Office of Government Commerce - UK HUGH BARRETT Chief Executive, OGCbuying.solutions EU Procurement Learning Lab Friday, 28 November 2003

VALUE FOR MONEY 2 Agenda Introduction to UK Public Sector Purchasing Cross Public Sector deal with Microsoft Government Procurement Card

VALUE FOR MONEY 3 Introduction Size of UK Public Sector Market Purchases CCG (England) - €19b Ministry of Defence - €14b National Health Service - €16b Local Government - €37b

VALUE FOR MONEY 4 Office of Government Commerce  Created in April 2000  Office of HM Treasury  Supervisory Board

VALUE FOR MONEY 5 OGC’s Purpose and Agenda OGC’s vision is to work with Central Civil Government as a catalyst to achieve best value for money in commercial activities

VALUE FOR MONEY 6 OGC’s Objectives:  From 1999 – 2002  € 1.43 billion value for money improvements.  From 2002 – 2006  Deliver € 4.29 billion of value for money gains in civil government procurement through the Office of Government Commerce  Agreed measurement methodology  Departments can keep their contribution

VALUE FOR MONEY 7 Major Issues  Improving Delivery  Small and Medium size enterprises  “e” Agenda

VALUE FOR MONEY 8  OGCbuying.solutions is a trading arm of the Office of Government Commerce.  Agency’s role is to deliver value for money gains for the public sector  Manage €2b of public expenditure through central arrangements  Realising €233m of savings to the public purse in 2002 OGCbuying.solutions

VALUE FOR MONEY 9  Aggregate demand to save public money and lower cost of sale for supplier  Voluntary agreements, not procurements  Specify pricing and terms for whole public sector  Operate within existing contractual and procurement frameworks What are Memoranda of Understanding?

VALUE FOR MONEY 10  Signed in February 2002 for 3 years  Specifies pricing and terms on Enterprise Agreement 6.0, Select Agreement 6.0 and Software Assurance  3 year payment schedule on Enterprise licenses  Savings to date are €71.5m over pre-MoU pricing  Covers up to 1.5 million desktops The Microsoft MoU

VALUE FOR MONEY 11  GPC 1 launched in 1997  Originally available to all Central Civil Government Departments  Visa Purchasing card  Method of paying for “low value” goods and services  Visa Corporate Card – Travel and Subsistence  Original contract let for 5 years and expired January 2003  GPC 2 contract let in February 2003 Government Procurement Card – History

VALUE FOR MONEY 12 Savings  Process efficiency savings = Time / Environment / Monetary  KPMG Analysis 1997  Review of all Central Government Departments  Average savings figure = €40 per transaction

VALUE FOR MONEY 13 How does GPC save cost?

VALUE FOR MONEY 14 Growth of GPC: Spend & Savings

VALUE FOR MONEY 15 GPC 1 Key Aims & Achievements  Aim:To achieve €430m spend by December 2002 Achieved:€580m cumulative spend  Aim:To process 2.5m transactions by December 2002, resulting in a process efficiency saving of €100m Achieved:€110m in process efficiency savings

VALUE FOR MONEY 16 The New GPC 2 Contract  EU compliant competitive tender resulted in VISA and a consortium of 7 issuing banks being awarded new GPC Contract  New GPC Contract commenced February’03 for 5 years, with option to extend for further 2 years  Now open to wider Public Sector  Target spend - €6.4b  €2.1b in Central Civil Government  €4.3b in the Wider Public Sector

VALUE FOR MONEY 17 Why the Success? Strategic Benefits Although Non-Mandated it has been successful because:  Link to the Modernising Government Agenda  Gives financial transparency and accountability  Helps to meet the Prompt Payment Initiative  Helps to adhere to Late Payment Legislation  Most cost effective “e-payment method”  Drives out inefficiency  Endorsed by the Treasury Chief Minister  Saves cost

VALUE FOR MONEY 18 Environmentally Friendly  Every transaction saves at least 6 pieces of A4 paper  11,500 pieces of paper = 1 tree WHICH MEANS THAT…… Over 2,000 trees saved in UK to date