Memorandum submitted by the Department
for Transport, Local Government and the Regions
1. The Treasury Sub-Committee has agreed an
inquiry into the work of the Office of Government Commerce (OGC)
with the following terms of reference:
how the OGC deploys its resources
to meet its aims and objectives; and in this context
to examine its strategies and progress
towards achieving its target of delivering £1 billion of
value for money improvements from central civil Government commercial
its role in PFI projects.
2. The Sub-Committee has invited the Department
to submit written evidence on the use it makes of the OGC and
the services it provides. This memorandum records our views.
3. We generally welcome the creation of the
OGC and the work that Peter Gershon is doing to drive forward
the commercial agenda across central government. The management
structure at board level, including the Supervisory Board, gives
departments the opportunity to influence and benefit from the
work at strategic level and appears to be working well.
4. The Gateway Review process for major projects
has been a particular success. On the evidence of the reviews
undertaken so far, the process adds real value and will help us
to deliver projects on time, to cost and within specification.
We are now working with OGC to develop the concept of gateway
reviews for low value projects.
5. OGC work in this area is proving to be of
benefit. While it is right to concentrate initially on strategic
suppliers, work in this area will need to be extended eventually
to include second tier suppliers. Central government is often
the major customer, and this presents us with a real opportunity
to influence the wider agenda in areas like green procurement
and sustainable development.
6. The creation of Buying.solutions within the
OGC should create opportunities to generate significant economies
of scale in the procurement of goods and services across central
government. We make extensive use of the G-CAT and S-CAT catalogue
purchasing arrangements for computer hardware/software and consultancy
services respectively. They offer ease of use and good value for
money, both in terms of price and reduced transactional costs.
7. OGC need to ensure that the agenda takes
on board the needs of departments and is properly managed and
co-ordinated. A number of earlier central initiatives, including
the now abandoned `electronic shopping mall' (initiated prior
to the creation of OGC) have led to abortive work in departments.
8. The OGC led initiative to introduce purchasing
cards in central Government departments has been a great success.
Use of the GPC is leading to significant reductions in the processing
costs associated with low value purchases.
9. The OGC is well placed to provide the strategic
overview on property and estates matters necessary to deliver
value for money for Government. The former Property Advisors to
the Civil Estate (PACE), set up following the 1996 Scrutiny report
on the Government Civil Estate and now part of OGC, has an important
and continuing role to play in this area, which we fully support
and would not wish to see diluted. We also support the key role
of the OGC in delivering to the Government construction procurement
community the modernising construction agenda.
10. The OGC Private Finance Unit has a key role
in helping set the Government's agenda for PFI, and providing
strategic advice, guidance and support to departments, which we
welcome and fully support. We would also welcome greater emphasis
on OGC's strategic role in assessing key PFI markets and how they
might more effectively deliver better value for money.
15 November 2001