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Commercial Reform Matt James Director of Commercial Advice, Crown Commercial Service.

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Presentation on theme: "Commercial Reform Matt James Director of Commercial Advice, Crown Commercial Service."— Presentation transcript:

1 Commercial Reform Matt James Director of Commercial Advice, Crown Commercial Service

2 2Commercial Reform Better commercial practices saved the Government £3.8bn in 2012/13 Circa £187bn spend p.a. on goods and services across the public sector Circa £40bn spend p.a. on goods and services in Central Government Commercial landscape

3 Reforming the landscape Retained departmental commercial activities Common but complex transactions – joint working with depts Transfer of additional commercial activities CG & WPS Spend & Procurements currently transacted 3Commercial Reform Developing managed services and building world class commercial capability Transferring operations - 4 trailblazer depts circa £5bn of spend Extending our involvement in complex commercial activities e.g IT/BPO Strengthening functional leadership and improving commercial capability Influence and service

4 Crown Commercial Service: three key inter-related service areas Indirect Advisory Building the Commercial Profession Direct Buying 4Commercial Reform

5 New DNA for commercial activities Business need identification Supplier relationship management and negotiation Execution of sourcing strategy Market analysis Sourcing strategy Supplier identification Finalisation of contract Contract management £ Goal High Low Time spent on value added activity Before going to market Procurement Process Contract and supplier management Managed Commercial Services delivered centrally - once on behalf of Government Developing requirements that shape markets and the supply base to Government Improving contract and supplier management capability through application of new standards Simplifying process and reducing turnaround times & supplier bid costs Before

6 Key objectives driving all that we do 6 Commercial Reform Excellent fully managed commercial services in central government and increasingly becoming the service provider of choice in the wider public sector Service Clear and compelling savings for all our customers leveraged through demand aggregation and innovative deals with suppliers both large and small Savings Managing and influencing significantly higher levels of spend on common goods and services across the public sector Spend & Reach Expert commercial advice provided by highly capable people informed by deep market knowledge and experience – on an increasing number of key government projects Impact

7 Responsive Reliable Relationships We must create a culture which drives and encourages excellent customer service 7 Establishing a customer-centric service 7 Commercial Reform

8 Getting the best deals 8 Commercial Reform Greater opportunities will arise through better pipelines to aggregate customer demand and requirements when going to market. Aggregating demand does not mean aggregating supply Aggregating requirements to get the best deals Price benchmarking is currently being rolled out across category teams to test and challenge the deals we have in place. Key to driving continuous improvement and increased savings as well as growing the business - particularly in the wider public sector. Leveraging market knowledge and benchmarking our prices

9 Delivery model for goods and services Corporate structures aligned towards delivering an outstanding customer service Category Management Pillars People Corporate Services Buildings Technology Commercial Contract Management Contract delivery, optimisation and management Supplier Performance Management Performance analysis, tracking spend and savings Sourcing & Operations Best in class e-platforms, clear and efficient processes Functional delivery Supplier Innovation Cross-category innovation in supply chain management 9 Commercial reform

10 Early examples of CCS in action 10Commercial Reform Managed service provides access to a pool of 175 agile digital services suppliers (84% are SMEs and 38% are new suppliers to government). Digital Services Framework £2bn worth of energy procured and delivered across the public sector in 2012/13 with savings to the public purse in excess of £109m. investing in innovative contracting models for long term energy requirements. Energy Facilities Management New contracting model being procured. Estimated savings over current model in the region of 10% to 15% (up to £350M) over the life of the vehicle (4 years). G- Cloud 4 th Generation contracting vehicle in place providing access to 1000 suppliers (84% are SMES). £64m of spend transacted through G-Cloud since inception in April 2012 via circa 4000 procurements. 63% of business by value has been won by SMEs.

11 Customer-centric services: Fleet Portal Online system collating vehicle technical data including for Cars & LCVs Allows customer access for vehicle purchase and leave quotations to determine best value solution and support Direct Award Direct link to Vehicle Lease suppliers for live financing quotes

12 Fleet framework agreements RM859: Vehicle Purchase – extended until October 2014 (new procurement underway) RM858: Vehicle Lease – expires May 2015 (new procurement underway) RM955: Supply and Fit of Tyres – live from August 2012 for up to 4 years RM956: Vehicle Conversion & Reconditioning Services – live from September 2013 for up to 4 years 124Crown Commercial Service – Fleet Team

13 Management of strategic suppliers 13 1.Cost Reduction - Targeting saving of £1bn through supplier engagement in 2013/14 Single customer approach supported by a team of Crown Reps 2. Performance Management - Create a more rigorous and effective process for performance management of all strategic suppliers 3. Deep Dive Commercial Capabilities - Disaggregation of contracts & Long run innovation ideas Economic Growth Deficit Reduction Public Service Reform Commercial Reform Circa 50% of the £40bn of central government spend is with circa 50 suppliers

14 We expect our suppliers Commercial Reform To embrace competition To be innovative through proposals for how we can improve services To be transparent through open book accounting To demonstrate high levels of corporate responsibility To deliver what we are asking for as an intelligent client To deal effectively with CCS as one customer - the Crown To make a reasonable but not excessive profit To provide opportunities to SMEs in the supply chain To deliver savings for taxpayers

15 Policy Delivery – SMEs SME CROWN REP - Stephen Allott – ‘voice of SMEs’ OPPORTUNITY - Developing ways to make it easier to find opportunities to do business with Government – Contracts Finder is being refreshed to make this process even better REFORM - Negotiating simpler, more flexible EU public procurement rules Supporting the commercial community to implement and comply with the legal and policy framework COMMITMENT - All departments have developed action plans and targets to increase their spend with SMEs and deliver their contribution to the 25% aspiration COMMUNICATION - SMEs given new channels of communication including Mystery Shopper, SME Panel, Crown Rep Implementing a wide range of measures to level the playing field for small companies, charities and voluntary organisations to be in the best possible position to compete for government contracts. 15Commercial Reform

16 Main reforms from new EU directives 16 Commercial Reform Greater Freedoms Allowing negotiation with suppliers - relaxation of the rules on the competitive negotiated procedure Simplification & reduced red tape Assessing suppliers credentials - greater use of self-declarations Reduced times for suppliers to respond to adverts/tenders New, improved or clearer rules Electronic Marketplaces & Dynamic Purchasing System Poor performing suppliers – ability to exclude Skills & experience of individuals (consultants, lawyers & architects etc) to be taken into account Social and environmental aspects Greater Flexibilities Public Service Mutuals & Social Enterprises – contracts reserved before exposure to competition New EU Commitment Review the effects of the EU thresholds Together - significantly changing the face of public procurement Implementation by the end of 2014

17 Lord Young reforms 17Commercial Reform Report Growing Your Business’ - May 2013 These were accepted by government and new legislation is being introduced this year. Abolishing PQQs for low value contracts and a standardised PQQ for high value contracts Mandating that 30 day payment terms are passed down the supply chain Mandating that all public sector contracts are readily accessible online Reporting on all new spend with SMEs/VCSEs Impact Whole of public sector

18 Building Commercial Expertise Across Government Civil Service Capabilities Plan - Priority Skills Area 18 Developing Expertise Developing a culture of confidence and judgment Interchange with industry Skills assessment tool and further L&D opportunities Retaining Expertise Active career path management Designing a commercial talent programme Non-monetary rewards Attracting Expertise Commercial recruitment hub Developing commercial Fast Stream scheme Fast Track apprenticeship programme Commercial Reform

19 “A must attend’ programme for all commissioning leaders.” Francis Maude Minister for the Cabinet Office Development programme for people responsible for delivering transformation of public services Combination of input from experts and practical, peer-led learning Focus on commissioning for outcomes and across organisational boundaries Gives knowledge, networks and confidence to do things differently - emphasis on ‘hearts and minds’ rather than process and rules training Terrific feedback from participants – supporting them in delivering real change 19 Next wave begins in September 2014; get in touch if you are interested Commissioning Academy Commercial Reform

20 20Commercial Reform Concluding thoughts......


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