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Commercial Reform

Matt James

Director of Commercial Advice, Crown Commercial Service

2 Commercial Reform

Commercial landscape

Circa £187bn spend p.a. on goods and services across the public sector

Circa £40bn spend p.a. on goods and services in Central


Better commercial practices saved the Government £3.8bn in


3 Commercial Reform

Reforming the landscape

Retained departmental commercial activities

Common but complex transactions – joint working with depts

Transfer of additional commercial activities


Spend &

Procurements currently transacted

Strengthening functional leadership and improving commercial capability

Extending our involvement in complex commercial activities e.g IT/BPO

Transferring operations - 4 trailblazer depts circa £5bn of spend

Developing managed services and building world class commercial capability

4 Commercial Reform

Crown Commercial Service: three key inter-related service areas





Building the




New DNA for commercial activities

Managed Commercial Services delivered centrally - once on behalf of Government



Contract and supplier management


Time spent on value added activity

Before going to market

Developing requirements that shape markets and the supply base to



Simplifying process and reducing turnaround times & supplier bid costs

Improving contract and supplier management capability through application of new standards



Key objectives driving all that we do



• Excellent fully managed commercial services in central government and increasingly becoming the service provider of choice in the wider public sector

• Clear and compelling savings for all our customers leveraged through demand aggregation and innovative deals with suppliers both large and small

Spend & Reach


• Managing and influencing significantly higher levels of spend on common goods and services across the public sector

• Expert commercial advice provided by highly capable people informed by deep market knowledge and experience

– on an increasing number of key government projects

6 Commercial Reform

Establishing a customer-centric service



We have a ‘customer centric’ culture

Enthusiasm Governance

We understand our customers



We exceed expectations

We deliver an exceptional experience


We must create a culture which drives and encourages excellent customer service

7 Commercial Reform

Getting the best deals

Aggregating requirements to get the best deals

• Greater opportunities will arise through better pipelines to aggregate customer demand and requirements when going to market.

• Aggregating demand does not mean aggregating supply

Leveraging market knowledge and benchmarking our prices

• Price benchmarking is currently being rolled out across category teams to test and challenge the deals we have in place.

• Key to driving continuous improvement and increased savings as well as growing the business - particularly in the wider public sector.

8 Commercial Reform

Delivery model for goods and services


Category Management Pillars





Functional delivery

Commercial Contract


Supplier Performance


Contract delivery, optimisation and management

Performance analysis, tracking spend and savings

Supplier Innovation Cross-category innovation in supply chain management

Sourcing & Operations Best in class e-platforms, clear and efficient processes

Corporate structures aligned towards delivering an outstanding customer service

9 Commercial reform

Early examples of CCS in action

Digital Services


• Managed service provides access to a pool of 175 agile digital services suppliers (84% are SMEs and 38% are new suppliers to government).

G- Cloud




• £2bn worth of energy procured and delivered across the public sector in 2012/13 with savings to the public purse in excess of

£109m. investing in innovative contracting models for long term energy requirements.

• New contracting model being procured. Estimated savings over current model in the region of 10% to 15% (up to £350M) over the life of the vehicle (4 years).

• 4 th Generation contracting vehicle in place providing access to 1000 suppliers (84% are SMES). £64m of spend transacted through G-Cloud since inception in April

2012 via circa 4000 procurements.

• 63% of business by value has been won by


10 Commercial Reform

Customer-centric services: Fleet Portal

• Online system collating vehicle technical data including for Cars & LCVs

• Allows customer access for vehicle purchase and leave quotations to determine best value solution and support Direct Award

• Direct link to Vehicle Lease suppliers for live financing quotes

Fleet framework agreements

• RM859 : Vehicle Purchase – extended until October 2014

(new procurement underway)

• RM858 : Vehicle Lease – expires May 2015 (new procurement underway)

• RM955: Supply and Fit of Tyres – live from August 2012 for up to 4 years

• RM956 : Vehicle Conversion & Reconditioning Services – live from September 2013 for up to 4 years

12 4 Crown Commercial Service – Fleet Team

Management of strategic suppliers

1. Cost Reduction - Targeting saving of £1bn through supplier engagement in 2013/14

2. Performance Management - Create a more rigorous and effective process for performance management of all strategic suppliers

3. Deep Dive Commercial Capabilities -

Disaggregation of contracts & Long run innovation ideas

Circa 50% of the £40bn of central government spend is with circa 50 suppliers

13 Commercial Reform

We expect our suppliers.....

To embrace competition

To be innovative through proposals for how we can improve services

To deliver savings for taxpayers

To provide opportunities to

SMEs in the supply chain

To deliver what we are asking for as an intelligent client

To deal effectively with CCS as one customer - the


To make a reasonable but not excessive profit

To demonstrate high levels of corporate responsibility

To be transparent through open book accounting

14 Commercial Reform

Policy Delivery – SMEs

Implementing a wide range of measures to level the playing field for small companies, charities and voluntary organisations to be in the best possible position to compete for government contracts.

SME CROWN REP - Stephen Allott

‘voice of SMEs’

OPPORTUNITY Developing ways to make it easier to find opportunities to do business with Government – Contracts

Finder is being refreshed to make this process even better

REFORM Negotiating simpler, more flexible EU public procurement rules

Supporting the commercial community to implement and comply with the legal and policy framework

COMMITMENT All departments have developed action plans and targets to increase their spend with SMEs and deliver their contribution to the 25% aspiration

COMMUNICATION - SMEs given new channels of communication including Mystery

Shopper, SME Panel, Crown Rep

15 Commercial Reform



Allowing negotiation with suppliers relaxation of the rules on the competitive negotiated procedure

Main reforms from new EU directives

Simplification & reduced red tape

Assessing suppliers credentials greater use of self-declarations

New, improved or clearer rules


Marketplaces &




Poor performing suppliers – ability to exclude



Public Service

Mutuals &


Enterprises – contracts reserved before exposure to competition

New EU


Review the effects of the EU thresholds

Reduced times for suppliers to respond to adverts/tenders

Skills & experience of individuals

(consultants, lawyers & architects etc) to be taken into account

Social and environmental aspects

• Together - significantly changing the face of public procurement

• Implementation by the end of 2014

16 Commercial Reform





- May



Whole of public sector

Lord Young reforms

Abolishing PQQs for low value contracts and a standardised PQQ for high value contracts

Mandating that 30 day payment terms are passed down the supply chain

Mandating that all public sector contracts are readily accessible online

Reporting on all new spend with SMEs/VCSEs

These were accepted by government and new legislation is being introduced this year .

17 Commercial Reform

Building Commercial Expertise Across Government

Civil Service Capabilities Plan - Priority Skills Area

Attracting Expertise

Commercial recruitment hub

Developing commercial

Fast Stream scheme

Fast Track apprenticeship programme

18 Commercial Reform

Developing Expertise

Developing a culture of confidence and judgment

Interchange with industry

Skills assessment tool and further L&D opportunities

Retaining Expertise

Active career path management

Designing a commercial talent programme

Non-monetary rewards

Commissioning Academy

“A must attend ’ programme for all commissioning leaders.”

Francis Maude Minister for the Cabinet Office

• Development programme for people responsible for delivering transformation of public services

• Combination of input from experts and practical, peer-led learning

• Focus on commissioning for outcomes and across organisational boundaries

• Gives knowledge, networks and confidence to do things differently emphasis on ‘hearts and minds’ rather than process and rules training

• Terrific feedback from participants – supporting them in delivering real change

Next wave begins in September 2014; get in touch if you are interested

19 Commercial Reform

20 Commercial Reform

Concluding thoughts......