Taking stock of the government purse

In June 2010, Buying Solutions, along with OGC, moved from HM Treasury to the Cabinet Office to become part of the Efficiency and Reform Group (ERG). In March 2011 Buying Solutions became the delivery arm of government procurement within the Cabinet Office following a Strategic Review commissioned by Francis Maude, Minister for the Cabinet Office, and in July 2011, was renamed Government Procurement Service (GPS) to reflect its new role at the heart of government procurement.

At the launch event Maude said: “It is bonkers for different parts of government to be paying vastly different prices for exactly the same goods. We are putting a stop to this madness which has been presided over for too long. Until recently, there wasn’t even any proper central data on procurement spending. So, as Sir Philip Green found, major efficiencies are to be found in government buying. The establishment of Government Procurement Service means that the days when there was no strategy and no coherence to the way the government bought goods and services are well and truly at an end.”

Maude continued: “In the last year, we have already made significant changes to drive down procurement spend by £1 billion, but this new centralised service means we will continue to deliver savings which are expected reach more than £3 billion a year. We are also determined to press ahead with measures to create a more level playing field so that small organisations and businesses can compete fairly with bigger companies for government contracts. SMEs can provide better value and more innovative solutions for government and the actions set out today will support their growth as the economy starts to recover.”

Savings across government

The Government Procurement Service is an executive agency of the Cabinet Office, and its overall priority is to provide procurement savings for the UK public sector as a whole and specifically to deliver centralised procurement for central government departments.

The centralisation, standardisation and aggregation of spend on common goods and services are a key mechanism to deliver significant, sustainable cost reductions to government. Operating at the heart of government procurement, the GPS plays a key role delivering expert sourcing, category and centralised data management.

GPS’s remit extends across central government and the UK public sector including local government, health, education, devolved administrations, emergency services, defence and not‑for‑profit organisations. The commercial procurement solutions are fully EU compliant and cover energy, travel, fleet, office solutions, communications services, professional services, ICT, eCommerce, and property & facilities management, saving customers time and money.

The products and services are delivered by more than 2,000 suppliers, of whom more than 50 per cent are SMEs. Working with over 14,500 organisations in central government, health, local government, devolved administrations, education and the not‑for-profit
sector, GPS
managed over £8.4bn of customer spend through its procurement arrangements and services in the 2011-12 financial year.

Kicking off with print

The first centralised procurement contract was awarded on the 13 July 2011. Under the new arrangement the HMRC print contract was made available to all government departments in a deal that was expected to save £21m and replaced 140 contracts with a single contract. The HMRC Print Vendor Partner contract was for a Managed Service Provider and awarded to Williams Lea. The supplier would act as a central manager to the second tier supply chain. This enabled departments to harness the expertise within the market and to aggregate and leverage spend. 

John Collington, chief procurement officer, said at the time: “This new print contract is the first of a number of central deals we are putting in place over the coming years. It shows government departments are utilising the expertise within their teams to support our reform and delivering real change along with significant savings.” Dave Thomas, HMRC commercial director said: “My team is extremely pleased to be managing the contract on behalf of government. HMRC has been heading in this strategic direction for the last three years and the benefits of the contract align perfectly with the government procurement agenda. This model will now be available across government six months ahead of schedule and we look forward to meeting the challenge of onboarding.”

Organisational priorities
GPS is committed to improving service delivery through increased customer focus and commercialism, to meet the stretching strategic objectives setand to drive a programme of continuous improvement. Its key areas of focus are: driving the delivery and development of Government Procurement Service; continued delivery
 of savings; e-enablement of all operations; operational and financial efficiency; and development and retention of high quality professional staff.

Savings are measured in accordance with guidance provided by the Efficiency and Reform Group guide ‘Measuring Up’, which was published on 29 November 2010. The guidance aimed to introduce a unified approach to driving savings, and is based on a number of principles. The Government Procurement Service is responsible for validating and reporting all savings for common goods and services procurement.

Principles
All benefits are, wherever possible, calculated against a pan government 2009/10 baseline.

The baseline represented actual prices paid by central government for the same product or service during the baseline period, with transactions from 1 April 2010 eligible to generate savings. Benefits must release cash and be net of any implementation costs (including significant whole life costs where relevant) and one‑off savings can be included where they do not represent deferred expenditure. Approved counterfactuals (inflation percentages) can be used where they are appropriate and approved by the savings team.
Benefits are summarised in the following classifications: standardisation; new commercial arrangements; new volumes; and demand management.

All savings are subject to an approved initiative methodology, supported by a formal sign off route, and must be evidenced by supplier provided transactional Management Information.

In 2011-12, GPS implemented a major change programme to transform operations and performance in order to support the delivery of centralised procurement. Fundamental changes were made to clearly focus the organisation on customer service, savings delivery and eEnablement. The aim was to provide exceptional service for its customers across government and the UK public sector. They are fully committed to ensuring all customers are able to take advantage of the benefits of the centralisation programme, driving value in an effective and transparent way.

To support this, the GPS customer team has dedicated relationship managers allocated to each central government department and sector, including health, local government and devolved administrations to provide a single point of contact. Customer service agreements are in place with all departments, defining service levels and identifying clear roles and responsibilities.

Case study: The Crown Prosecution Service
The Crown Prosecution Service (CPS) is becoming digital through enhanced technology which is helping deliver a slicker, quicker and more efficient service.

A significant aspect of its T3 (Transforming Through Technology) programme is the reduction of paper within the criminal justice system. Although CPS is confident that paper will reduce, the exact timescales and size of the reduction are not yet fully understood.

CPS therefore sought proposals for a secure overnight delivery service that can flex and adapt to changing needs, whilst still offering a secure and cost efficient service.

The CPS used lot 13, document exchange, of the postal services framework to find a suitable solution. This approach meant that they could focus on the service requirements that were of particular importance to them, whilst being assured of the framework benefits regarding compliance with regulation.

Preparation of the further competition, evaluation criteria and contract documents was also quicker and easier than if a full tender had been conducted.

The contract was awarded to DX Group as its solution offered a sufficiently flexible service to meet CPS’s requirements, without compromising on security or value for money. For example, CPS expects to make an average saving of 35 per cent on 1st class mail in 2012.

The service also provides an overnight pre‑9am delivery to the CPS branch network and other related members of the Criminal Justice System and legal sector. Using the framework allowed pre-agreed service levels and KPI standards to be customised to meet requirements to monitor supplier performance against pre-agreed criteria.

CPS and DX Group are now working together to continually renew service requirements and flex and adapt the service as the T3 programme evolves.

Case study: Test Valley Borough Council

Following previous successful signage projects completed for Test Valley Borough Council, DMA Signs were asked to tender to supply and install new signage solutions for Portway Business Park. After the successful tender, DMA worked in collaboration with Test Valley Council to implement their designs.

Slim line, curved entrance signage was created for different access routes to the estate indicating which part of the Business Park visitors had arrived at. These were manufactured using relief cut text backed with specially coloured acrylic which was then back illuminated. Large estate location maps, complete with lighting troughs to give good visibility day and night, were also implemented throughout the site to ease visitor navigation in high traffic areas.

Case study: The Police Force
Seven police forces were using two government frameworks for stationary and paper which were due to expire, and required a single source provider for the supply and delivery of stationary and paper to all sites. The police forces consolidated their requirements detailing individual ordering and logistical requirements. Their main objective was to procure quality products, excellent customer service and delivery of ongoing cost reduction throughout the life of the contract. In addition they aimed to develop a partnership with the successful supplier to deliver additional long term mutual benefits of consolidation.

A procurement strategy was developed to gain the benefit of economies of scale and leverage the benefits of a common specification, whilst taking into account specific product requirements. The police forces wanted the supplier, via the provision of management information, to assist in identifying and reducing the cost to service the overall contract which would be monitored via a savings tracker report. This would form an integral part of the contract review mechanism and any savings would be shared as a payable rebate by the supplier.

The forces went out under lot 2 of the Wider Public Sector Office Supplies framework agreement (RM781) for their requirements.

The successful supplier, Banner Business Services Ltd, (Banner), has implemented new pricing across all forces, with various delivery and ordering profiles. Banner has worked with each individual force to agree specific delivery requirements for each force from police stations to main offices and stores.

Orders are consolidated and transmitted to the supplier. Banner has also implemented a structured achievable rebate structure to reward reduced low value orders; scheduled weekly/monthly delivery; prompt payment, and electronic/punch-out ordering.

The framework pricing has delivered a saving in the region of 13 per cent over and above a previous competitive framework. Banner has also demonstrated efficiency and environmental savings by reducing frequency of deliveries and carbon footprint.

Further information
www.gps.cabinetoffice.gov.uk