The Department for Work and Pensions (DWP) has laid outs plans to build a commercial team that is “respected” across government and is “fit for future”, which will also drive hundreds of millions of pounds of ICT savings and boost the department’s use of SMEs for supplying goods and services.
In its latest commercial strategy, DWP outlines how in 2012/13 the department spent £3.4 billion on third party suppliers, which is approximately 43 percent of DWP’s total running costs and around 8 percent of all government commercial spend.
DWP states : “This plan sets out our strategic commercial approach for the next three years explaining how we will be seizing the opportunity of Government Procurement Reform, market developments and contract expiry, transform the way we operate, under a Commercial Change Programme, to help the department achieve its key responsibilities in improving services to the public and increasing organisational efficiency.”
It outlines how it is going to build a cross government commercial team that is listened to by the business for its commercial and procurement skills and market knowledge, whilst also create category teams with end-to-end accountability and responsibility across the procurement lifecycle.
DWP aims to “operate with staff skilled across the procurement lifecycle within smaller teams, which effectively support major programmes and service delivery with strong commercial direction”.
The department wants to organise its structure around what it buys and the suppliers and markets it operates in, with the aim of implementing a new organisational structure by April 2014.
The plan states that it hopes to achieve £34 million of ICT savings by 2013/14; £38.5 million by 2014/15; and £135 million by 2015/16.
It also aims to increase its spend with SMEs – either directly or indirectly through the supply chain – to 22 percent by March 2014 and 25 percent by March 2015. DWP’s combined spend with SMEs stands at 16 percent – as of August this year.
DWP’s plan follows a number of recent reforms within Whitehall, which aim to diversify departments’ supply base and drive down costs. The government’s chief technology officer Liam Maxwell has said, for example, that when many of the departments’ key outsourcing agreements come to an end over the next couple of years they will not just be handed back to the same large suppliers – they will be restructured and support the use of agile working and SMEs.
To support this, the Cabinet Office and the Government Digital Service have introduced a number of frameworks to make it easier for smaller businesses to work within the public sector – namely the G-Cloud and the Digital Services Framework.
Furthermore, the government also recently formed the Crown Commercial Service, which is going to be responsible for common departmental spend, and aims to help departments become more commercially savvy. It is currently on a recruitment drive and aims to hire nearly 100 commercial experts.
However, DWP has also faced a number of ICT challenges in 2013 - largely with its flagship welfare reform project, Universal Credit.
Universal Credit aims to merge benefits such as jobseeker’s allowance, income support, housing benefit, child tax credit and working credit. The IT system supporting it will require real-time data on the earnings of every adult, from a new Pay as You Earn (PAYE) system being developed by HM Revenue & Customs (HMRC).
DWP plans to spend £2.4 billion to implement Universal Credit up to April 2023 and has spent £425 million up to April 2013. Most spending so far (£303 million) has been on contracts for designing and developing IT systems. However, to date there have been a number of suspected problems with delivery.
Duncan Smith recently told MPs on a select committee that he is in control of the project and that there is “no debacle”. However, he admitted that the department has had to write off, or ‘impair’, £40.1 million worth of IT assets to date – nearly a fifth more than the £34 million figure revealed to the National Audit Office earlier this year.
Moreover, this figure could increase: "If anything goes wrong going forward, that [figure] might be different," said Duncan Smith.
Universal Credit consists of £152 million worth of intangible assets, with £34 million of this to be used as software code in the final digital version.
The remaining IT assets will now also be written off over a five-year period, as opposed to the 15-year period that the department had originally planned.
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