day1 sess1&2

SESSION 1DEFINING THE LANSCAPE

Day 1 – Tuesday 8 March

CHAIR’S OPENING REMARKSGrahame Steed,

Managing Editor, Government Opportunities (GO)

FIXING THE PUBLIC FINANCESBill Hill,

Associate Partner, Deloitte

Reshaping public sector procurement - the practitioner’s view

David ThomasCommercial DirectorHM Revenue and [email protected] 827 0261

Procurex National | 8 March 2011 | 7

Overview of current position

• “The stage”

• “The cast”

• “The script”


“The Stage”

• Efficiency Reform Group

• Central Government Departments

• Wider public sector

• OGC

• Buying Solutions


“The Cast”

• Francis Maude

• Ian Watmore

• John Collington

• Adrian Kamellard

• Katharine Davidson

• PEB


“The Script”

• Austerity

• Tight and loose

• Renegotiate contracts

• Aggregation

• Centralise commodity procurement

• ‘De chunk’ IT

• SME development

• Transparency

• Crown Commercial representatives


What are the practical challenges that arise?

• Roles and responsibilities

• Separation of central government from wider public sector

• Transformation of Buying Solutions

• Balancing vfm and SME development


Roles and responsibilities

• Centralising commodity procurement impacts Department organisations

• Sourcing ownership changes

• Contract management roles change

• Departmental commercial teams retain a different but important role.


Contract Management – a new model

Central Government leadership

Joint Department and Central Government responsibility

Departmental role


Transformation of Buying Solutions

• There is a problem – FACT

• February strategic review

• Supplier views sought

• Customer views sought

• Employee consultation

• Proposed strategy declared in March

• One thing is certain – this transformation will take time to work fully


Central Government and the wider Public Sector

• Tight and loose is declared policy

• MCO changes are for Central Government only now

• There are practical implications from this:

• Is it a straight line or wavy?

• Two market approaches?

• Separate current contracts

• BS – are they two teams?


Value for money and the development of SMEs

• Can all policies work in absolute harmony?

• Fully understand and accept Government policy but again there are potential issues for buyers to work through:

• Some markets have few SMEs

• SMEs may have below threshold financial capabilities

• Resistance to change from major suppliers


Conclusion

• Public sector procurement is changing

• Buyers have to recognise the changes and adapt

• Change creates issues and it is our responsibility to manage them

Thank you

Any questions?

David ClarkDirector General

SOLACEPresentation to

Procurex National 2011 – The Procurement Exhibition

Birmingham National Exhibition Centre, 8-9 March 2011

© Institute for Fiscal Studies

• Permanent hit to public finances from financial crisis estimated at £86 billion a year (in today’s terms)

• Response is a £98 billion fiscal tightening by 2015–16, comprising a £24 billion tax rise and a £74 billion spending cut (in today’s terms)– OBR estimates 60% chance of hitting fiscal mandate on current policies

• Overall post crisis tax and benefit reforms regressive across most of the income distribution.– cuts to welfare payments for working-age individuals

• Four years from next April will be the tightest sustained squeeze to public service spending since April 1976 to March 1980– total DELs cut by 11% in real terms– overseas aid budget increased sharply– in England: NHS and schools relatively protected; largest cuts to:

Communities and Local Government, DEFRA and BIS

Data: Institute for Fiscal Studies

http://www.procuexnational.co.uk/


Impact of cuts to spending on public services

• Total spending on public services to be cut in real terms for six years– since WW2 cuts have only been achieved for two consecutive

years– deepest sustained cuts since April 1975 to March 1980

• Central government spending on public services (DELs)– to be cut as a share of national income back to the late 1990s

levels– in real terms spending in 2014–15 to be 11.2% lower than in

2010–11 or 13% below the level Labour planned for 2010–11




‘Winners’


Note: Figures show real change in total (resource + capital) DEL



‘Losers’


Note: Figures show real change in total (resource + capital) DEL



Record breakers?

– total spending: tightest since World War II

– spending on public services: tightest since April 1975 to March 1980

– NHS: tightest since April 1951 to March 1956



Issues for local government

Budgets

A time limited council tax freeze; followed by below inflation rises?

A pay freeze for public sector workers, not necessarily in local government, but practically it will happen


Three Lines of attack:

People

Plant and Capital

Contracts

Locally?


Public and private sectors working together to deliver services

“Cuts will fuel a ‘surge’ in public sector outsourcing” National Outsourcing Association


Outsource What?

BPO - Facilities Management - Fleet Management

Variously defined back office activities

Domiciliary and Elderly care


Models

Straight outsource

Joint venture, some hubbing but more likely to be looking at place based alternatives.

Talk of mutuals, but little understanding as to what this might mean


Third Sector

Risk Management relatively underdeveloped

76% dependant on local government or national government money


Some services lend themselves to community involvement

Centre for learning difficulties in Sussex

Volunteer dust crews, street sweepers and physics teachers are harder to come by


More likely that some services will disappear or become only available to those that can pay

Borough Engineer

Student Grants Officer


A smaller less supporting state

Greater use of contractors

Different use of third sector (where there will undoubtedly be consolidation)

Driven by new combines of authorities


Q&A SESSION

SESSION 2DELIVERING SAVINGS – LIVE DEBATE


DISCUSSION ON HOW TO FACE THE CHALLENGE OF MEETING THE EFFICIENCY TARGETS

Grahame Steed, Managing Editor, Government Opportunities (GO)

Panellists:Ken Cole, Commercial and Procurement Advisor, Capital AmbitionNigel Kletz, Assistant Director, Corporate Procurement Services, Birmingham City CouncilDavid Loseby, Ex-Chief Procurement Officer and Head of SRM,Westminster City CouncilEddie Regan, Senior PASS Consultant, BiP SolutionsJack Salter, Head of Commercial Policy Team, Department for Education

SESSION 2DELIVERING SAVINGS


day1 sess1&2

News & Politics

solutions procurex national

script procurex national

central government spending

fiscal studiesdata

public services total

fiscal studiesnote

public service spending

new model procurex national