https://civilservice.blog.gov.uk/2014/10/02/why-commercial-matters/

Why commercial matters

Bill CrothersRaising commercial skills is a key part of Civil Service Reform. This is because we spend £240 billion of taxpayers’ money with suppliers to deliver public services, including £40 billion in central government alone. In an era of increased demand and less resource it is more crucial than ever to spend every penny of it well.

This isn’t just a task for commercial professionals; obtaining better value requires us all to demonstrate sound financial and commercial understanding. Yet we know from the Annual Skills Review that “delivering commercial outcomes” is one of areas where civil servants rate their capability weakest. So what do we need to do to change this?

All civil servants must better understand the three phases of commercial engagement:

• early market engagement - how to plan and engage with the market to obtain most choice and innovation
• procurement - how to procure and contract intelligently
• good contract management - how to manage the delivery of goods or services so that our expectations are met

Value is obtained during all of these 3 phases, but today we tend to overly focus on the procurement phase. We have established 5 guiding principles (STACK), to build our commercial capability and restack the commercial balance in our dealings with suppliers:

Specialist capabilities are required across the wider Civil Service as well as by a group of commercial experts. Commercial expertise is broader than what we refer to today as ‘procurement’.

Time should be spent where we can maximise value. In a regulated procurement environment this applies as much, if not more, before a formal procurement starts as well as after a contract has been signed.

Attitude, or judgement, is as important as process and so we need all our dealings to be about knowing what represents great value and achieving it.

Crown is what we must always act as, and be treated as a single customer.

Knowledge is key and we must seek, share and use it to our commercial advantage.

So, we need to work hard to develop a Civil Service which has a strong commercial mindset, and a Commercial Function which has the skills, experience, confidence and judgement to provide an excellent service to Government. There is a great range of commercial learning programmes available for all of us on Civil Service Learning – so please log on now and have a look!

The 1 day Civil Service Learning Commercial Skills for Leaders course is a must for all senior civil servants to gain insight into applying commercial skills to complex issues and lead more effectively in commercial situations. The next course is on 30th October in London.

For everyone from HEO to SCS, the Effective Commercial Planning and Contracting Masterclass offers a 1 day introduction on how the commercial cycle works, how to make best use of different markets and how to create effective contracts. And for anyone whose job involves managing contracts or suppliers, we have a 1 day Masterclass in Managing Contractors. There are also 5 free e-learning modules on Commercial Awareness, available to all staff.

And finally, the Civil Service Reform Plan: Progress Report was published yesterday and gives an update on our efforts to reform the Civil Service. Commercial reforms are a key part of this programme and our work features prominently in the report. I encourage you to read it.

You can visit the commercial skills page here

14 comments

  1. Comment by Graham posted on

    I can think of many areas where the CS is simply not connercially savvy.
    Over spending for goods and services. When ever I raise it with snr management I am told there is nothing that can be done "that's the way it is", "in the wider scheme of things it makes no difference". Well in my mind it does.
    Quite infuriating when in actual terms we as staff are doing more, at a higher level than employed and in "real" terms taking a year on year pay cut.

  2. Comment by Hass posted on

    Having read the article I still don't understand why "all" civil servants must better understand the three phases of commercial engagement.

  3. Comment by Amanda Jarret posted on

    I believe that lots of civil servants wrongly think they aren't commercially aware because their day job does not involve buying anything or managing budgets or overseeing contract delivery, but if required to take a decision which involves spending public money are perfectly capable of making not just the decision which results in best value but also the one which is a proper and lawful use of public funds - an awareness that they are guardians of taxpayers money sits with them at all times, it is second nature. I also believe that lots of people, particularly relatively junior people, who join the civil service having already had commercial experience have little awareness of what it means to be spending public money and see it as their role to challenge the colleague who tells them that it is not appropriate for a public servant to be looking to pull a fast one just because you might get away with it and it is commercially expedient. I hope that people will take advantage of the training offered but I hope it also recognises and values propriety and doesn't assume that an experienced civil servant's gut feeling that a particular choice would be wrong, or an experienced public lawyer's opinion that something would be unlawful (not just legally risky) count for nothing in the drive to get more for less.

    • Replies to Amanda Jarret>

      Comment by David Hoppe posted on

      I think Amanda Jarret makes some very salient points about ethical and professional standards.

      There is much pressure to cut costs which shall invariably involve risk, risk to reputation, commercial risk, supply risk etc.

      Upholding professional standards can be difficult with in the procurement profession. The number of whizz kid talented high flyers who have low commitment and loyalty to the Civil Service are increasing. Like traders in the city if they win they take credit and get on if they lose its our money.

      Who wouldn't take a risk to get on? Probably the ones with an eye on what can be lost as well as won.

  4. Comment by Dee posted on

    The two points I picked up from the STACK principals were;

    Crown - is what we must always act as, and be treated as a single customer.

    Knowledge - is key and we must seek, share and use it to our commercial advantage.

    I completely agree Bill Crothers on these points, but I stuggle to see how either can be fully achieved without centralising all gov't procurment activities. Historically (from personal experience), all gov't departments can be poor at best when it comes to sharing knowledge or in seeking partnership opportunities (with other depts), often due to the differing requirements of each department and/or the lack of insight or willingness to even slightly embrace joint ventures by realising that a small shift would make massive positive changes and potentially save millions of £s.

  5. Comment by Tim posted on

    Raising commercial skills should not be limited to civil servants working in the field of procurement and contract management. In the policy profession too it is increasingly important that we understand the commercial drivers which influence the culture and behaviour of private sector stakeholders. This knowledge is vital in developing realistic policy options and working in collaboration with these organisations to achieve policy outcomes.

  6. Comment by A M Fox posted on

    The major flaw I see in the Civil Service's desire for us to improve our skills is time. In my previous and current role I barely had time to do the day job. I would love to do more courses and expand my knowledge but forget it during the working day; and in my case more. As I care, I put more hours in than I get paid for as it is.
    A good example is when I left my previous role I had to spend (waste) precious hours working out how to recruit my replacement when surely there should be professional HRMS staff doing this sort of thing on the information I give them.
    Since becoming a Civil Servant 4 years ago I have had to learn everything, I mean everything, by searching online. Whether it was how to claim expenses or to do a report. I have not had any form of briefings or human interaction on how to do anything outside my core duties. It's lucky that I enjoy the roles I have and I can see the success of my input or I would have walked long ago.
    We need to be and learn all the things that I see being proposed from the centre but until the centre realise that many are being dragged down by day to day minutae that can be addressed by others, who are better trained for it, then we will continue to have staff who turn up and just 'drift'.

    • Replies to A M Fox>

      Comment by Michael posted on

      As one who recalls having personnel staff on site (or at a point not many miles away) at previous workplaces, people to whom you would be more than a name on a piece of paper, I do not consider the seeming concentration of the advisory eggs into the online basket to have been an inspiring development myself, especially when software has temperamental moments that add to the time used up.

  7. Comment by Phil posted on

    The commercial awareness influence that lower grade colleagues can bring to DWP with regard to purchasing,is really limited to ensuring that no more than necessary is requested.To my knowledge,contacts are agreed at a high level with what appear to be sole suppliers of goods and services,something that within industry is not considered to be wise from supply security,price,and service point of view.
    Of greater concern to me are the 'Headline Cost Savings' for example the phasing out of Flexi Machines.By this I mean that,on paper,a centre will save around £1500 a year on a Maintenance Contract,plus the time of a Flexi Machine Operator.In reality,the hidden costs far outway this saving.
    If,for example,every person within a Centre of 240 personnel takes three minutes a day to manually complete their Flexi Sheet this equates,taking a conservative average hourly employment cost of £11 per hour for AO Grade and above,to over £34,000 a year.The cost for an AA Grade operator at two hours per day plus the Maintenance Contract is £6,700 a year.

  8. Comment by Marion Armour posted on

    From the post by Bill I note that one of the 3 phases of commercial engagement is "good contract management" I really feel at operational level this is almost impossible to do. Basically because it's so difficult to establish what the contract actually specifies and therefore what our rights are to manage it. Everything from how long the engineer is allowed to come and fix the dodgy printer to how long My/CSP & Capita have to consider the steps and progress an ill health retirement application. In fact every aspect of the office environment contracts and the suppliers we've bought into is a big mystery that requires much research to be able to escalate or check in any form whether we're getting what we paid for! Please can we find a way to put all the key contract 'rights' into an accessible form so we as users know if X isn't happening you are right to expect Y action in Z days etc

  9. Comment by Charlotte posted on

    From my perspective, I treat all commercial activities (end-to-end process)as if it was akin to improving my home, my investments and my quality of life. So take responsibility!

    Be it buying a new bathroom suite or changing utility supplier, I want service, good quality service and good quality product. To ensure I get that I have to do my homework (criteria and market research). I also have to spend time up front to determine what it is I really need (basic fundamentals or latest trendy gadget/luxury must haves ). I then consider my budget and ways of tracking that spend to make it last throughout the shelf-life of job/product.
    What I don't need is sales people, I want to actually talk to the organ grinder - the person that knows and is willing to make a decision/take a risk. I don't want to deal with illogical process followers.

    Likewise I apply same principles to commercial activity in work, why not after all my tax is paying for this. Early Engaging is key! Engagement with Procurement, Contract Management, Budget Holder and Supplier. As you would in your personal life. They can't help you unless you help them.

    Most procurement team colleagues are helpful, insightful and the only place WE get stuck is when faced with contradicting information from CCS to Department's Commercial Processes However the overall decision maker is the business's critical need and End-User ability to use and maintain the service/product effortlessly. Anything else can be overcome, therefore keep asking questions up front, keep providing scenarios until either something gets changed for the better without and I stress this, there is little or no impact on the end-user.

    Yes there is a lot of work up front, yes you need to take personal responsibility and accountability (why not?). The benefits are that each time it gets easier, each time you get a little wiser and best of all each time you are changing the process into a better one. So be brave, grasp the nettle and go for it!
    Remember amateurs build the ark...... expert's the titanic.

  10. Comment by Myles Tagoyet posted on

    Has anyone ever tried and more importantly succeeded in getting into the commercial work stream from outside commercial?
    I’ve done all of the online training I can find, so have some skills – but can’t get a foot in the door despite there being vacancies galore at C & B band, because (you guessed it) – I don’t have experience!

    • Replies to Myles Tagoyet>

      Comment by gillian obasiagbon posted on

      Myles, in response to your question, I succeeded in getting into Commercial, but through a different route. Having worked in the Job centre for donkey years, I decided to change my career and move into Commercial. It was one of the most difficult tasks to achieve, I had to start my professional exams in procurement through self study/self financing because the department turned down my request for funding. I then tried to transfer into the commercial department, but once again hit an impasse. My last resort was to directly contact the commercial director and sell my passion to him, to my surprise it worked and he offered me a 3 month placement. To cut the long story short, I got an extra 6 month extention, then transferred into CCS and finally got a promotion to Procurement Category Manager. So yes, it is achievable. Don't be afraid to take your request higher, there are Senior management who have once been in your position.

  11. Comment by Graham posted on

    I dont see the bullet points for

    - Deciding what you need ,having discussed the needs with the staff that will operate what you buy

    Unless this is clear to start with,and we listen to the views of those operating it ,we may well be wasting a lot of money .