‘TOWARDS TESCO’A NEW APPROACH TO PUBLIC SECTOR

PROCUREMENT AND OUTSOURCING

Colin Cram

Marc1 LtdTel: 01457 868107

Mobile: 075251 49611

colin.cram@talktalk.net

www.marc1ltd.com

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

MIRROR TO PUBLIC SECTOR PROCUREMENTWhat Does It Look Like? How Well is it being Managed?How Can We do Better?

DOES PUBLIC SECTOR PROCUREMENT MATTER?

• £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

LOCAL GOVERNMENT PROCUREMENT- £42bn

Alone would put UK in top 25% of national GDPs

FEATURES OF PUBLIC SECTOR PROCUREMENT

• 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

IF IT WAS YOUR MONEY, WOULD YOU MANAGE IT LIKE THIS?

• 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• Absence of Mandation

BUT• Increasing Collaboration/Joint Procurement

HOW TO MAKE SAVINGS PUBLIC SECTOR ORGANISATIONS CREATE UNNECESSARY

COSTS FOR SUPPLIERS AND THEMSELVES

•Indiscipline

•Different Procedures/Contract Ts and Cs

•Complexity – e.g. Tender Procedures/Ts and Cs

•Multiplicity of Tenders

•Multiplicity of ‘Duplicate’ Contracts and Contract Managers

•Specifications

•Inconsistency of Capability, Expertise, Processes

SO WHAT IS THE COST OF POOR PRACTICE/MISSED OPPORTUNITY?

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%

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BIG IMPROVEMENTS NEED BIG CHANGES

•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?

BENEFITSCoherent Framework for the Strategic Management of

Public Sector Procurement spend - the whole spend, not just 'common' categories

Delivery of the massive procurement savings that are needed

Accountability for the delivery of savings, value for money and public procurement policies

Clarity about the costs of doing public sector procurement

Consistent and expert procurement for all contracts, framework agreements, projects

Enable best supply management and market management tools to be used effectively for all areas of procurement for the whole of the public sector

BENEFITS Continued

Consistent approaches to procedures, specifications etc. Consistent approach to interpreting EU procurement

directives and government procurement policies Eliminate Duplication100% compliance with framework agreementsProcurement personnel with the authority to challenge

the need for procurements and query specificationsCareer development path for Public Sector Procurement

Personnel.

HOW CAN OUTSOURCING AND SHARED SERVICES BUSINESS BE BOOSTED?Eliminate obstacles

High CostsLong TimescalesComplex ProceduresVaried ProceduresDuplicate Specifications

• Create Model Approach• Create Vision for Public Service Delivery

PUBLIC SPENDING £bn Central Local Total

Pensions 110 110Health/Social Care 117 117Education 28 52 80Defence 38 38Welfare 60 50 110Protection 16 17 33Transport 13 10 23General Government 13 13 26Other Spending 71 32 103Interest 30 1 31

TOTAL 496 175 671

ELIMINATE OBSTACLES: CREATE MODEL APPROACH

Create Range of Model SpecificationsCreate Matrix of Service Providers and Services

that the Public Sector can use without further EU Tendering

Provide those Services through building on Existing Service Centres/Creating New Ones

SERVICES

© C M Cram

SERVICES SERVICE PROVIDERS

1. 2. 3. 4. 5. 6.

Roads √ √

Call Centres √ √ √

HR √ √

Finance √ √ √

ConstructionServices

√ √

ICT √ √ √ √

Legal √

HOW?Create Range of Model SpecificationsFollow EU Procurement Directives to Create

MatrixEvaluation Criteria: CapabilityObtain Indicative Prices?Grow Matrix OrganicallyConsider Dynamic Purchasing System

WHAT SERVICES COULD BE COVERED?ALMOST ANYTHING!

• Whitehall Policy• 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

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

VISIONARY – Nothing Ruled Out

THANKYOU

Colin M Cram

Marc1 Ltd

Tel: 01457 868107

Mobile: 075251 49611

colin.cram@marc1ltd.com

www.marc1ltd.com

MAKING IT HAPPEN

• Outsourcing Industry to Take Lead?• Create Steering Group with TORs - membership

private and public sectors• Commission and Fund Initial Work – to investigate

feasibility/sources of funding etc• Draft Programme of Work and Implementation Plan