NAO: Crown Commercial Service
Tuesday December 13th, 2016
Government can save money by using Crown Commercial Service deals, but central government has not yet achieved value for money from its central buying. Furthermore, the Cabinet Office severely under-estimated the difficulty of implementing joint buying across government, according to today’s report from the National Audit Office.
The Crown Commercial Service (CCS), a government agency and trading fund, is directly responsible for buying around £2.5 billion of goods and services for central government and public sector organisations. CCS buying frameworks were used by central government and public sector organisations in £12.8 billion of public spending. CCS helped save government departments and public sector organisations £521 million in 2015-16. However, these savings were calculated on a different basis and are not directly comparable to the planned net benefits of £3.3 billion over four years. The NAO could not tell whether these savings would have been achieved anyway if the departmental buying functions had not been transferred to CCS.
A CCS survey shows that 6 out of 10 customers are satisfied with the CCS service. Some departments have, however, complained that CCS’s services can be poor quality and CCS itself reports that service delivery has not always been in line with service agreements.
The NAO found that CCS’s management of services has not supported consistent value for money and quality. For example, CCS’s services were not integrated or standardised, and CCS could not demonstrate to its customers that its deals are always the best available. CCS has increasingly extended its frameworks, and continues to use expired frameworks to issue contracts. However, recently CCS has shown clear signs of improvement in governance, risk and internal control.
Central buying should achieve very large savings, but it is not clear exactly what spending should be centralised. The Cabinet office relied on a Cabinet Committee mandate to get departments to transition their services quickly and did not focus enough on how it would manage them once they transitioned. CCS has not achieved its original ambitions, which CCS’s current management believe were not realistic. They believe that the Cabinet Office’s plan to create CCS wrongly estimated both the activities and the amount of goods and services that were appropriate to be bought centrally. From the start of CCS’s establishment, there was a rapid erosion in departments’ confidence in CCS. By 2016, only seven departments had transferred the responsibility for buying common goods and services to CCS, amounting to £2.5 billion, well below the £13.4 billion envisioned.
The strategic argument for joint buying, however, remains strong. CCS is now focusing on improving the quality of its services and its new Chief Executive is carrying out reforms that are generating goodwill amongst central government departments. For central government to achieve value for money from its common goods and services, it needs to finish the centralisation it began in 2014. The events of the last two years have shown that, in practice, joint buying needs both a mandate and goodwill from departments.
Among the NAO’s recommendations is that the Cabinet Office should reiterate the mandate for CCS in central government and be clear about its expectations for those departments that have not yet transferred their buying of common goods and services to CCS.
Amyas Morse, head of the National Audit Office said:
“Without a sound overarching business case or a detailed implementation plan, it is not surprising that the Crown Commercial Service rapidly ran into difficulties and soon had to reset its plans. It is particularly disappointing that the Cabinet Office has not tracked net costs and benefits. 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.”
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