Cabinet Office underestimated difficulty of procurement reform, say auditors

13 Dec 16

The Cabinet Office severely underestimated the difficulty of implementing joint buying across government through the Crown Commercial Service, according to a report from the National Audit Office.

Furthermore, while the CCS helped to save government departments and public sector organisations £521m in 2015-16, it was not possible to compare these savings with the predicted benefits of £3.3bn by 2018.

This was the conclusion of a report by the spending watchdog that examined the performance of the CCS, the government agency created in 2014 with the aim of saving money through centralised buying.

The CCS now directly manages £2.5bn worth of spending – £8bn less than forecast – for seven government departments, which is ten fewer then planned. According to the report, the CCS buying frameworks were used by central government and public organisations in £12.8bn of public spending on common goods and services.

The watchdog reported that it could not tell whether the ‘savings’ of over half a billion pounds could not have been achieved anyway, if the departmental buying functions had not been transferred to CCS.

A survey by the CCS showed that 6 out of 10 customers were satisfied with the CCS service. However, the CCS itself reported that service delivery had not always been in line with service agreements, and that some departments had complained that the service from CCS could be of poor quality.

Auditors found the CCS’s management of services “has not always supported consistent value for money and quality.” For example, the CCS’s services were not integrated or standardised, and CCS could not demonstrate to its customers that its deals were always the best available. However, auditors noted that the service had recently shown “clear signs” of improvement, governance, risk and internal control.

In theory, central buying should achieve very large savings, the NAO said. But it was not clear what spending should be centralised. It said the Cabinet Office relied on a Cabinet committee mandate to get departments to transition services quickly, and did not consider how it would manage them once services were transitioned.

Overall, the CCS has not achieved its ambitions, which the NAO believes were not realistic. The Cabinet Office’s plan to create the service “wrongly estimated both the activities and the amount of goods and services that were appropriate to be bought centrally.”

Auditors recommended that the Cabinet Office should reiterate the mandate for CCS in central government, and set clear expectations for those departments yet to transfer their buying of common goods and services to CCS.

Auditor general Amyas Morse said that without a sound overarching business case or a detailed implementation plan, it is not surprising that the Crown Commercial Service rapidly ran into difficulties.

“It is particularly disappointing that the Cabinet Office has not tracked net costs and benefits,” he added. “Because of this, it is not possible to show that CCS has achieved more than departments would otherwise have achieved by buying common goods and services themselves.”

Responding to the report, CCS chief executive Malcolm Harrison said: “CCS continues to enable central government and the wider public sector to achieve substantial benefits for the taxpayer from the procurement of common goods and services.

"I welcome this report, which rightly highlights the challenges CCS faced at its establishment, while acknowledging the positive progress we are now making.”

John Manzoni, the chief executive of the civil service, added: “The Cabinet Office will always set ambitious targets for the work we do right in the heart of government. CCS has made huge strides in recent months, and we expect to see more and more savings as the changes we make take hold across departments.

“From the centre we will increase skills and bring in the talent needed to make sure every penny of taxpayer’s money is used to its absolute maximum.”

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