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Exclusive interview with the ERG’S John Collington

Thursday March 3rd, 2011

John Collington, Head of Procurement at the Efficiency and Reform Group at the Cabinet Office, speaks exclusively to GO Features Editor Morven MacNeil about the opportunities and challenges facing the procurement profession following the Chancellor’s recent Spending Review, and the Group’s involvement in moving procurement forward.

As part of the Government’s drive to achieve the £6.2 billion spending cuts set out in the Chancellor’s Emergency Budget in June, a powerful new joint Treasury-Cabinet Office group – the Efficiency and Reform Group (ERG) – has been set up to ensure savings across Whitehall and Arm’s Length Bodies happen at a fast pace.

The ERG board is chaired jointly by the Chief Secretary to the Treasury, Danny Alexander, and the Minister for the Cabinet Office (MCO) and Paymaster General, Francis Maude. The Group has the power to make sure departments work together to tackle waste and improve accountability across a range of areas, including ICT spend, procurement, advertising and marketing spend, and Civil Service expenses and recruitment.

A central member of the Group is John Collington, Head of Procurement at the ERG and former Group Commercial Director at the Home Office, who is spearheading a new cross-Government approach to procurement, encouraging Government to use its scale to ensure it always obtains best value for money. GO spoke exclusively to Mr Collington about the opportunities that lie ahead for procurement and how the profession will develop over the coming years.

What have been the biggest challenges you have faced since becoming Head of Procurement at the Efficiency and Reform Group?

The biggest challenge has been making people aware that we’re operating under a new regime of collective accountability to each other, to other departments, to the ERG board, and ultimately to the MCO. From my experience in the Home Office there are some really good practices happening today in public sector procurement; for example, the way that Buying Solutions and the OGC team have been managing the energy category over the last couple of years is as good as anything I’ve ever come across in the private sector. But we have not leveraged that as quickly and effectively as we might across 100 per cent of the public sector. The Green Review has indicated that it has taken us about four years to get to 75 per cent buy-in, and that is just far too long to get to that point. We need to find ways and means of identifying what’s good and what’s recognised as best practice, as well as what’s getting in the way of departments and other parts of the public sector taking that up.

As regards collective accountability, there is a lot of good practice to be found in central government. Some of the departments – HMRC, DWP, MOJ and the Home Office – have, in my opinion, developed a procurement capability as good as anything in the private sector through their own transformation programmes. But we’ve tended to build that capability on a department-specific basis. What we haven’t done is to identify and leverage the best practice that exists in some departments on a horizontal basis to engage other parts of central government. So our biggest challenge is to recognise that under the new Government we are collectively accountable to each other. How do we make a good deal work across a wider group of customers – and much more quickly than we’ve done in the past? How do we take that area of best practice and improve the data to benefit other government departments? We’ve got to think beyond our own areas of immediate responsibility and start thinking about wider government accountability. Getting access to quality, credible data and disseminating it across government as a whole is a major challenge we must overcome.

At the heart of the ERG’s Procurement Executive Board is the philosophy of collective accountability. There are two boards – a main board and a sub-board. The main board comprises the large departments that account for about 90 per cent of expenditure. Then there’s a sub-group that feeds into that comprising the other departments – Education, Communities and Local Government, and so on.

What role has the ERG played in the recent Spending Review (CSR 10)?

The ERG, and especially the MCO, has played a key role. Look at some of the changes the Minister implemented straight away across departments. There was a freeze on IT procurement and a significant slowdown in the use of consultants and contractors that now requires Secretary of State and ultimately MCO approval. There have also been major contract renegotiations with the key suppliers to government. The initial top 19 suppliers list has been extended to give us just over 50 suppliers where negotiations are currently under way to identify immediate and sustainable savings. This work will contribute to CSR 10 reduction targets.

So I would say that the role the ERG is playing is implementing controls and then using the results to say to departments ‘look, this can be done’. In the Home Office, for example, where I came from, our Permanent Secretary said right from the election that we were going to significantly reduce expenditure on consultancy and contractors. We were able to set revised budgets and targets in May because we had invested in quality information beforehand. After six months I believe the Home Office is more than 50 per cent down on this expenditure compared with this time last year.

There has been a lot of focus on efficiency savings and job cuts following the Spending Review. Where do you believe opportunities lie for the procurement profession?

When I spoke in Glasgow recently at the Scottish Government Sixth National Public Procurement Conference, I told the delegates that I honestly and genuinely believe that this is a fantastic opportunity for good procurement people to shine. I was with the 2009 graduate intake into OGC recently, and I saw about 20 people round the table with some worried looks on their faces. Had they done the right thing joining the public sector? Had they done the right thing concentrating on procurement as a career? I looked them all in the eye and said ‘absolutely you have made the right decision, if you’re prepared to be the best you can’. If you’re prepared to push the envelope and seek out fresh opportunities, if you’re prepared to go that extra mile from that negotiation, if you’re prepared to challenge perceived ways of thinking and working within your department, then this is a fantastic time and golden opportunity for good procurement people to shine.

One of the things I believe we need to get better at is in identifying best practice, publicising and emulating that best practice, and then leveraging it as effectively as possible across central government and other areas of the public sector. With Minister of the Cabinet Office Francis Maude and Chief Secretary to the Treasury Danny Alexander as joint chairs of the ERG, it makes sense to leverage their influence on a cross-departmental basis. We have supported Sir Philip Green’s recent Efficiency Review extensively. Some of the data highlighted within that review were numbers that we had identified and provided. It was an arduous task getting hold of the data in a short space of time – we have to find a way to get data much more quickly and easily. And once you’ve got that data, what do you do with it? We’re making our suppliers aware that in the environment we are now operating in, we need a model where we are paying lowest price – which should be available certainly to central government and ideally across the wider public sector as well. There is no excuse any more for having suppliers who are willing to operate with two sets of prices according to the status of the buyer they are engaging with, when we can centralise and put in place a single deal – and that’s exactly what we will do, even for our most commonly used goods and services or with the top government suppliers who perhaps for the last couple of years have been operating with different rate cards.

Sustainability is an important part of procurement; do you believe that the spending cuts will affect this?

I’m a great believer in sustainable procurement and the wider corporate social responsibility agenda. At the Home Office we made significant strides in identifying and promoting the use of SMEs and on carbon reduction initiatives, which has been well publicised in the supplier awards programme that we’ve run over the past three years.

So how do we approach carbon reduction and increasing SME targets? I believe the way you do that is through very effective supply strategies that are specific to each of the categories that we operate within government. I would expect that the supply strategy for travel, for example, would take into consideration how we address the target of placing 25 per cent of future contracts with SMEs and how we make sure both our new travel policy and the supply strategy for travel take into consideration our carbon reduction targets. If you then look at energy, it’s going to be harder for us to achieve the 25 per cent target for SMEs in that sector than it will be to actually achieve our carbon reduction target in the renewables agenda. You need to take a category-specific supply strategy and ensure that you are embedding within that strategy your key corporate social responsibility requirements. In this particular instance I believe we can achieve that in carbon reduction, renewables and more effective use of SMEs.

In your opinion, will the spending cuts hurt SMEs with larger firms better placed to offer reduced rates?

Transparency is going to be absolutely key to us as we move forward.

What we’ve got to try and identify is the process whereby we, the taxpayer, are paying margin, on margin, on margin. Say you’ve got a prime contractor engaging with a medium-sized subcontractor, who then subcontracts with a small contractor; you find that the prime is taking a margin and then the mid-range is taking a margin, and they’re probably earning more from that than the small company which is actually delivering the work. I think we can overcome that through transparency and, where appropriate, the contract terms. We really do need to identify and if possible eradicate this practice of margin on margin.

What are your views on the role of outsourcing in delivering greater efficiency savings?

I actually come from an outsourcing background and I’m a believer in outsourcing where it makes sense – where the process being outsourced is non-strategic and non-core throughout the business, and where the outsourced service provider can clearly demonstrate cost efficiencies and introduce innovations on a sustainable basis over the duration of that contract through them managing it as a strategic service rather than it being managed as a non-strategic, non-core back-office process within the buying organisation. You have to look carefully at what can be outsourced, but I think quite clearly there will be a place for that within the wider public sector.

John Collington speaking at the recent Scottish Government's Sixth National Public Procurement Conference

What can the public and private sectors learn from each other with regard to procurement?

First of all we have got to get better within the public sector at learning from each other. We have to move away from the tendency to departmental primacy and start looking across Westminster, Whitehall and the wider public sector to see where we could leverage what we’ve done in our department to benefit others, as opposed to almost in a sense competing with each other as departments to see who has the best procurement capability. I think that comes back to my point earlier about collective accountability.

Secondly, we’ve got to start learning from each other within the realms of the UK. I think that Westminster can learn from Scotland, Northern Ireland and Wales. For example, I believe there is a greater degree of maturity in the work that Scotland has carried out in implementing technology and the Centres of Expertise, in particular with the focus on SMEs. I am in dialogue with Alastair Merrill, Director of Procurement at the Scottish Government and Des Armstrong, Director of the Central Procurement Directorate in Northern Ireland on what we can learn from each other.

Thirdly, with regard to the private sector, we need to be open to challenge. In my opinion, bringing in Sir Philip Green specifically to look at public procurement was a good decision because that gave us a completely different perspective on procurement from someone who manages a very successful business. We are now in the process of incorporating Sir Philip’s recommendations within the centralised category procurement plan.

How do you see the role of procurement developing over the coming years?

I think we’re at a crossroads in procurement. As I said earlier, this is our chance to really shine – if we are prepared to step up to the challenge, learn new skills such as outsourcing, and significantly reduce the use of consultants and contractors across the procurement landscape. We need to run these types of complex procurements to deliver sustainable and tangible results that fully conform to National Audit Office requirements for true cost savings. Procurement has the opportunity to place itself along with finance and IT at the forefront of stretching budgets and saving costs as we face the challenges of CSR 10. My message is that this is a fantastic opportunity for the procurement profession. I hope that people will look at that statement and ask: ‘Do I see myself as a good procurement professional or not?’ If I see myself as a good procurement professional then this is my opportunity to shine – I genuinely believe that.

Thank you for speaking to GO.

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