GPs success sheds light at the end of the procurement tunnel

A mid year performance review published in late November shows how the transformation plan is forging ahead, and how GPS is helping local and central government plus the wider public sector generate savings through smarter procurement techniques

In November, the GPS published its mid-year performance review for 2012/13, which reported improved savings, improved spend and market analysis, supplier performance management and a robust commercial approach. As a result of the progress made by GPS in the last three years, savings targets have been increased from £860m to £1.1bn.

During the period, GPS has introduced a slew of practices to increase efficiency. It delivered its first forward eAuction for a group of local authorities to drive the best price for old newspapers and magazines to be recycled for use as newsprint. This generated £1.8m revenue, improving the pre-auction value by 17 per cent. This innovative approach, says GPS, will provide a valuable boost to local authority budgets. So far, £18.4m savings have been delivered through reverse eAuctions in various categories including Print Management, Vehicle Purchase, Mobile Voice & Data Services and IT Hardware on a pre‑auction value of £257.7m.

HISTORY
Previously known as Buying Solutions, the organisation was renamed Government Procurement Service (GPS) following a Strategic Review commissioned by Francis Maude, Minister for the Cabinet Office, in July 2011, to reflect its new role at the heart of government procurement. At the launch event Maude said: “It is bonkers for different parts of government to be paying vastly different prices for exactly the same goods. We are putting a stop to this madness which has been presided over for too long. Until recently, there wasn’t even any proper central data on procurement spending. So, as Sir Philip Green found, major efficiencies are to be found in government buying. The establishment of Government Procurement Service means that the days when there was no strategy and no coherence to the way the government bought goods and services are well and truly at an end.”

The products and services available through the GPS are delivered by more than 2,000 suppliers, of whom more than 50 per cent are SMEs. Working with over 14,500 organisations in central government, health, local government, devolved administrations, education and the not‑for-profit sector, GPS managed over £8.4bn of customer spend through its procurement arrangements and services in the 2011-12 financial year.

MAJOR CHANGE
In 2011-12, GPS began implementation of a major change programme to transform performance in order to support the delivery of centralised procurement. Fundamental changes were made to clearly focus the organisation on customer service, savings delivery and eEnablement.

E-AUCTIONS: LOWERING COSTS
The IT hardware & solutions framework, developed in partnership with Pro5, a consortia of local government buying organisations (CBC, ESPO, NEPO and YPO), used eAuctions to reduce starting costs on a standardised range of desktops, laptops, tablets and printers by over 20 per cent.

The Government’s cloud procurement gateway, CloudStore, achieved its highest monthly sales figures in  December since opening for business in April 2012. Nearly £6 million in IT services has been sold through the scheme since launch, with December contributing £1.2 million to this total. The Cabinet Office is currently in the process of rolling out the third iteration of the G-Cloud. The invitation to tender was released to potential providers on 15 January, which was also the beginning of the clarification period and when the e-Sourcing Portal opened.

A new Central Government travel contract is on track to save £5m annually, and plans to generate additional savings through travellers booking online to benefit from lower transaction fees.

A new “Agile Route to Market” has been developed to enable access to sub-OJEU (below £100k) spend on communications, including marketing and public relations services, which will allow a supply base of over 300 (mainly SMEs) to provide competitive pricing for the public sector’s smaller requirements.

Changes to Print Services have been implemented for the wider public sector which provide access to eCommunication options, as well as a new pricing options, including open book and gainshare models for use where appropriate.

A new Medical Locums framework is due to be launched in February which will expand on the services available and provide flexibility at a local level regarding service delivery models and pricing. Benefits of the new framework will include choice of service delivery models: neutral vendor, master vendor and fixed term direct employment to cover known long term absence.

Perhaps most significantly, Public Service Network (PSN) framework agreements have been established for telephony and related communication services. Two national further competitions for aggregated mobile and connectivity services have been managed for some 45 customers, supplementing over 130 competitions run by customers themselves.

The GPS is currently running a National Further Competition under the PSN Connectivity framework, which it is looking to award in mid-May 2013. PSN Connectivity is a framework agreement consisting of a single lot for procurement of Wide-Area (WAN) connectivity services, including access and core networks and Local Area (LAN) connectivity services.

CHARGING LESS COMMISSION
The GPS is funded from a commission charged to suppliers, which averaged 0.38 per cent in the first half of the year. Supplier commission has been actively reduced by unwinding complex historical arrangements and moving to a simpler, standardised commission structure of no more than 0.5 per cent.

LEAD TIMES
Procurement lead time continues to fall,  currently tracking below 100 days, although this is expected to rise when the impact of a number of larger more complex procurements are included later in the year. The improvement programme has allowed GPS to increase the number of procurements whilst delivering them swiftly. The standardisation of pre and post OJEU processes, including improved market engagement, plus the adoption of lean principles and investment in e-enabled systems has helped to deliver this.

INTERNAL SAVINGS
In 2012 GPS successfully adopted a Lean approach to business planning with monthly reporting of performance metrics and quarterly full day business plan reviews. The focus on performance management has been strengthened with additional resource dedicated to ensuring the provision of timely, accurate management information. Internally, GPS continued to develop these ‘Lean techniques’ to improve effectiveness. Visual performance management is used across the organisation to track progress and make key metrics visible to all. 67 GPS staff have been trained in Lean tools and techniques as well as senior management Lean leadership training.

GPS LEARNING HUB
In partnership with the Chartered Institute of Purchasing and Supply, GPS has provided three day face to face Lean sourcing training to 288 procurement professionals, as well as one day training for 123 people and an eLearning module to 382 people, with positive feedback and evidence of improvements in speed and quality of procurements starting to emerge. A GPS Learning Hub has been developed and launched internally as a means to access the suite of procurement related eLearning modules and to record and collate results.

STRATEGIC PROCUREMENT SERVICE
A team was created in September 2012 as a fully flexible resourcing model within GPS to support the delivery of high value, complex and strategic procurement and sourcing projects in Central Government. Key outcomes for the team include delivery of savings, spend under management and the execution of Lean procurement and sourcing across Government.

The team is progressing well, currently supporting nine ‘live’ projects, with a further seven in the initiation stage. Spend influenced to date is in excess of £900m, with a number of successes, including the DECC Green Deal for SME brokerage services, Cabinet Office Electoral Registration Transformation Programme and DfT Shared Services competitive dialogue.

MICROSOFT DEAL FOR SCHOOLS
Under a new three-year Memorandum of Understanding (MoU), which started on 1st January, all schools in the UK will be able to take advantage of improved discounts and better licensing terms across a wide range of Microsoft’s academic software. Under the new agreement, schools will be able to use more of their budgets on frontline teaching rather than back office administration, with estimated total savings of around £10 million.

Following extensive negotiations with Microsoft, led by Government Procurement Service (GPS) with the Department for Education, the new agreement builds on an existing arrangement that has operated with Microsoft since 2004. It secures improved benefits based on the entire UK schools’ software spend with Microsoft, but involves no financial or contractual commitment for schools or the Department for Education.

As well as offering better value for money for both new and existing users, schools will now have more flexibility in the way they license Microsoft software. They will also be able to make more cost-effective choices for using alternative and free to use software. This reflects the Government’s policy to give schools greater autonomy and control over how they spend their money and use resources.

HELPING THE NHS
The GPS has a number of frameworks designed specifically with health customers in mind. These include staff – including agency nurses, medical locums, and non‑medical/clinical staff – building and maintenance, vehicle conversions, modular buildings, laundry & linen services, and telecare. To get the best results for the health sector, the GPS focuses on working closely with Quality, Innovation Productivity and Prevention (QIPP) to ensure all health customers know how the GPS can help drive down costs. It works closely with NHS Supply Chain and NHS Business Services Authority to explore how it can work together to the benefit of the NHS.

The GPS aims to help the NHS to identify savings opportunities and transition spend. It also provides data management to improve visibility to help control spend and monitor compliance. It also delivers savings through arrangements which focus on aggregation of volumes, standardisation of specifications, rationalisation of core product lists and demand management.

Healthcare purchasers will benefit from dedicated relationship managers provided by the Department of Health and the NHS with a single point of contact. An NHS Customer Board meets regularly to help ensure engagement at all levels across the NHS. The GPS also provides progress reports on spend, savings, supplier performance and customer satisfaction.

NHS TASKFORCE TRAINING
Understanding the complex role of procurement within healthcare, the GPS has created a training programme specifically for procurement staff in supplies, pharmacy and estates across the NHS.

Delivered by its specially trained network of NHS supplies managers, Basic Operational Purchasing Training includes the CIPS level 2 qualification, which covers basic purchasing and supply issues, fundamental principles and processes, as well as five additional modules covering further topics in operational purchasing.

LOOKING FORWARD
The second half of the year will see GPS deliver new procurements including electricity, payment cards, property and insurance services. Resourcing frameworks for Central Government, NHS and Wider Public Sector are also planned, and the GPS will formally extend arrangements with RCUK (Shared Service Centre Ltd) to enable further coverage of new spend categories such as scientific and market research.

INVESTING IN TECHNOLOGY
The GPS looks to continue investing in internal IT infrastructure, and the development of new data warehouse for internal reporting and tailored management information for customers.

Planned for launch in January is EduBuy, a procurement initiative between the Department for Education, GPS, Eastern Shires Purchasing Organisation (ESPO) and YPO. It will be a free online search service offering education establishments a single information point to find products and services needed to run an education establishment, allowing users to view an extensive range of legally compliant contracts, frameworks and thousands of products and services available to the sector.

The GPS continues to invest in a range of systems to provide more timely, accurate use of data for its customers. Tools for spend analysis pull in detailed accounts payable figures from across Government Departments, analysing and enriching spend and supplier data. The GPS has continued to enhance its eSourcing suite, including eAuctions, supplier and contract management tools. The Government eMarketplace hosts centralised catalogues and runs sub £100k sourcing events. 340 catalogues have been loaded and over 1200 suppliers registered.

AT THE HELM
David Shields has been steering the ship at GPS since June 2011, when he was appointed managing director. He joined Government Procurement Service in December 2010, and has previously worked within the Government’s Centralised Category Procurement workstream in the Efficiency and Reform Group (ERG).

As a procurement and supply chain professional, David has years of experience in the private sector where he worked in senior roles for global insurance providers, such as AXA plc and CGU, now known as Aviva. David has also worked within other areas of the public sector including HM Customs and Excise and is an active fellow of the Chartered Institute of Purchasing and Supply.

Shields and his senior team expect procurers to take an entrepreneurial approach to procurement. Each category team – and the range of categories is wide, including office solutions, print and print management, ICT commodities, professional services, property and facilities management, energy, travel and fleet – has spend and savings objectives. They are given more freedom to deal directly with suppliers, visit their premises, use e-auctions, spot buy as well as the more traditional approach of letting contracts and framework agreements.

In the report’s foreword, David Shields says: “2012/13 is proving to be another exciting and challenging year. Our transformation programme continues as we strive to deliver even better commercial outcomes for our customers across Central Government and the Wider Public Sector.

Our key priority is to save money and improve service delivery for our customers, expanding the breadth of our service offering to provide an end- to-end procurement service. Successful delivery against our plans for the first half of this year has enabled us to increase our forecast savings from £860m to a new forecast of £1.1bn. Set against a full year delivery of £358m in 2010/11 this is one measure of the significant progress, we have made.”

ROB WILMOT JOINS BOARD
As a non-executive director, GPS has appointed Rob Wilmot, a founding member of the internet service provider Freeserve. Wilmot was co-director of Freeserve back in 1998, the Internet Service Provider backed by the Dixon Stores Group. After floating on the London Stock Exchange, Rob became one of the youngest directors of a FTSE 100 company at the age of 29. Rob exited Freeserve after the completion of a £1.6 billion sale to Wanadoo in 2001. Since then, he has invested in a range of tech and media companies and is on a number of company boards as well as being the Chair of Governors for Doncaster College.

“Wilmot brings his experience from the internet, telecommunications and eCommerce industries which complements the expertise of the other NEDs on our Board,” says Shields.

RELATIONSHIPS
According to Peter Smith of spendmatters.co.uk, relationships with the Pro5 collaborative purchasing organisations are developing well. Smith wrote: “There’s much less mutual suspicion than we saw a few years ago. And it sounds like the spend analysis programme, powered by BravoSolution technology, is beginning to pay off in terms of helping GPS understand spend then develop specific plans to work with individual departments. However, the report still doesn’t tell us what sort of ‘compliance’ GPS is getting from each Department on the major spend categories.”

The Government Procurement Service appears to be shedding light at the end of the procurement tunnel.

FURTHER INFORMATION
gps.cabinetoffice.gov.uk
www.pro5.org
www.ypo.co.uk
www.espo.org