Regional Conference on “Public Procurement Reform in West Balkan" Pristina, 16-17september 2008

1. Central Public Procurement Institution in UK – Office of Government Commerce – Organisation and Functions Mr. Peter Bennett, OGC, U.K. Regional Conference on “Public Procurement Reform in West Balkan"Pristina, 16-17september 2008

2. Topics covered: - OGC: beginnings and development from 2000 - The public procurement context - Transforming Government Procurement: a new agenda from 2007 - OGC: key business areas

3. OGC: beginnings OGC was established in 2000 following the Gershon review & brought together various public procurement bodies including: • Central Unit for Purchasing (CUP) • The Buying Agency (TBA) • Central Computer and Telecommunications Agency (CCTA) • Property Advisors to the Civil Estate (PACE) A unique body within Government - an independent office of HM Treasury with it’s own Chief Executive OGC vision To work with central civil government as a catalyst to achieve best value for money in commercial activities

4. Role of Office of Government Commerce(OGC) & OGC buying solutions (OGCbs) • OGC • co-ordinate departmental & Government purchasing power • improve procurement skills & improve performance of major projects • OGCbs • commercial arm of OGC, but non-profit making • key role to help public sector purchasers maximise procurement efficiency &vfm • income derived from a levy on frameworks paid by suppliers…

5. The public procurement context and issues for OGC The UK public sector spends over £125bn a year on procuring goods and services Issues for OGC: - History of poor contract and project management - Devolved Authority of Departments and their Agencies - Procurement activities that did not involve or take advice from professionals • Procurement and Finance often separate - How to achieve change by influence rather than control

6. OGC: early achievements • OGC helped to realise £1.6 billion value for money gains in 3 years up to 2003 Sources of vfm savings Greater focus on quality & whole life costs • Reducing process and transaction costs • Co-ordinating departmental & Government purchasing power • Wider involvement of professional procurement staff • Gateway reviews – improvement in cost & schedule performance of major projects

7. Office of Government Commerce: 2005 to 2007 Extension of remit to cover not only central civil government but also the wider public sector including: health, police, defence and local authorities Priorities: • to support the public sector in the delivery of £21.5 billion efficiency gains over a 3 year period • to deliver £3 billion vfm gains from more effective government procurement • to achieve improvement in the success rate of mission critical projects

8. Transforming Government Procurement • TGP was published in January 2007 and set a new agenda for government procurement. • OGC tasked with driving major change and creating best practice in procurement across central Government, through: • setting the policies and standards to be followed and monitoring capability and adherence to the standards; • developing a cadre of skilled procurement professionals across Government; • playing a stronger role in the successful delivery of major projects; • driving value for money deals on a collaborative basis.

9. OGC’s key business areas from 2007 Policy, Standards and Capability Markets and Suppliers, Government Procurement Service Collaborative Procurement Capital Group • Major Projects Review Group (MPRG)

10. OGC’s main functions • OGC’s main functions are to: • Set procurement policy and standards for departments • Monitor performance; and take action where necessary • Make sure: right people; right jobs; right skills; right incentives • Demand collaboration for common goods and services • Work with the Major Projects Review Group to ensure the most complex projects are subject to high standards of scrutiny & support

11. OGC Policy and Standards Policy and Standards has the lead for UK procurement policy • Represent the UK in Europe and Internationally • Transposition of EU Directives into UK law • Domestic Procurement Policy • Guidance on the procurement rules

12. National law • A brief overview of the UK legal system for public procurement • The UK transposes EU Directives into national law: • The Public Contracts Regulations 2006; • The Utilities Contracts Regulations 2006. • National Law covers England, Wales and Northern Ireland • Scotland implement separately – but work closely with the UK for consistency

13. Government Policy • Government procurement policy requires all purchases of goods and services to be based on value for money, having due regard to propriety and regularity • Value for money = “the optimum combination of whole life cost and quality (or fitness for purpose) to meet the customer’s requirement” • Not just lowest price • Requirements are set subject to usual public expenditure tests (need, cost-effectiveness, affordability)

14. Collaborative procurement: why change? • Get a better deal for the taxpayer by understanding managing and leveraging £78 billion of common public sector spend • Deliver against public spending targets • Release resources to support front line delivery in the public sector • Deliver the Transforming Government Procurement agenda • Embed collaborative procurement into sustainable better practice

15. Collaborative deals • Collaborative procurement can be an important driver of value for money. OGC given new powers to require departments to act collectively to procure commodity goods and services. • Collaborative deals worth over £1.5 billion negotiated since January 2007, allowing Departments to free up more funds for front-line services and to reduce resource committed to routine procurement. • We have developed a collaborative procurement model which will be used to drive a more collaborative approach to commodity procurement across government. • Four pilots are running at present – MoD is leading on energy, NHS Pasa on fleet, and OGCBS on travel and office solutions.

16. Major projects • Gateway Reviews have helped achieve significant savings and successful delivery of programmes and projects, and will continue to provide major support to Senior Responsible Officers across Government. • Major Products Review Group adds a further mechanism to allow intervention by Ministers and Treasury where appropriate. • Chaired by HM Treasury and supported by OGC expertise, designed to scrutinise projects and assess deliverability at key stages in life cycle: • at development of business case • before going to tender • following bid assessment but before contract award.

17. Thank you