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«Cm 9013 February 2015 Treasury Minutes Government responses on the Eighteenth, the Twenty First to the Twenty Fourth, and the Thirty Third reports ...»

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2.4 The Cabinet Office and the Treasury are jointly conducting a programme of reviews of corporate commercial capability across central government departments. These reviews are reporting to the Minister for the Cabinet Office, Cabinet Secretary, Civil Service Chief Executive, and Commercial Secretary to the Treasury. Departments, including the Cabinet Office and the Crown Commercial Service itself, are implementing the ensuing recommendations as their reviews are completed. The Cabinet Office, reporting to the new Corporate Management Board chaired by the Chief Executive of the Civil Service, will continue to engage regularly with each department after the reviews to ensure recommendations are implemented.

2.5 The Government has strengthened the governance of commercial reform by establishing a committee of senior officials chaired by the Chief Executive of the Civil Service to oversee markets of Government services. This comprises Permanent Secretaries from the large spending departments meeting regularly to discuss and oversee commercial reforms, including deep dive analyses of specific suppliers, market design principles in specific markets, and SME strategy.

2.6 The Cabinet Office has increased the level of commercial experience within the Crown Representative team by continuing to recruit senior business leaders, who are able to carry out deep dive investigations into government's most important suppliers. The cross-departmental Commercial function reports to the Chief Executive of the Civil Service. The Chief Executive, and the Chief Commercial Officer, will have clearly defined roles in managing talent within the Commercial profession (including through controlling recruitment, deployment and setting career pathways) and building capability by setting the learning curricula for the commercial profession.

Recommendation 3:

Accounting Officers remain accountable for spending throughout the life of contracts. They should put in place an accountability framework for contracts which specifies how senior oversight of major contracts should work in practice—including the information needed to scrutinise and challenge contractor performance, cost and progress in making further savings—and the personal responsibilities of senior managers, with appropriate sanctions and rewards for performance.

3.1 The Government agrees with the Committee’s recommendation.

Target implementation date: Autumn 2015.

3.2 The responsibilities of an Accounting Officer are set out in chapter 3 of Managing Public Money (MPM). This sets out the standards expected to ensure that the organisation (and sponsored ALBs) operate effectively and to a high standard of probity for governance, decision making, and financial management. Further, chapter 7 of MPM sets out the requirements, through a framework document, for public sector organisations delivering public services.

3.3 The Government’s strengthened functional leadership model will help consolidate the way in which the centre works with Accounting Officers to improve performance and delivery. The functional heads have a cross-cutting responsibility for the running of expert corporate functions, from IT to HR, digital to finance. They take a leading role in recruiting talent and agreeing standards within their crossdepartmental functions. The Government Chief Commercial Officer is leading work to manage talent better and build capability within his function. This includes setting standards for departments to follow;

setting career pathways and the learning curricula for the commercial profession; and establishing a central recruitment hub. Commercial Directors have a dotted line responsibility to the Government Chief Commercial Officer and this relationship will be clarified.

Recommendation 4:

The Committee welcomes progress to improve the Government's commercial and contract management skills, but this needs to be supported by concerted Cabinet Office action in two areas: to increase the attractiveness of careers in commercial disciplines including pay, status and career development; and do more to raise the commercial awareness of operational managers so they can work with the commercial professionals to achieve value for money throughout the life of contracts.

4.1 The Government agrees with the Committee’s recommendation.

Target implementation date: Late 2015.

4.2 The Government is taking steps to reshape the commercial profession following the findings of its reviews of commercial capability, which confirmed that the commercial profession is too focused on securing compliance with procurement rules and not sufficiently focused on market shaping or rigorous, post-procurement contract management. There are too few senior and experienced people, and the commercial awareness of generalist policy officials needs to improve.

4.3 To address these issues, departments are already taking steps to enhance their commercial capability. In addition, the Chief Executive of the Civil Service is leading a programme of work to address common themes, such as status and career progression of commercial specialists. The profile of the profession is being raised, and new entrants are taking up a career in the Commercial Function, rather than a particular role in an individual department. A holistic approach to talent management and career development is being developed by the Government’s Chief Commercial Officer, including a recognised framework of experience for senior commercial roles, specifying clear requirements for senior posts.

4.4 To support and complement the actions being taken in departments to raise commercial capability, there are now 20 highly experienced commercial leaders operating as Crown Representatives to improve the Government's commercial performance and capability, 17 of whom are from the private sector. Their work is enabling Government to act increasingly as a single customer, negotiate better contracts, and build stronger commercial relationships with industry. The Government is also identifying graduates who are interested in pursuing commercial careers in Government, and has launched a specific Commercial Fast Stream. This new talent is a core element for the Civil Service to “grow our own” commercial expertise for the future.

4.5 A programme is under way to build contract management capability, including embedding contract management principles, a contract management framework summary based on work by the NAO, and a new contract management operating model. A range of learning and development products is now in place to build confidence and good practice of operational managers with a current uptake over 51,000, and rising, of which more than 3,000 have been face-to-face training. In addition to the core commercial courses, departments are increasing the commercial awareness of their staff through workshops, seminars and other initiatives, including the now well established Commissioning Academy.

Recommendation 5:

Alongside the Cabinet Office reporting back to the Committee at the end of 2015, both the Ministry of Justice and the Home Office should report back to the Committee specifically on

progress with their contract management improvement plans:

For the Ministry, the Committee will be particularly interested in arrangements for running the 'Transforming Rehabilitation' contracts (for outsourcing probation services) which we see as a litmus test for better management of high risk and complex contracts.

For the Home Office, the Committee will be particularly interested in what it has done to extend improvement plans beyond its commercial directorate and into the operational management of contracts.

5.1 The Government agrees with the Committee’s recommendation.

Target implementation date: September 2015.

Ministry of Justice

5.2 The Ministry of Justice (MOJ) has a contract management improvement plan which is due to be implemented by September 2015 but will remain a high priority area. The plan is being overseen by the recently established Commercial and Contract Governance Committee (CCGC), which is chaired by the Director General Finance, Assurance and Commercial and reports to the MOJ’s Executive Committee.

Part of the remit of the CCGC is to perform in-depth reviews of existing contracts. As part of these reviews a named individual responsible for the performance of a contract is required to ‘attest’ to the CCGC the effective and appropriate management of their contracts. Senior supplier relationships have also been put on a more formal and strategic footing.

5.3 A common operating model has been introduced, together with increased clarity of roles and responsibilities, to support staff at all levels to carry out their roles. Internal Audit has widened its scope in relation to contract management with an intensive programme of audits. Analytical services has prioritised the development of improved KPIs for key contracts.

5.4 The Commercial and Contract Management Directorate is being reorganised to provide for a more senior grade mix and operating from fewer locations to improve professional oversight and management. To improve capability, MOJ has worked with the International Association for Contract and Commercial Management (IACCM) to develop an e-learning programme covering the full range of contract management skills. This has been made available to all staff involved in contract management including operational contract managers, analysts, internal audit, as well as commercial contract managers. Over 140 people will have commenced or completed the training by end of February 2015.

5.5 The contract management arrangements for the Transforming Rehabilitation contracts (which are due to go live on 1 February 2015) are fully aligned with the contract management improvement programme and are under active review by the Government Chief Commercial Officer who, in turn, is regularly updating the Chief Executive of the Civil Service. The Treasury’s approval of this project was made conditional on satisfactory contract management plans and capacity being in place. The Commercial and Contract Governance Committee will oversee the management of these contracts within MOJ.

Home Office

5.6 The Home Office implemented a Contract Management Improvement Plan in April 2014, which is assured by the Home Office Internal Audit unit. The Executive Management Board oversees implementation of the plan. Good progress has been made by improving the Home Office management of supplier relationships; issuing guidance, and standardising policies and procedures in contract management; improving skills, knowledge and commercial capability across the Home Office commercial and business functions; and strengthening and providing clarity to governance structures.

5.7 A commercial awareness programme commenced in October 2014. This provides an introduction to contract and commercial management to business functions across the Home Office. The Commercial Skills for Business Contract Owners Programme provides general awareness and bespoke training interventions. The Home Office is collaborating with the NAO, MOJ and Cabinet Office to establish a method to derive a benchmark to measure improvement through training.

5.8 The Home Office has addressed the issue of business responsibility for contracts with the introduction of named business owners to strengthen the relationship between business units and the Commercial Directorate in managing strategic suppliers. The Executive Management Board is fully committed to this initiative.

5.9 In addition, each of the above departments have agreed, at Permanent Under Secretary level, to address all of the recommendations resulting from the review of commercial capability. A plan for implementing these recommendations is in place within each department.

Committee of Public Accounts conclusions 6-8:

Contractors have not shown an appropriate duty of care to the taxpayer and users of public services.

Recommendation 7:

The Cabinet Office should work with industry to define what obligations a duty of care should entail, what sanctions would apply should performance fall short, and require senior executives to attest annually to the strength of their internal controls over public contracts and to be personally accountable to Parliament for performance.

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