People matter, results count. Collaborative Procurement The Opportunities and Challenges The Local Government Group & Cabinet Office Seminar on Public Sector Reform Andrew Smith and John Collington

Points to Cover in 35 Minutes  Progress and Lessons Central Government – JC Local Government – AS  Common Emerging Themes Collaborative Procurement Models Joint Interests Making it Real Risks and Issues  Q & A and Discussion AS

Changes to Central Government Procurement Landscape UNCLASSIFIED Jun ‘10 > Commitment to Procurement at highest levels > Greater focus on cost reductions - emergency budget > Crown negotiations with top suppliers > Centralised Procurement – Target Operating Model > New central category strategies - being implemented > Government Procurement Reform strategy produced > Government’s first CPO position appointed Jul ’11 > Launch of JC

Government Procurement: Mission /13 Reform Government Procurement through centralisation of common goods & services spend, to fund improvements in technology, processes and Government wide procurement resources, to better manage total procurement spend, in support of Departmental cost reduction targets. UNCLASSIFIED Mission JC

Procurements Contribution to First Year Savings £800m through renegotiating contracts and £360m from centralised procurement £870m on consultancy (down 70%) and £500m on agency staff (down 40%) £400 million on advertising and marketing spending £300 million from smaller Civil Service (17,000 FTEs down) £90 million from property controls and 10% carbon emission reduction from Government estate £400 million from reviewing major projects and £300 m from ICT controls Savings in 2010/11 – Communicated by MCO and COO UNCLASSIFIED JC £2.5bn of the £3.75bn

Lessons and Barriers to Overcome - CG In spite of progress and Ministerial commitment  There are still too many cynics and sceptics  Data integrity remains an issue  Inertia/reluctance to changing practice JC Spend Under Management Sustainable Savings Investment to Improve Which if unaddressed will impact: UNCLASSIFIED

Progress in Local Government  Delivery of Phase 1 of LGG Workstream Quick Wins Big Wins Proposed strategy to deliver Phase 2 – the NPA  LG examples of best practice – NIEP CAP thinking Joint working with Cabinet Office / DCLG / DoE / DfT  Networks and connections improving AS UNCLASSIFIED

Lessons and Barriers to Overcome – LG AS  Barriers are political and cultural – not technical  Sovereignty and adoption are key issues  People misinterpret localism and leverage  The need to compel rather than mandate  No current coherent strategy  The risk that LG does not get its act together  The risk that political aspirations with CG cannot be aligned UNCLASSIFIED

Points to Cover in 35 Minutes  Progress and Lessons Central Government – JC Local Government – AS  Common Emerging Themes Collaborative Procurement Models Joint Interests Making it Real Risks and Issues  Q & A and Discussion AS

Collaborative Procurement Models Principal Focus: Market aggregation Market making Developing category spend Principal Benefits: Maximise buying power of government Delivery of sustainable savings Leveraging capability and volumes Driving policy through procurement AS

Collaborative Procurement Models Localism & Leverage i)National Procurement Agency would create the interface with the Government Procurement Services ii)Local Authorities have access to a range of arrangements by category of spend iii)Local decision remains with local government iv)Local and Central government bring market strength together – market segmentation and shaping AS

Joint Interests AS Both sectors need to operate from effective spend and supplier data: becoming a more informed and powerful client sector Best value from: increased volumes, improved market share, best deals, joint use of technology and capacity, deployment of private sector contribution, SME participation, Working together where it makes sense (e.g. market shaping, best deals) (Probably) one of the biggest initiatives ever taken in this landscape – ambition of both sides Delivering government policy through procurement: providing local economic, social and environmental benefit – localism and leverage

Making It Real JC Common Simple Goods & Services ICT & Professional Services Social Care & Emerging Products Complexity Savings Potential Dependent on a willingness to share and leverage knowledge, experience, data and commitment !

Risks and Issues JC  Local Government does not get its act together  Central Government falters from the strategy  Political aspirations on both sides cannot be met  Adoption!  Invest to save approach  Importance of governance

Risks and Issues High Level Indicative Governance Model AS Governanc e NPAGPS Joint Venture Private Sector Markets Category Sharing Business Best Deals Management Development LGG & ERG

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Thanks for listening Any questions?? UNCLASSIFIED