14 July 2011 | Rebecca Ellinor

Bringing together the best parts of government buying, John Collington is creating a new mood of collaboration. Rebecca Ellinor meets the government's first chief procurement officer

"We’ve no-one to blame but ourselves if we are not successful,” says John Collington on the collective accountability that now exists among commercial directors in central government procurement and the “massive difference” it’s making. “We have been delegated responsibility, we have more mandates than we have ever had – and that is a really important point: there is nowhere for us to hide.”

Collington was named the UK government’s first chief procurement officer in April. He told SM then: “It’s recognition for the work myself and colleagues have done over the past few years to raise the profile of procurement. Effectively, there is no change to my work. The appointment is affirmation that the journey we embarked upon over the past seven months has been the right one.”

And it’s been quite a journey. Between May 2010 and this year, a new government has come in and there has been a commitment to procurement at the highest levels – Cabinet Office minister Francis Maude is leading the charge, supported by Prime Minister David Cameron. There’s been an emergency budget with greater focus on cost reductions, contracts with the government’s top 30 or so suppliers have been renegotiated and an operating model was established for centralised procurement.

Topshop owner Sir Philip Green was also commissioned to conduct an efficiency review. He completed that in October, concluding that there was a “staggering” level of wasteful spending in government. That review highlighted the need for up-to-date information on how much the government spends and with whom. Category strategies have been developed for common goods and services that can be purchased centrally, nine ‘crown representatives’ have been appointed to ensure government acts as a single customer and achieves more value for money, and a review of Buying Solutions – the government’s commercial agency – has been conducted and concluded.

To that last point, Collington says: “We took the opportunity not just to review Buying Solutions, but to ask ourselves how we can use its transformation to put procurement further up the agenda and make sure we deliver cost effective savings on a sustainable basis during the lifetime of the parliament.”

Following this review, a government procurement strategy was produced and presented to Maude and chief operating officer of the ERG, Ian Watmore. That was in turn presented to ministers. While that was being signed off, Collington was appointed as the government’s first CPO and David Smith, who is also commercial director at the Department for Work and Pensions (DWP), became deputy CPO.

“We realised we needed more than just the mandate we’ve got from the Cabinet Office, which we have never had before, to drive expenditure through central contracts. What we [the Procurement Executive Board] recommended was the creation of Government Procurement and the bringing together of the best parts of what were the collaborative procurement team of OGC, Buying Solutions, and key elements of departments – so HM Revenue & Customs, DWP, the Home Office. Each of them will contribute to the provision of services under this new banner of ‘Government Procurement’.”

Further developments

Another change to have taken place is the establishment of this Procurement Executive Board (PEB). Commercial directors from the six largest departments sit on this decision-making board. Melinda Johnson, one of the six, represents both the Department for Education and the smaller government departments (which are part of an extended board). Also on the board is Sally Collier, in charge of policy and capability, MD of Buying Solutions David Shields, and CIPS CEO David Noble, who is a non-executive director. His role involves both challenging the board and bringing a private-sector perspective to discussions.

“Having commercial directors working through the PEB with the mandate and responsibility we have been given to drive the reform agenda is probably the biggest difference from where we were before.”

Previously, commercial directors met quarterly under the chairmanship of OGC, with up to 25 people discussing the government’s procurement agenda. “OGC was one step removed from the departments and Buying Solutions was one step removed from OGC. Members of the PEB are constructive and challenging with each other. We are influencing, in a sense, government policy in procurement. In the past, that policy was, in a sense, driven from OGC and almost foisted upon departments.”

The OGC capability reviews, which effectively produced a league table of government purchasing, engendered a competitive culture among departments. Now the mood is much more one of collaboration. The six departments in the PEB account for 85 per cent of expenditure. Together, the boards make decisions on approving category strategies, deals and will approve and manage a Procurement Investment Fund to invest in technology and people development. They also have “strategic oversight” over the running of Buying Solutions, now called the Government Procurement Service. “In a sense, we are overseeing a £40 million business,” says Collington.

So what has the PEB achieved so far? “We’re getting involved in major strategic initiatives such as the technology strategy. We’ve never had a joined up one for government and one thing it’s been criticised for in the past is an inability to produce readily available data on spend and suppliers. There are a number of exceptions to that, but the problem has been pulling that data together on a collective basis.”

In the past, the process resulted in data that was at best six months old and at worst 18 months out of date.

By the end of the financial year, the government will have its first pan-government spend analysis tool. This system will download data from departmental ERP and accounts payable systems, and cover everything from common goods to one-off purchases.

Another focus for the board is training. Having sought input from all departments, Government Procurement is developing a concept it’s calling the ‘licence to operate’. This covers three areas – the licence to lean source; to category manage; and to contract manage. Training for each will involve ‘face-to-face’ learning, a post-course evaluation and accreditation, plus access to a virtual academy. The board has approved the concept and commissioned a pilot, which it is talking to CIPS about. Following this, it will look at a way to roll it out widely. Training will be funded by surplus from the Buying Solutions trading fund. Money from that fund will also be invested into new technology.

The need for training was highlighted by the government’s largest suppliers during the renegotiation process. “Suppliers were very critical of the length of time it takes to run a public sector procurement exercise. So we initiated the ‘lean review’ and brought in a specialist company to help us map and re-engineer the public sector procurement process.”

That review, Accelerating Government Procurement, made two key suggestions – the formation of an elite group of commercial professionals who are ‘licensed to source’ and an interchange programme between the private and public sector. “We have got to improve the perspective that people have of government procurement resources and capability.”

Collington says procurement’s reputation will be improved by achieving sustainable results throughout the life of the parliament. And by ‘procurement’s reputation’ he means the way it is viewed by ministers, special advisers, suppliers, the public, and peers, so it can attract and retain talent.

Government Procurement will manage categories of common goods and services across government and expects to save £3 billion annually by the end of March 2013 on £13 billion of addressable spend from the 2009/10 baseline. As reported by SM, two tenders have already been published for the common categories. Government Procurement will also improve the buying of £40 billion “strategic and operational spend”, such as armed forces equipment, by increasing procurement capability across government. A further £13 billion, which is spent with the government’s top suppliers, will be managed as the crown.

“We have delivered fantastic results in the first year. We’ve reduced consultancy by more than £800 million in a year, travel spend is around 37 per cent down and IT costs are down. This is work that departments have done collectively and the result of tighter spending controls. We have also done well over the past 12 months in saying we can no longer be divided and conquered by suppliers. We are making progress and I think government procurement is a good place to work. It’s good, it’s genuine and it’s real.”

*John Collington will be speaking at the CIPS Conference 2011 in London on 6 October

Strategic goals

Government Procurement’s steps to tighten up buying and spending

Government Procurement will:
• Deliver and manage the operating model for centralised procurement, delivering cost reductions in excess of 25 per cent from the 2009/10 baseline of £13 billion by March 2013.

• Create formal agreements between itself and departments to deliver centralised procurement and to improve capability, with a focus on policy, people, processes, technology and results.

• Increase spend through Government Procurement by departments and by category from less than £2.4 billion to more than £10 billion.

• Transform Buying Solutions to make it the ‘engine room’ of Government Procurement and deliver savings through sourcing, category, data and customer management.

• Repurpose procurement domestically and internationally and deliver on key policy initiatives.

• Develop lean processes for government and establish a Civil Service training programme. procurement staff apply them.

☛  Click here to find out how the government renegotiated contracts with its largest suppliers