'Transforming Government Procurement' is no milestone

Tim Williams, managing director of public sector procurement specialists Millstream Associates, looks for changes of real note in the UK Treasury’s new government procurement report.

In January this year the Treasury published its report on 'Transforming Government Procurement,' which was hailed as the “first major reshaping of the procurement agenda since the Office of Government Commerce (OGC) was established,” although it's only seven years since the OGC was formed.

In the 1990's a number of official reports were published on the subject of government procurement, but in 1998 the then new Prime Minister, Tony Blair, took an interest in the subject and asked Peter Gershon, at that time with British Aerospace, to conduct a further review, the results of which were published in the 1999 report 'Review of civil procurement in central government.'

The key recommendation of this report was the creation of a specialist agency, the Office of Government Commerce, which would be responsible for setting policy, undertaking procurement where large scale aggregation would deliver improved value for money, as well as trying to deal with the problems of poor or inconsistent processes, lack of qualified staff and benchmarking.

In April 2000 the Office of Government Commerce was launched as an agency of the Treasury with Peter Gershon as its first chief executive. At the same time a commercial arm, OGCbuying.solutions was created, which incorporated the purchasing organisations, the Buying Agency and the Central Computer & Telecommunications Agency (CCTA).

While the OGC concentrated on strategy and the reform of the procurement process, buying.solutions focused on establishing centrally negotiated and tendered contracts, which the rest of the public sector could use. The rationale was that because of the limited number of qualified procurement staff in government departments and local authorities, the quickest way to solve the problem was to use qualified specialist staff in a central agency. This method also allowed requirements to be aggregated and benefit from the reduced prices that could be generated by a single large customer.

The G-Cat and S-Cat framework contracts, for computer hardware and IT services respectively, were the fi rst result of this approach. Any public sector organisation in the UK was able to place an order through these frameworks without having to go through the hassle of completing a competitive tendering exercise themselves. While OGCbuying. solutions has always maintained that this all complied with the European Directives, the European Commission has not always been convinced. The regulatory regime changed at the beginning of 2006 with the publication of the Public Contracts Regulations 2006, which now regulate how these arrangements are operated, so it seems likely that they will be with us for the foreseeable future.

Since its formation OGCbuying. solutions has gone on to establish framework contracts for a wide range of products and services, including energy, mobile phones, consultancy services, facilities management, etc. Given the value of print and document management contracts that the public sector places each year, it is perhaps surprising that buying.solutions has not established a framework that includes such services.

However, the only print related contract that I am aware of is for the provision of recycled printing paper. It may be that this is an area that buying. solutions will focus on in the future. Unfortunately, companies with an interest in supplying the public sector may have to contend with this in the future.

The next step change in government procurement was initiated in 2003, when the Prime Minister and Chancellor of the Exchequer asked, the now Sir Peter Gershon to conduct a review into public sector efficiency, which although it had a wider remit, also included a review of procurement. When Sir Peter published his report 'Releasing Resources for the Frontline' in 2004, he promised over £20 billion of efficiencies, which is not quite the same thing as financial savings.

The latest report ‘Transforming Government Procurement’ is really just the latest in a series of initiatives and reviews, rather than a milestone in the evolution of government procurement.

A substantial proportion of the cashable savings were to be delivered once again by improving procurement. Probably the main difference between this exercise and Sir Peter's previous report, was his proposed reduction in the number of civil servants as well as inclusion of local authorities and NHS trusts in the programme, which provides much greater scope for achieving savings.

On this occasion Sir Peter did not take on the responsibility of delivering this efficiency programme. Instead this responsibility was passed to his successor as chief executive of the OGC, John Oughton. The progress so far was reported in the National Audit Office (NAO) publication 'The Efficiency Programme – A second review of progress' which was published in February. The NAO reported that £13.3 billion of the target £21.5 billion annual efficiency gains, 45,551 of the 70,600 headcount reductions and 9,412 of the 13,500 reallocations to the frontline had been reported. They key word here is reported, as the NAO clearly considers that some of the reported efficiencies may not have been achieved or are being optimistically-reported.

The latest report 'Transforming Government Procurement' is really just the latest in a series of initiatives and reviews, rather than a milestone in the evolution of government procurement. The report focuses on beefing up the powers of the OGC, so that instead of just being a guiding or consultative body, it actually has the power to make some of the more recalcitrant elements in the public sector embrace the necessary changes.

Probably the major changes that will affect suppliers wishing to win public sector contracts, are an increase in collaboration, for which I think you should also read aggregation, i.e. a smaller number of larger contracts and also reflecting public sentiment, an increased focus on sustainability such as a reduction in carbon emissions, recycling waste, reduced waste, reduced water consumption and increased energy efficiency. As such, if a supplier wants to win public sector contracts it will undoubtedly be beneficial to demonstrate that it has the capacity to handle large, multi-site contracts and also any improvements it can show in its processes, will contribute towards meeting the public sector's targets for sustainability.

There are a number of ways in which suppliers interested in bidding for public sector contracts can identify relevant opportunities. The Official Journal of the European Union (OJEU, or as it was previously known OJEC) publishes notification of all public sector contracts with a value greater than £100,000 for central government and the NHS and £154,000 for local authorities, etc. The OJEU can be accessed online at ted.europa.eu.

For lower value contracts, which are probably much more relevant to small and medium sized companies, Tenders Direct (www.TendersDirect.co.uk) includes many contracts published by local authorities, etc., that are not widely publicised, as well as all of the OJEU contracts as well.

In conclusion, the field of government procurement is constantly evolving, there are rarely if ever major changes which fundamentally shift the basis on which companies can do business with the public sector. Any change, inevitably takes years to filter down to the frontline procurement staff, by which time there is probably a new initiative on the way. As such, there are always opportunities, you just have to know where to look.

Tim Williams

Tim is the managing director of Millstream Associates, and a recognised expert on public procurement in the UK and Europe. Tim has briefed Ministers, MPs and MEPs on changes in procurement law.