© OECD A joint initiative of the OECD and the European Union, principally financed by the EU Central Public Procurement Institution in UK – Office of Government Commerce – Organisation and Functions Mr. Peter Bennett, OGC, U.K. Regional Conference on “Public Procurement Reform in West Balkan" Pristina, 16-17september 2008

© OECD A joint initiative of the OECD and the European Union, principally financed by the EU Topics covered: - OGC: beginnings and development from The public procurement context - Transforming Government Procurement: a new agenda from OGC: key business areas

© OECD A joint initiative of the OECD and the European Union, principally financed by the EU OGC: beginnings OGC was established in 2000 following the Gershon review & brought together various public procurement bodies including: Central Unit for Purchasing (CUP) The Buying Agency (TBA) Central Computer and Telecommunications Agency (CCTA) Property Advisors to the Civil Estate (PACE) A unique body within Government - an independent office of HM Treasury with it’s own Chief Executive OGC vision To work with central civil government as a catalyst to achieve best value for money in commercial activities

© OECD A joint initiative of the OECD and the European Union, principally financed by the EU Role of Office of Government Commerce(OGC) & OGC buying solutions (OGCbs) l OGC - co-ordinate departmental & Government purchasing power - improve procurement skills & improve performance of major projects l OGCbs - commercial arm of OGC, but non-profit making - key role to help public sector purchasers maximise procurement efficiency &vfm - income derived from a levy on frameworks paid by suppliers…

© OECD A joint initiative of the OECD and the European Union, principally financed by the EU The public procurement context and issues for OGC The UK public sector spends over £125bn a year on procuring goods and services Issues for OGC: -History of poor contract and project management -Devolved Authority of Departments and their Agencies -Procurement activities that did not involve or take advice from professionals - Procurement and Finance often separate -How to achieve change by influence rather than control

© OECD A joint initiative of the OECD and the European Union, principally financed by the EU OGC: early achievements l OGC helped to realise £1.6 billion value for money gains in 3 years up to 2003 Sources of vfm savings Greater focus on quality & whole life costs l Reducing process and transaction costs l Co-ordinating departmental & Government purchasing power l Wider involvement of professional procurement staff l Gateway reviews – improvement in cost & schedule performance of major projects

© OECD A joint initiative of the OECD and the European Union, principally financed by the EU Office of Government Commerce: 2005 to 2007 Extension of remit to cover not only central civil government but also the wider public sector including: health, police, defence and local authorities Priorities: - to support the public sector in the delivery of £21.5 billion efficiency gains over a 3 year period - to deliver £3 billion vfm gains from more effective government procurement - to achieve improvement in the success rate of mission critical projects

© OECD A joint initiative of the OECD and the European Union, principally financed by the EU Transforming Government Procurement l TGP was published in January 2007 and set a new agenda for government procurement. l OGC tasked with driving major change and creating best practice in procurement across central Government, through: setting the policies and standards to be followed and monitoring capability and adherence to the standards; developing a cadre of skilled procurement professionals across Government; playing a stronger role in the successful delivery of major projects; driving value for money deals on a collaborative basis.

© OECD A joint initiative of the OECD and the European Union, principally financed by the EU OGC’s key business areas from 2007 Policy, Standards and Capability Markets and Suppliers, Government Procurement Service Collaborative Procurement Capital Group  Major Projects Review Group (MPRG)

© OECD A joint initiative of the OECD and the European Union, principally financed by the EU OGC’s main functions l OGC’s main functions are to: Set procurement policy and standards for departments Monitor performance; and take action where necessary Make sure: right people; right jobs; right skills; right incentives Demand collaboration for common goods and services Work with the Major Projects Review Group to ensure the most complex projects are subject to high standards of scrutiny & support

© OECD A joint initiative of the OECD and the European Union, principally financed by the EU OGC Policy and Standards Policy and Standards has the lead for UK procurement policy Represent the UK in Europe and Internationally Transposition of EU Directives into UK law Domestic Procurement Policy Guidance on the procurement rules

© OECD A joint initiative of the OECD and the European Union, principally financed by the EU National law l A brief overview of the UK legal system for public procurement The UK transposes EU Directives into national law: –The Public Contracts Regulations 2006; –The Utilities Contracts Regulations National Law covers England, Wales and Northern Ireland Scotland implement separately – but work closely with the UK for consistency

© OECD A joint initiative of the OECD and the European Union, principally financed by the EU Government Policy l Government procurement policy requires all purchases of goods and services to be based on value for money, having due regard to propriety and regularity Value for money = “the optimum combination of whole life cost and quality (or fitness for purpose) to meet the customer’s requirement” Not just lowest price Requirements are set subject to usual public expenditure tests (need, cost-effectiveness, affordability)

© OECD A joint initiative of the OECD and the European Union, principally financed by the EU Collaborative procurement: why change? - Get a better deal for the taxpayer by understanding managing and leveraging £78 billion of common public sector spend - Deliver against public spending targets - Release resources to support front line delivery in the public sector - Deliver the Transforming Government Procurement agenda - Embed collaborative procurement into sustainable better practice

© OECD A joint initiative of the OECD and the European Union, principally financed by the EU Collaborative deals l Collaborative procurement can be an important driver of value for money. OGC given new powers to require departments to act collectively to procure commodity goods and services.  Collaborative deals worth over £1.5 billion negotiated since January 2007, allowing Departments to free up more funds for front-line services and to reduce resource committed to routine procurement.  We have developed a collaborative procurement model which will be used to drive a more collaborative approach to commodity procurement across government.  Four pilots are running at present – MoD is leading on energy, NHS Pasa on fleet, and OGCBS on travel and office solutions.

© OECD A joint initiative of the OECD and the European Union, principally financed by the EU Major projects Gateway Reviews have helped achieve significant savings and successful delivery of programmes and projects, and will continue to provide major support to Senior Responsible Officers across Government. Major Products Review Group adds a further mechanism to allow intervention by Ministers and Treasury where appropriate. l Chaired by HM Treasury and supported by OGC expertise, designed to scrutinise projects and assess deliverability at key stages in life cycle:  at development of business case  before going to tender  following bid assessment but before contract award.

© OECD A joint initiative of the OECD and the European Union, principally financed by the EU Thank you