Cabinet Office lacked ‘sound business case’ on shared procurement plans, says NAO

The government has not achieved predicted savings through shared purchasing of common goods and services due to “overambitious targets, poor planning, inadequate data and lack of buy in”, a report has said.

NAO said Cabinet Office relied too heavily on Cabinet Committee mandate – Photo credit: PA

According to the National Audit Office, the government’s attempts to reform central buying through the Crown Commercial Service “have not been well managed”, and that more savings could have been made if it had been set on a “sounder footing”.

The CCS was launched in April 2014, bringing in staff from the Government Procurement Service, with a mandate to buy common goods and services directly rather than simply creating frameworks for departments to use.

However, in a report published on Tuesday, the NAO said that the Cabinet Office was too reliant on this Cabinet Committee mandate and “severely underestimated the difficulty of implementing joint buying across government”.

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The Cabinet Office wanted to increase the CCS’s management of direct buying from £0.15bn in 2013 to £13.4bn in 2017-18, in order to generate a net saving of £3.3bn.

But the NAO said that these plans were hampered by a lack of consistent information on what departments spend and a lack of agreement with departments on what should be bought centrally.

Just a month after it was launched, the CCS began delaying the dates when departments would transfer to its services, and by April 2016, CCS was managing just £2.5bn of spend directly, more than £8bn less than it had originally forecast.

At the same point, CCS was managing the spend of seven departments directly – ten less than it planned.

The NAO said that public sector organisations working with CCS saved £521m in 2015-16 – of which around £225m were on technology – but these figures are not directly comparable to the £3.3bn target and so the actual net benefit of the CCS to date is not known.

Comptroller and auditor general Amyas Morse said: “Without a sound overarching business case or a detailed implementation plan, it is not surprising that the Crown Commercial Service rapidly ran into difficulties and soon had to reset its plans.

“It is particularly disappointing that the Cabinet Office has not tracked net costs and benefits. Because of this, it is not possible to show that CCS has achieved more than departments would otherwise have achieved by buying common goods and services themselves.”

Poor framework and process management

Among the failings identified in the NAO’s report is the way the CCS manages its processes and frameworks.

The NAO said that the CCS was failing to consistently renew or replace framework agreements before their final expiry dates, and that, until April this year, it lacked internal control mechanisms and appropriate technology, such as workflow management tools, to stop staff using expired frameworks to issue contracts.

The CCS is currently carrying out a reset programme following a review carried out in 2015 by Malcolm Harrison – a former chief procurement officer at Nestle, who later became the CCS’ chief executive.

This includes a £10m investment in the way it manages its operations, called the Digital Transformation Programme, which the CCS says will improve its control environment and reduce time taken and errors incurred on activities for customers.

In addition there are plans for a digital platform called Crown Marketplace for customers to directly buy simple goods and services.

The CCS is also recruiting four senior specialists to lead on creating and managing strategies for buying cars of good and services, including IT.

The NAO concluded that the case for joint procurement of common goods and services remains strong, but that the Cabinet Office must build goodwill instead of using mandates to bring departments on board.

“For central government to achieve value for money from its common goods and services, it needs to finish the centralisation it began in 2014,” the report said.

“The events of the past two years have shown that, in practice, joint buying needs both a mandate and goodwill from departments.”


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