UNCLASSIFIED

2. The UK is facing significant economic challenges 2009-2010 saw the greatest disparity between public expenditure and public revenue since 1979.. UNCLASSIFIED

3. The UK Government response focuses on two objectives Promote Growth Using pan-Government resources to implement existing UK economic policy while looking for new ways to support business and stimulate opportunities for growth. 1 Efficiency Savings Preventing waste and focusing resources on genuinely beneficial activities. Reduce the Deficit 2 Public Sector Reform A longer term view of transforming public services while reducing future expenditure. UNCLASSIFIED

4. Cabinet Office - Efficiency & Reform Group (ERG) • Historically: • Government lacked a strong corporate centre • Government Departments worked in silos • ERG was created in June 2010 to: • Support the £80 billion reduction in Government expenditure • Join the work of Cabinet Office and Her Majesty’s Treasury • Introduce a central control • Improve co-ordination to fully exploit economies of scale UNCLASSIFIED

5. ERG supports central government departments to deliver efficiency savings UNCLASSIFIED

6. Cabinet Office controls • Cabinet Office controls cover these areas of spend in central government: • Advertising and marketing • Strategic Supplier Management, including disputes with major suppliers • New commercial models • ICT • Digital Service Delivery and ID Assurance • Consultancy • External Recruitment • Redundancy and Compensation • Learning and Development • Property and Facilities Management UNCLASSIFIED

7. What has been achieved so far? A ruthless approach to eradicating wasteful spending across Whitehall has enabled the Government to save over £5.5 billion for the taxpayer last year - even higher than predicted – and on top of the £3.75 billionsaved the previous year. The savings are equivalent this year alone to: • around £500 per working household in Britain; • the salaries of around 250,000 junior nurses; or • the cost of around 1.6 million primary school places. Francis Maude, Minister for the Cabinet Office has confirmed that spending controls will be a permanent feature across government. As reported in the press recently: “this is not the sexy end of politics – it's about the minutiae of procurement and financial management. No one who has been a supplier to government can honestly deny that there was waste and inefficiency in the way goods and services were procured and managed in the past.”

8. How those savings have been calculated

9. UK Government’s Chief Procurement Officer (CPO) • Chief Procurement Officer’s Priorities: • Top priority is money! We need to think big. Bill has savings in his sights. • His remit includes not just government procurement but also: • Strategic Supplier programme, focusing on value for money from the Government's 40 biggest suppliers; • Crown Representative network of skilled negotiators with suppliers; • and the development of the procurement profession and capability across Whitehall. • Bill’s mantra could be described as “inside out and outside in”: • “Outside in” = encouraging Whitehall to learn from outside expertise and best practice, whether in the private sector or other governments. • “Inside out” = spreading Whitehall's own best practice to the wider public sector, where appropriate. • Bill Crothers • Chief Procurement Officer • Sally Collier • Deputy Chief Procurement Officer UNCLASSIFIED

10. Her Majesty’s Government – Strategic Suppliers Accenture Capgemini Balfour Beatty G4S Cisco Microsoft Lockheed Martin HP IBM Oracle Vodafone SAP Xerox Our strategic suppliers include:

11. How Government wants to work with strategic suppliers 1. Price consistent across contracts and reflective of the overall size of the business (relative market position) High-value partner Integral to others success 2. Delivers consistently with a high-level of competency across all contracts 1. Reform ideas seriously explored 3. Takes cost out of the system and share the upside 2. Meetings with Minister and senior officials 4. Proactive in engagement, resolving issues, and highlight bad commercial practice 3. Crown Representative and a single client manager 5. Aligns positively with Government policy 4. Clarity on the pipeline and capacity needs 6. Innovative in suggesting solutions 5. Clear view of Government policy and opportunity to contribute and shape 6. Opportunity for innovation and partnering in new market offerings UNCLASSIFIED

12. Commercial Relationships priorities for 2012-13 • Cost Reduction • Second major Programme of Supplier meetings with Minister for the Cabinet Office, building on the £800million saved in 2010 Economic growth Single customer approach • 2. Performance Management • Create a more rigorous and effective process for performance management of all strategic suppliers Deficit reduction Public service reform • 3. Deep Dive Commercial Capabilities • Disaggregation of contracts • Long run innovation ideas UNCLASSIFIED

13. Her Majesty’s Government – Crown Representatives Crown Representatives were introduced in 2011: • as focal points for groups of providers looking to provide to the public sector; • help Government to act as a “single customer”; • work with Departments’ existing commercial teams; • communicate a single, strategic view of Government’s needs and identify areas of cost savings; • cover all sectors of service provision from SME and voluntary sector organisations, through to mutually owned organisations, large suppliers and specific sectors such as banking services. Government is committed to doing business in new and innovative ways and the team of Crown Representatives is at the heart of this work.

14. Procurement supporting business and promoting growth UNCLASSIFIED Government will:

15. Improving procurement efficiency through LEAN 6,000 + pages of stuff to a 50 page Guide to LEAN Sourcing & Standard Operating Procedures (SOPs) • Working with key partners, we reviewed existing procedures, identified opportunities to streamline and developed new Standard Operating Procedures (SOPs) • We have piloted the training and are now working to a plan to train 80 people per month or up to 1,000 in 2012/13 UNCLASSIFIED

16. Key LEAN Sourcing Principles LEAN principles Key LEAN sourcing principles - the ‘must do’ minimum 1. Specify value - in terms of the customer 2. Identify the value stream - the specific path the product or service needs to take The standard LEAN sourcing solution A repeatable step-by-step approach to LEAN sourcing for above OJEU procurements. The process is designed to reduce turnaround times and the cost of resources required to run successful procurements using Open, Restricted & Competitive Dialogue procedures. Focus on the voice of the customer – ensuring a sound understanding of required business outcomes Wasteful process design and management Establish a planning and management discipline using visual management tools to drive progress. Use a streamlined and time-boxed approach to engagement with stakeholders & suppliers High levels of bureaucracy – guidance, serial processing 3. Flow – after knowing the value stream the product or service will flow through the process without interruption Pre-OJEU readiness 4. Pull – the product or service is pulled through the value stream to eliminate waiting time and build up of stock Mis-use of procurement procedure Advertise your potential requirement to the market (preferably by using a project specific PIN) and undertake pre-procurement market engagement with industry prior to going to OJEU to inform sourcing strategy Inadequate resource capability 6. Visual control - to expose problems 5. Standardise processes - with inbuilt quality Ensure readiness for OJEU by developing your bidders pack (outcome / output based specification, draft Ts&Cs and project plan) ready for the publication of OJEU 7. Continuous Improvement - strive for perfection, always Utilise OJEU compliant e-sourcing tools to underpin the sourcing process Themes from Diagnostic study Follow the LEAN sourcing standard operating procedures and challenge deviation from them Drive continuous improvement and reductions in procurement turnaround times (from Contract Notice to Award of Contract) by measuring performance. Where the procurement process allows use a time boxed “bootcamp” approach to discussion with suppliers and use the draft contract as the vehicle for dialogue / negotiation UNCLASSIFIED Formal training in LEAN and the standard solution

17. SME Programme UNCLASSIFIED

18. Mystery Shopper Service • Mystery Shopper: • provides a clear, structured and direct route for suppliers to raise concerns about public procurement practice when attempts at resolving issues with a contracting authority or a first tier supplier have failed; • provides reasoned feedback to enquirers on their concerns; • helps the Cabinet Office identify areas of poor procurement practice so it can work with the contracting authority to put them right, and help ensure similar cases do not arise in future; • takes action to reduce the likelihood of similar issues arising in other authorities; • holds Government to account on progress towards delivering its SME announcements.  306 Total cases received to date 49 Current live cases 257 Current closed cases 79 % cases closed with positive outcome

19. Contracts Finder Approx 97,000 page views per week 44499 registered supplier and guest users  492 registered buyer groups 2136individual buyers 4218 number of supplier organisations Published Documents (at end October 2012) 4141 low value opportunities (3736 flagged as SME friendly, 656 flagged as VCS Friendly) 4591 tenders 11615 Published contracts ( 3828 awarded to an SME) 1083 live opportunities (including 70 low value)  1083 live opportunities (inc  70 low value) one place for public procurement opportunities and documents; covers key stages of the procurement lifecycle; flags opportunities suitable for smaller businesses and Voluntary and Community Sector (VCS); open – no login for info and most features; modern – features familiar to users of e-bay and Amazon; automated feeds – will limit manual entry.

20. Procurement Capability Licence to Source Training in ‘lean’ sourcing techniques and application of learning Contract/Supplier Management – development of ‘best in breed’ standards Professional Curriculum - Standardisation and promoting professionalism Commissioning Academy scoping the concept – Senior Civil Service (SCS) target audience UNCLASSIFIED

21. Key challenges Data, data, data! Continuing economic situation Change on the ground Government structures UNCLASSIFIED