Colin Cram Marc1 Ltd Tel: Mobile:

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 1. 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+

£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

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

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 BUT Increasing Collaboration/Joint Procurement

Indiscipline Different Procedures/Contract Ts and Cs Complexity – e.g. Tender Procedures Multiplicity of Tenders Multiplicity of ‘Duplicate’ Contracts and Contract Managers Specifications Inconsistency of Capability, Expertise, Processes

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

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 ** Industry Specific ** PPIs/Major Project Support * ** Regional/Large Local Contracts/Suppliers * Small Local Contracts ** Discipline/Implementation/ Compliance ** © C M Cram

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

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

PUBLIC SPENDING £bn Central Local Total Pensions Health/Social Care Education Defence Welfare Protection Transport General Government Other Spending Interest TOTAL

UK PUBLIC EXPENDITURE £bn Total Budget 671 Cost of Public Spending (ex Welfare/Pensions) 451 Annual Procurement Spend 220 Estimated Annual ‘Back Office’ Outsourcing Spend 20? Estimated Potential O/S Spend IT/Back Office 35? Theoretical Total Additional Outsourcing Potential* ? * Includes front line services

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 Boost the Shared Services/Outsourcing Market Provide those Services through building on Existing Service Centres/Creating New Ones

WHY IS NOW THE RIGHT TIME? Public Spending Deficit Increasing Focus on ‘Efficiency = Cash’ Improved Service Demands Managing this ‘Squeeze’: – Shared/Joint services – Outsourcing – Transferring Work from High to Low Cost Areas – Third Party Spend/Procurement – BPR and Lean – Cutting Services

SERVICES © C M Cram SERVICES SERVICE PROVIDERS 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 Sytem

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

MAKING IT HAPPEN Create Steering Group with TORs Commission and Fund Initial Work – to include – Wider Discussions with Public Sector, Ministers and Industry – Discussions with other bodies e.g. CLG Advice re Dynamic Purchasing System – Identify Possible Sources of Funding – Identify Team to Do Work – Identify Possible ‘Hosts’, e.g. BIP Approve and Fund Work to create OBC Draft Programme of Work and Implementation Plan

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

Colin M Cram Marc1 Ltd Tel: Mobile: