1Department for Work & Pensions

Andrew Forzani DWP Commercial Director

Key messages from the Commercial

Director

• DWP spend with third party suppliers in 2013/14 was £3,012m (37% of annual running costs), about 7% of central Government procurement.

• DWP spend reduced by £199m (6.2%) over 2012/13, of this £175.5m are cash savings on recurrent expenditure.

• Proportion of spend with top 15 suppliers fell from 70% in 2012/13 to 66% in 2013/14.

• 85% of our spend is on contracts that must be procured in next 3 years.

DWP Commercial Spend

DWP Third party Spend (£m)

CategorySpend

2012/13Spend

2013/14 Reduction% Reduction

         

ICT £1,112 £786 £326 29.31%

Estates £637 £582 £56 8.74%

Health & Disability Assessments £124 £87 £37 30.06%

Other non-Employment £432 £433 -£1 -0.23%

Sub-Total £2,306 £1,888 £418 18.13%

         

Employment Programmes £772 £991 -£219 -28.38%

         

Core Department Total £3,078 £2,879 £199 6.47%

Non-Departmental Public Bodies £133 £133 £0 0%

DWP Total £3,211 £3,012 £199 6.20%

Last Year

• Difficult for DWP and cross-Government.

• Ability of Government to manage contracts questioned.

• Ability of suppliers to deliver and meet our standards questioned.

• Independent scrutiny of contract management (NAO, PAC, PWC) reviews.

• Challenge is for us all to respond and restore confidence.

Last Year – Commercial Highlights

• New DWP Commercial Strategy – December 2013.

• Completed Commercial Change Programme:

• Introduced new operating model, end-to-end Category Management;

• Move to disaggregated supply model in key categories;

• Focus on savings developing market and category expertise, being more intelligent and demanding customer

• Trailblazer for Commercial Reform – Wave 1 spend categories transitioned to CCS in April, Wave 2 planned for June.

Need for Change

• Efficiency & Reform Group – drive and centre for Government commercial function.

• Crown Representatives in place with all strategic suppliers.

• Crown Commercial Service will procure “common goods and services” across Government.

• DWP trailblazer – Wave 1 transitioned to CCS in April.

• CSS will provide Departments with a fully managed service, meaning a different relationship with suppliers.

Commercial Reform

£

High

Low

Time spent on value added activity

MARKET DESIGN FOCUS: Developingrequirements that

shape markets and thesupply base toGovernment

Simplifying process andreducing turnaroundtimes & supplier bid

costs

Improving contract andsupplier management

capability throughapplication of new

standards

Cross Government contract review

Before going to market Procurement Process Contract and supplier management

Average turnaround times for EU procurements now less than 100 days (200 days in 2011) Circa 20% of spend is now with SMEs (baseline 6%)

BeforeGoal

• Commercial Improvement – • Commercial capability across DWP, specialists and others;• Category planning;• Technology;• Performance;• Contract management.

• Embed category management – exploit market innovation, improve services and deliver savings.

• Continue transition to CCS, focus DWP commercial resource on our unique requirements.

• Market development - create a more competitive, agile and diverse supply base.

• Support DWP business and deliver savings.

The Year Ahead

• Category Spend Savings Targets

• 2013/14 Cash Efficiency

• ICT Infrastructure £489m £43m £0m

• ICT App/Dev £297m £5m £61m

• Corp Services £433m £21m £0m

• Estates £582m £20m £25m

• Employment £991m £0m £70m

• H&DA £87m £25.5m £23.5m

• DWP TOTAL £2,879m £114.5m £179.5m

All Savings £294m

Savings Targets

• Help us deliver better quality, efficient services, supporting us to continually review and improve performance.

• We expect:

• Positive, constructive relationships;• Innovation, ideas to improve, use of technology;• Integrated planning, joined-up supply chain thinking;• Assurance of processes;• Performance reporting;• Transparency, open book;• Good treatment of your supply chains.

• Improving performance and support for our agenda.

What we need to ask of you.

• Fair and equal treatment.

• Early, open discussions on future plans and opportunities.

• Appetite to showcase and trial new ideas.

What you should expect from us.