‘TOWARDS TESCO’ A NEW APPROACH TO PUBLIC SECTOR PROCUREMENT AND OUTSOURCING Colin Cram Marc1 Ltd Tel: 01457 868107 Mobile: 075251 49611 colin.cram@talktalk.net www.marc1ltd.com

My Background Director, North West Centre of Excellence - 47 local authorities Director, Research Councils’ Procurement Organisation Director, North West Universities’ Purchasing Consortium Director, Benefits Agency Contracts Organisation Central Unit on Purchasing Cabinet Office, Treasury, Central Government generally Senior Adviser to Office of Government Commerce Member of Society of Local Authority Chief Executives -SOLACE Fellow of Chartered Institute of Purchasing and Supply Institute of Directors: ‘Towards Tesco’

TOWARDS TESCO Public Sector Procurement is Vast A New Integrated Model could Deliver Huge Benefits 2. Outsourcing and Shared Services Is Chaotic and Costly Huge Potential Remains Propositions: A New Outsourcing Model? A Proposition for Delivery of Public Services 3. Potential Savings of £25bn+

MIRROR TO PUBLIC SECTOR PROCUREMENT What Does It Look Like MIRROR TO PUBLIC SECTOR PROCUREMENT What Does It Look Like? How Well is it being Managed? How Can We do Better?

DOES PUBLIC SECTOR PROCUREMENT MATTER? £220 Billion pa £3,500 per Adult and Child pa One Third of Total UK Public Spending One Sixth of UK Gross Domestic Product (GDP) 0.75% of Global GDP Size makes it Critical to Delivery of Public Services Effective Management is Essential to Reduce Public Spending Deficit and Deliver Government Procurement Policies EDUCATION PROCUREMENT - £30+bn Alone would put UK in top 30% of national GDPs

FEATURES OF PUBLIC SECTOR PROCUREMENT 65% Non-Central Government 50% Common Categories, Goods, Services Professional Services £35bn Construction £21bn ICT £10bn Facilities Management £10bn Energy £4bn Reprographics £3bn Travel £3bn Fleet £3bn Food £2bn

IF IT WAS YOUR MONEY, WOULD YOU MANAGE IT LIKE THIS? Some Major Central Government Department Organisations Some Large Specialist Organisations NHS Outsourcing Buying Agencies: 40+ OGC and Category Teams Several Thousand Small to Medium Procurement Units 40,000+ Procurement Points Absence of Mandation BUT Increasing Collaboration/Joint Procurement

HOW TO MAKE SAVINGS PUBLIC SECTOR ORGANISATIONS CREATE UNNECESSARY COSTS FOR SUPPLIERS AND THEMSELVES Indiscipline Different Procedures/Contract Ts and Cs Complexity – e.g. Tender Procedures/Ts and Cs Multiplicity of Tenders Multiplicity of ‘Duplicate’ Contracts and Contract Managers Specifications Inconsistency of Capability, Expertise, Processes

SO WHAT IS THE COST OF POOR PRACTICE/MISSED OPPORTUNITY? Furniture 30% FM/Outsourcing/Major Contracts Up to 35% Laboratory Consumables Up to 90% IT 5 – 80% Construction 5 – 25% Excellent Construction Management 5 – 15% Social Care 10% Legal Services 10% Good Contracts Management 5 – 35% © C M Cram

BIG IMPROVEMENTS NEED BIG CHANGES Right Procurement Structures/Joint Procurement Common and Complete Databases Common Information/IT Systems Common Procedures Common Specifications Commodity, Markets, Procurement Expertise Specialist Management Best Practice Procurement Techniques

PUBLIC SECTOR PROCUREMENT IN 5 YEARS TIME? Central/ Major Departments/ Buying Solutions Industry Specific Regional P Hubs/ Medium Depts Local/Med/ Small Departments Major National Contracts/Suppliers * Common Categories Relationship Management Market Management PPIs/Major Project Support Regional/Large Local Contracts/Suppliers Small Local Contracts Discipline/Implementation/ Compliance © C M Cram

PUBLIC SECTOR PROCUREMENT: THE FUTURE? INTEGRATION COLLABORATION INDEPENDENCE © C M Cram

HOW CAN OUTSOURCING AND SHARED SERVICES BUSINESS BE BOOSTED? Eliminate obstacles High Costs Long Timescales Complex Procedures Varied Procedures Duplicate Specifications Create Model Approach Create Vision for Public Service Delivery

PUBLIC SPENDING £bn Central Local Total Pensions 110 110 Health/Social Care 117 117 Education 28 52 80 Defence 38 38 Welfare 60 50 110 Protection 16 17 33 Transport 13 10 23 General Government 13 13 26 Other Spending 71 32 103 Interest 30 1 31 TOTAL 496 175 671

ELIMINATE OBSTACLES: CREATE MODEL APPROACH Create Range of Model Specifications Create Matrix of Service Providers and Services that the Public Sector can use without further EU Tendering Provide those Services through building on Existing Service Centres/Creating New Ones

SERVICES © C M Cram SERVICES SERVICE PROVIDERS 1. 2. 3. 4. 5. 6. Roads √ Call Centres HR Finance Construction Services ICT Legal

HOW? Create Range of Model Specifications Follow EU Procurement Directives to Create Matrix Evaluation Criteria: Capability Obtain Indicative Prices? Grow Matrix Organically Consider Dynamic Purchasing System

WHAT SERVICES COULD BE COVERED? ALMOST ANYTHING! HR Payroll Print and Design Finance Internal ICT Legal Services Agile Working Solutions Procurement Construction Asset Management Roads Revs and Bens Debt Collection Managed CCTV CRM Out of Hours Services ICT Hosting Data Centre Operations Environmental health Elements of Children’s Services and Adult Social Care

PROPOSITION FOR PUBLIC SERVICE DELIVERY What should be Delivered by the Public Sector? What should be Delivered by the Private Sector? Benefits of Proposition Overall Model for Public Service Delivery Developed by the Outsourcing Industry VISIONARY – Nothing Ruled Out

MAKING IT HAPPEN Outsourcing Industry to Take Lead Create Steering Group with TORs - membership private and public sectors Commission and Fund Initial Work – to investigate feasibility/sources of funding etc Draft Programme of Work and Implementation Plan

THANKYOU Colin M Cram Marc1 Ltd Tel: 01457 868107 Mobile: 075251 49611 colin.cram@marc1ltd.com www.marc1ltd.com