NAO critical of government failure on centralised buying

Cabinet Office attempts to reduce government spending by creating the Crown Commercial Service (CCS) to offer a centralised procurement and buying service have failed to deliver the expected benefits or value for money, according to a report by the National Audit Office (NAO) which says the whole approach needs to be re-thought

At the point it was set up, the CCS was expected to produce £3.3bn in anticipated net benefits over the four years to 2017-18. However, the NAO says the actual benefits from the creation of the CCS to date are unknown.

CCS buying frameworks have been used by central government and public sector organisations in £12.8bn of public spending, and the CCS helped save government departments and public sector organisations £521m in 2015-16. However, these savings were calculated on a different basis and are not directly comparable to the planned net benefits of £3.3bn over four years. The NAO said it could not tell whether these savings would have been achieved anyway if the departmental buying functions had not been transferred to CCS.

It found that by April 2016, £2.5bn of spend was directly managed by CCS, more than £8bn less than the £13.4bn originally forecast. Seven departments have their spend directly managed by CCS, which is 10 fewer than originally forecast.

The CCS delivers services such as advice on complex procurement, commercial capability development, the creation and management of procurement frameworks and buying services for central government and public sector organisations.

The NAO research found 60% of its users were satisfied with the service provided. 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.

The watchdog said the failings of CCS were in part because the Cabinet Office’s original focus was on getting departments to transition their services quickly and did not focus enough on how it would manage them once they transitioned.

Its report concluded 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.

However, the NAO says the strategic argument for joint buying remains strong and reports that the 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.

Amyas Morse, NAO head, said: ‘Without a sound overarching business case or a detailed implementation plan, it is not surprising that the CCS 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.’

The NAO report on the Crown Commercial Service is here.

Pat Sweet |Reporter, Accountancy Daily [2010-2021]

Pat Sweet was the former online reporter at Accountancy Daily and contributor to the monthly Accountancy magazine, pub...

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