NAO raises question mark over impact of Crown Commercial Service

Central government has not yet achieved value for money from central buying – and the Cabinet Office “severely under-estimated” the difficulty of implementing joint buying across government.

Meanwhile, only seven Ministries have transferred the responsibility for buying common goods and services to the centre – a £2.5bn spend well below the £13.4bn original government target envisioned.

The verdict comes out of a sharply critical new report today from from the National Audit Office (NAO) into the contribution of the Crown Commercial Service (CCS).

The body, a government agency and trading fund, is directly responsible for buying around £2.5bn worth of goods and services for central government and public sector organisations, notes NAO, which says CCS buying frameworks have been used by central government and public sector organisations to drive £12.8bn of public spending.

The good news: CCS helped save government Departments and public sector organisations £521m in 2015-16, and is praised for showing clear signs of improvement in governance, risk and internal control, says the national spending watchdog.

And now the bad: these savings were calculated on a different basis and are not directly comparable to the target set by government for CCS’s intervention – planned net benefits of £3.3bn over four years.

As a result, NAO claims it “could not tell whether these savings would have been achieved anyway” if Departmental buying functions had not been transferred to CCS.

The bad news doesn’t stop there. The report quotes an internal CCS survey that shows 6 out of 10 customers are satisfied with the CCS service but some parts of Whitehall have complained that CCS’s services can be “poor quality”, it says, and CCS itself reports that service delivery has “not always been in line” with service agreements.

The NAO also believes CCS’s management of services has not supported consistent value for money and quality, arguing CCS’s services were “not integrated or standardised”, and CCS could not demonstrate to its customers that its deals are always the best available.

It also says CCS has increasingly extended its frameworks and continues to use expired frameworks to issue contracts.

As a result of all these findings, the report is very much in “could do better” mode.

“Central buying should achieve very large savings, but it is not clear exactly what spending should be centralised,” it says.

It also warns that The Cabinet Office relied on a Cabinet Committee mandate to get Departments to transition their services quickly to using CCS, but it failed to sufficiently focuson how it would manage them once they transitioned.

Overall, then CCS has not achieved its original ambitions. However, NAO says, “CCS’s current management believe [these goals] were not realistic [because] 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 Whitehall confidence in CCS.

The strategic argument for joint buying, however, remains strong, says NAO, adding that 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.

“For central government to achieve value for money from its common goods and services, it needs to finish the centralisation it began in 2014. The events of the last two years have shown that, in practice, joint buying needs both a mandate and goodwill from departments,” it concludes.

Among the NAO’s recommendations is that the Cabinet Office should reiterate the mandate for CCS in central government and be clear about its expectations for those parts of the public sector that have not yet transferred their buying of common goods and services to CCS.

“Without a sound overarching business case or a detailed implementation plan, it is not surprising that the Crown Commercial Service rapidly ran into difficulties and soon had to reset its plans,” said head of the National Audit Office Amyas Morse.

“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.”