Meeting the need to do more with less
Central Government’s Commercial function continues to operate under huge pressure – increasing workloads, fewer people and cost-saving drives bring challenges that can lead to poor outcomes for every stakeholder. Add in inflationary pressures, regulatory reform and sustainability targets, and it’s no wonder that some Commercial Directors have a reputation as the people who say ‘No’ more than ‘Yes’.
Of course, a rigorous commercial function underpins the success of every public sector project, driving value for money, delivering operational efficiencies and managing substantial risk. Doing these things consistently well requires diligence, restraint and challenge, which is where Baringa’s experienced Government and Public Sector team bring practical solutions that deliver tangible results.
Our preferred approach is always to embed a team within the civil service. This gives us direct access to every level of the commercial function to identify where and how the most value can be added to projects. Baringa’s team then coaches and supports the commercial team to upskill, implement new ways of working and optimise processes in order to:
- Actively seek out opportunities
- Embrace novel commercial models
- Empower expert teams
- Develop close ties with operational colleagues across Government.
Unlocking potential by saying yes
When times are tough, it’s easy for Commercial Directors to say no. But saying ‘Yes’ to the right public sector projects, when they are well-planned and tightly managed, pays dividends and can deliver significant returns:
- Energy buying: Energy is no longer a commodity purchase given the wholesale market and Government’s Net Zero ambitions. Commercial teams without a thorough energy strategy are missing substantial savings. We estimate that Power Purchase Agreements (PPAs) can deliver savings in the region of £250m - £350m over a typical 15-year contract for departments and bodies using 1 TWh. By entering into a PPA under current market conditions, electricity costs over the next three years could fall by around 75%. Via PPAs, power can be sourced directly from new-build renewable generators, saving 50 to 100 ktCO2e each year compared to average grid electricity to help achieve Net Zero goals.
- Technology: The long shadow of legacy IT and commercial constructs looms large over government. Commercial teams can unlock significant value through focus on innovation, disaggregation, modernisation and migration to the cloud. And it’s not as scary as it sounds. Through our work across government, and recently with HMRC’s Technology Sourcing Programme, we know that commercial teams can drive value for money by:
- Embracing an array of procurement routes, commercial models, and even establishing new bespoke Frameworks to meet today’s needs. Baringa’s support to HMRC and CCS in developing both the Big Data and Analytics and Digital and Legacy Applications Frameworks will enable significant technology innovation across government.
- Engaging early with the new DDaT supplier base to explain project needs, existing technology estate and commercial constraints. Suppliers with greater insight can offer better tailored solutions, partner-up with relevant companies and bring savings through Best And Final Offer.
- Procurement processes and teams: Planned changes to legislation will bringopportunities for commercial teams to innovate and collaborate with the market differently. We’ve seen great success from practical steps such as:
- Using all avenues available for procurements
- Moving away from the direct awards that accelerated during Covid. The simple act of competition can save 20-25%
- Building the capacity and capability of in-house commercial teams to meet the challenges of increasing complexity of business requirements, commercial priorities and supplier diversity
- Automation of routine tasks
- Upskilling on commercial platforms (e.g. SAP Ariba).
Change can bring great opportunity
Changing the way things are done can feel daunting, especially at scale. But by challenging established processes and embracing new ways of working, significant savings and enhanced efficiencies are achievable for commercial teams working across government.
To find out more about how we are helping Government's commercial function discover the power of 'Yes', please get in touch with Sarah Ashley or John Thompson.
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