Office of Government Commerce - Alignment Review Report : Guidance 05.
Background to OGD. In November 1998 the Paymaster General and the ...
Office of Government Commerce - Alignment Review Report : Guidance 05 Background to OGD In November 1998 the Paymaster General and the Parliamentary Secretary to the Cabinet Office invited a review of civil procurement in central government in the light of the Government's objectives on efficiency, modernisation and competitiveness for the short and medium term. Following ministerial changes in December 1998, the Chief Secretary to the Treasury became responsible for procurement matters. Peter Gershon, then Managing Director of Marconi Electronic Systems, undertook the review and reported in April 1999. The review examined the whole process of acquisition from third parties by government, including goods, services and large capital projects. This process spans the whole lifecycle, from initial inception through to the end of the useful life of the asset or the completion of the contract. The review covered both conventional publicly funded activities and more innovative types of procurement such as Public Private Partnerships, including the Private Finance Initiative. The report to ministers, Review of Civil Procurement in Central Government, identified a number of weaknesses in government procurement. These covered organisation, process, people and skills, measurement and the contribution of the 'centre' of government. The proposals for dealing with these weaknesses called for the creation of a central procurement organisation called the Office of Government Commerce (OGC). Peter Gershon recommended OGC should be tasked with the following roles and responsibilities: Formulation of integrated procurement policy and strategy. Representing the UK on procurement matters in EU, WTO and other relevant international bodies. Ownership of the generic procurement process. Development of a common process for management of the supplier base. Strategic management of key suppliers, especially those involved in providing goods and services which are critical to the successful operation of government. Measurement and benchmarking of procurement performance across government. Specifying e-commerce standards and sponsoring the development of products which facilitate their implementation across government. Undertaking procurement on behalf of government where aggregation of requirements enables significant value-for-money improvements to be obtained. Provision of a centre of excellence for strategic procurement skills, eg PFI, outsourcing and the management of very large complex projects in areas such as IT and construction.
Planning for, and development of, new procurement skills. Undertaking periodic reviews of procurement performance, skills and capabilities within departments. Catalysing the spread of 'best in class' procurement practice. Functional leadership of the Government Procurement Service. Working proactively with departments to implement the recommendations of the review.
The intention was to provide a greater sense of direction in procurement and ensure adoption of Best Practice approaches in the public sector. Effectively implemented, it was estimated that the changes recommended could deliver value-for-money gains to the value of £1 billion. Departments would need to work closely with OGC in areas where this would deliver increased value for money for the taxpayer Ð an important practical example of modernised, joined-up government. Present Structure of OGD OGC is headed by a Chief Executive at Permanent Secretary level reporting to the Chief Secretary to the Treasury. On its official formation on 1 April 2000 the OGC inherited the HM Treasury Procurement Group and Private Finance Unit, and in addition took over responsibility for the former Cabinet Office Executive Agencies - Property Advisers to the Civil Estate (PACE), the Central Computer and Telecommunications Agency (CCTA) and The Buying Agency (TBA). In addition to the Deputy Chief Executive and an Executive Director responsible for Corporate Services, there are Directors for Private Finance Policy, Construction and Gateway Projects reporting directly to the OGC Chief Executive. The OGC Business Alignment Team has also reported directly to the Chief Executive. Each Executive Agency is headed by a Chief Executive who, as accounting officer, is responsible to the Chief Executive of the OGC for the overall operation of the Agency in accordance with the Agency's framework document. OGC is located in Fleetbank House, Central London. CCTA is based in Norwich and Steel House, London, and TBA in Liverpool. PACE, with its main operational base at Trevelyan House in Westminster, also has operational teams working from Birmingham, Edinburgh, Leeds, Manchester, Bristol and Cardiff. The Director for Construction is now co-located with PACE.
Executive Summary
A recent report on the organisation of OGC and the alignment of its resources and key structures recommends a new structure for the OGC, to replace the existing structure which is based on a central organisation and three Executive Agencies Ð Property Advisers to the Civil Estate (PACE), the Central Computer and Telecommunications Agency (CCTA) and The Buying Agency (TBA). The proposed structure would comprise: the Office of Government Commerce, with six Directorates: Policy, Practice and Legal Customer Relations Supplier Relations and e-Commerce IT Property and Construction Corporate Services a single trading arm, responsible to OGC, based on the activities of TBA and including certain managed services currently provided by CCTA. The remit of this trading entity would include a sharper focus on the contribution to the OGC's overall £1 billion target than exists in the current CCTA and TBA trading objectives. The scope for PPP in this area should be examined during 2001-02 after the implementation of the new structure.
As well as supporting the Vision and Key Strategies which have been agreed for OGC, such a structure would address important issues raised in the course of consultation with departments. Notably, these include: the need for OGC to work with departments to assist them in securing value-formoney improvements in the procurement budget; a widespread desire for a 'one-stop shop' and consistent procurement advice; and a particular need in central government for support in project and contract management.
The structure is designed to provide: a more unified organisation, working to a common purpose; an identifiable customer facing function charged with developing positively OGC's working relationship with departments, championing the customer's cause and helping to stimulate innovation in government procurement; an identifiable supplier-facing function to deliver on supplier-related strategies, including enabling competition and working with departments on strategic supplier management; coherent policy development and Best Practice; value-adding consultancy services, including support on gateways and with project and contract management; and a trading arm which works with OGC and departments to support delivery of the Key Strategies.
The result will be a more efficient and effective organisation which, while building on current strengths, adds and supports new capabilities to meet ministers' and departments' requirements. It will have the flexibility to respond to new requirements. The review has been conducted in accordance with the remit by a Review Team which met monthly with a Steering Committee. The Steering Committee comprised the OGC Executive Board with representatives from Cabinet Office's Effective Performance Division and the Office of the e-Envoy and from two other departments, to provide an independent view and customer voice. Terms of Reference To review the present structure of OGC, covering its executive agencies and all other units; and to make recommendations on how best to align OGC s resources to deliver successfully its vision and strategies. The review will take into account the views of stakeholders including staff, central departments, other departments, customers and suppliers. It will also take account of requirements for Agency quinquennial reviews, in order to provide the specific reviews required for CCTA and PACE in the next year. Inputs to the review included consultation with customers, suppliers and management. The views of the Trade Union side and staff generally were sought. Other stakeholders were consulted, including the Treasury, Cabinet Office Agency and Modernising Public Services Groups and the Office of the e-Envoy. The analysis on which the recommendations are based included mapping activities against the Key Strategies, an assessment of all activity against prior options (that is,
abolition, contracting out/market testing/PPP, merger and privatisation) and an assessment of organisational options against a set of principles agreed with the Steering Committee as the criteria for judging the attractiveness of any organisational model. The proposed organisation measures up well against the guiding principles. It was arrived at through a process which involved the development of a range of organisational models designed to bring key issues to the surface and thereby to encourage discussion with management and the Steering Committee, including the realism of maintaining the status quo. The Review Team considered that the status quo was not a sustainable option. The Steering Committee agreed. Another key issue was the cessation of activity which did not fit OGCs mission as expressed through its Vision and Key Strategies. Such activity falls primarily in the area of IT. The proposed structure involves stopping work in one or two areas which have nothing to do with procurement and for which support can easily be found from other sources, including the private sector (for example, website design and maintenance). But the major change concerns the support currently given by CCTA to the Office of the e-Envoy (which now incorporates CITU). It is recognised that it would not be desirable simply to withdraw such support, at least in the very short term, even if it does not fit with the Key Strategies. For this reason, discussions have been taking place between OGC and the Office of the e-Envoy to clarify responsibilities and to agree the nature and scope of future support. Implementation of the outcome of this review will be in the context of a substantial change programme required for OGC. A Change Management Unit has been established in OGC to take this programme forward. The Guiding Principle
consistency between the tasks undertaken by the organisation and the Key Strategies;
service and transparency: meeting needs of stakeholders and clarity of role and services;
financial viability;
effectiveness;
efficiency;
practicability; and
a structure which supports its activities, in terms of financial structure and targets, and accountability for performance.
Conclusions The report recommends an organisational structure for OGC which would best align its resources with its Vision and Key Strategies. In reaching conclusions, the OGC has been guided by a set of principles, agreed with the Steering Committee, which acted as criteria against which to judge the organisational models developed in the course of the review, and the preferred model. A full account was taken of the requirements for quinquennial reviews in the Cabinet Offices guidelines, and OGC has been very conscious of the views of those consulted. Perhaps above all, OGC has been conscious that the keystone of OGCs success, as recognised in its Vision, is how well it works with and supports the procurement community. As well as supporting the Vision and Key Strategies which have been agreed for OGC, such a structure is designed to address important issues raised in the course of consultation with departments. Notably, these include: the need for OGC to work with departments to assist them in securing value-formoney improvements in the procurement budget; a widespread desire for a one-stop shop and consistency in procurement advice; and a particular need in central government for support in project and contract management.
These issues will be directly addressed by bringing PACE and some of CCTAs services into the main body of OGC. The aim would also be to realise substantial benefits from forging clear linkages with other aspects of OGCs work, such as policy and Best Practice, gateways, project and contract management, skills development, excellence in construction, and OGCs involvement in the follow-up to the review of major IT projects. A more unified organisation will support cross-fertilisation and improve OGCs ability to lead and support the procurement community. As to trading activities, the report considers that there would be significant advantage, organisationally and in terms of service, in having a single trading arm, based on TBA. This would result from merging CCTAs catalogue and managed services with services of a similar nature provided by TBA. The conclusion on the status of the trading arm is that Agency and trading fund status would be appropriate in keeping with TBAs current status. OGC believes that there is likely to be scope for PPP arrangements, and that the examination of the possibilities should be a feature of the Agencys forward work programme.
Summary a more unified organisation, working to a common purpose; an identifiable customer-facing function charged with developing positively the working relationship with departments, championing the customers cause and helping to stimulate innovation in government procurement; an identifiable supplier-facing function to deliver on supplier-related strategies, including enabling competition and working with departments on strategic supplier management; coherent policy development and Best Practice; value-adding consultancy services, including support on gateways and with project and contract management; and a trading arm which works with OGC and departments to support delivery of the Key Strategies.
The result will be a more efficient and effective organisation which, while building on current strengths, will add and support new capabilities to meet ministers and departments requirements. It will also have the flexibility to respond to new requirements. Implementation The Review Team believe that the formal and parliamentary activity necessary to effect implementation by 1 April 2001 can be achieved. By implementation OGC means that the management structure of the organisation could become operational with staff reporting within the new directorates. OGC senior management recognise that full implementation will not be achieved for some 18 months, and must be seen in the context of a wider change management programme. To this end, it has been agreed that a Change Management Unit will be created on a transitional basis, to ensure that implementation takes place on 1 April 2001 as well as to oversee the broader programme. The Review Team believe that senior management in OGC should review existing business plans with a view to redirecting resources in areas where activities may be less relevant to the new organisation and thus expedite some convergence activity. A particular example would be work in connection with implementation of common business processes.
