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20 September 2022: Commercial Capability Expansion Programme

Published 29 September 2022

Accounting Officer Memorandum: Commercial Capability Expansion Programme

An Accounting Officer assessment for the Commercial Capability Expansion Programme was conducted in line with the Cabinet Office commitment to publish Accounting Officer Assessments for Government’s Major Projects. This Accounting Officer assessment considers the four standards of regularity, propriety, value for money and feasibility.

Background and context

The Cabinet Office and HM Treasury completed Commercial Capability Reviews in 2014 - 2015 with the ten departments with the largest influence on spend. The recurring theme was that we needed to do much more to improve the capability, capacity and confidence of commercial specialists across government.

To support this ambition the Commercial Capability Programme (January 2015 - January 2018) was established as a major programme under the Government Major Projects Portfolio (GMPP) to address the issues identified in the Commercial Capability Reviews with a main focus on establishing and launching the Government Commercial Organisation (GCO) - the single central employer of commercial specialists at Grade 6 and above for government departments.

Upon achieving its aims the Commercial Capability Programme transitioned to a business as usual function (the GCO) in January 2018. The opportunity was recognised to address other areas of the commercial landscape where remedial action was needed. The Civil Service Board endorsed proposals to expand the scope and reach of the work in 2017, with a view to further improve commercial capability deeper into the civil service and across the wider public sector. This work is being delivered under the Commercial Capability Expansion Programme and the three areas of expansion are:

1. Commercial specialists at Grade 7 (Commercial Leads) in central government departments - project successfully closed as of November 2019, having met its objectives (bringing all Grade 7 Commercial Leads into the GCO, following assessment, with provision of training to support falling short of fully achieving accreditation)

2. Commercial specialists within Wider Government Bodies (provision of training and assessment) - ongoing

3. Contract managers in central government departments (provision of training and assessment) - ongoing

As at 31 March 2022 a total of 5,598 individuals have been assessed (both internal and external) and working across central government we have 1,134 accredited commercial professionals within the GCO.

The initial Strategic Outline Business Case (SOBC) was formally approved by HM Treasury in 2017 and has been assured both via the Programme Oversight Committee and the Infrastructure and Projects Authority (IPA) as it has evolved. The Programme’s Business Case is at the Full Business Case (FBC) stage. Our FBC was last updated in Quarter 4 of 2020/21, incorporating feedback from the IPA, the 12-month programme extension to March 2023 (in light of COVID-19 impacts), and other relevant updates.

To note: This Accounting Officer (AO) Assessment is specific to the Commercial Capability Expansion Programme.

Assessment against the Accounting Officer standards

Regularity

The Commercial Capability Expansion Programme has HM Treasury authorisation granted through the Strategic Outline Business Case (March 2017) to deliver its objectives and all funding for the programme is in line with spending reviews and agreed budgets.

This programme does not require specific legislation for Parliament to authorise spending. As set out under section 2.5.3 Managing Public Money, the expansion programme is exempt from needing bespoke legal powers as it falls within the category of ‘routine matters’ where funds are covered under common law.

Regularity Accounting Officer Standard: Met.

Propriety

The programme is assessed as managed in accordance with the public standards of conduct. It is subject to programme-level assurance provided by the Infrastructure and Projects Authority’s (IPA’s) Integrated Assurance and Approvals Process in the form of IPA Gate reviews.

The Expansion Programme continues to operate under spending controls approved by HM Treasury.

There is a Senior Responsible Owner (SRO) and Programme Director that oversees delivery.

There is a dedicated Programme Management Office (PMO) to support the programme that draws from best practice, lessons learnt, the Project Delivery Functional Standard as well as other best practice project management methodologies.

A robust integrated governance structure (that includes representatives from all major departments and target Wider Government Bodies) is in place that spans across the GCO and the Expansion Programme, providing strategic direction, assurance, transparency and controls.

Propriety Accounting Officer Standard: Met

Value for Money

The economic case outlined in the Business Case considered six options, including the option to ‘do nothing’. After assessment it was found that choosing to do the maximum option offered the best value for money in terms of business need, strategic fit and benefits realisation. It allowed the programme to target the full target population dealing with commercial and contract management activities and therefore address the associated issues with these populations more wholly, which in turn influences the highest amount of public spend.

The Commercial Capability Expansion Programme is an enabling programme, but provides longer term financial benefits for the government through capability uplift.

Annual central government commercial spend on goods and services is c.£70bn and if you include the wider public sector this figure increases to £357bn. It is acknowledged and evidenced that improved capability delivers better commercial outcomes and significant savings on government third party spending.

Industry (WCC) estimates that approximately 9% of contract value can be leaked annually due to poor contract management. The training and accreditation for contract managers launched under this programme ensures that we move to a position where government contracts are only managed by those who meet the right standards and can drive the best value through active supplier and contract management.

The programme has a well developed benefit realisation management framework and includes both financial and non financial benefits - utilising financials, data, case studies and testimonials to evidence measurable improvements and impact. The return on investment is clear - in line with the principles of economy, efficiency and effectiveness.

The programme communicates benefits realised through our governance structure with key stakeholders via a bi-annual Benefits Realisation snapshot report.

Assurance that the intended benefits are being realised has been conducted via IPA Assurance Reviews and the Government Internal Audit Agency (GIAA).

Value for Money Accounting Officer Standard: Met

Feasibility

The programme has had significant success in building capability across the senior Commercial Function including to G7s in Central Government Departments. It was recognised that the challenge ahead was to achieve the same level of success with the Wider Government Bodies and the rollout of the contract management training. The team found sufficient evidence to suggest that this was deliverable providing the programme gave sufficient attention to create momentum with organisations and had that it had the capacity to meet organisational needs.

Both the Contract Management (CM) and Wider Government Bodies (WGB) projects have been working towards the overall Expansion Programme end date of March 2023. Whilst progress has been made with organisations, engagement and competing priorities across some has limited the desired pace to meet the programme objectives fully. There is a Partnerships Team who are engaging with departments to fully understand and overcome barriers to engagement.

There have also been other challenges and risks associated with the programme’s ability to meet its target deadline, initially set at March 2022.

The impact of Covid-19 caused a pause and then a move to virtualised training and accreditation. Given the pause to services, in November 2020 the programme received the Civil Service Board’s full endorsement for a 12-month programme extension to March 2023.

In addition, wider Cabinet Office recruitment and spending controls are having an impact on the ability to deliver the full programme scope as re-planned. As a result, the programme is subject to internal review to reassure alignment between goals and resources.

Out of the three key projects and target populations - the programme has fully met the objectives of one (the expansion to G7s in central government) and is partially meeting the other two (the expansion to commercial specialists in target wider government bodies and the accreditation of all contract managers across central government). The programme will be highlighting progress and next steps for endorsement at the next Civil Service Board in late November 2022.

The programme is managed via a series of key governance board meetings that ensure key topics are regularly discussed, addressed and escalated to the Programme SRO, Programme Board and Oversight Committee as appropriate. These meetings span across all critical areas to check the programme is delivering within the defined scope, timelines and budget parameters - actively managing risks, issues and dependencies. The programme continues to deliver but at a significantly slower throughput .

Feasibility Accounting Officer Standard: Partially Met

Conclusion

I am satisfied that the Commercial Capability Expansion Programme relies on clear legal powers, meets the standards in Managing Public Money and accords with the generally understood principles of public life, representing value for money for the Exchequer as a whole, and is largely feasible to deliver.

This summary will be published on the government’s website (GOV.UK). Copies will be deposited in the Library of the House of Commons, and sent to the Controller and Auditor General and Treasury Officer of Accounts.

Alex Chisholm

Permanent Secretary, Cabinet Office

20 September 2022