Ways The Commercial Function Can Support Central Government Priorities

by 4C Insights | Jun 10, 2022

Since joining 4C last year, I have been asked on numerous occasions on what my thoughts are on the focus and direction that central government take going forward, and how does commercial support this?

When I was first asked this, I thought “that’s easy!”, but as I started to answer with one key focus area, I thought of another, then another and so on. People think that now the pandemic appears to be over, it will be back to a simple, BAU life. The truth is it’s far more complex than that and there is no simple BAU life in government.

Right now, we have a very complicated mix of factors (often competing) that central government are having to face. All of these have a strong influence over which direction to take and the scary thing is, these are just examples, not the full list:

Net Zero and Social Value Strategies and each departments contribution to its delivery. With so much of Governments work delivered by 3rd parties, there is a need to ensure robust strategies are in place and delivering against the targets.
Handling Covid 19 aftermath – huge debts, continued scrutiny, huge stocks to manage, future operating models around PPE, Test and Trace and Vaccinations to define and execute.
Raising Inflation, increased fuel prices leading to increased cost of living and general goods and services plus fighting off a looming recession. As I write this, there has been an announcement that No. 10 has a plan to tackle the cost-of-living crisis, no doubt putting more strain on the coffers.
The annual Spending Review has capped resource levels across many departments leading to recruitment freezes. Overlapping this is the news reports of a reduction of 91,000 FTEs although it’s not clear on how this will be delivered, which will cause confusion and anxiety with many Civil Servants.
Numerous vacancies across all functions, conflicting with Commercial and HR edict around the reduction of Consultants & Contingent Labour as leaders try to find a way to plug the gaps and continue to deliver on their objectives.

My time as a Civil Servant in the Complex Transactions Team, working across all departments as well as having a leading role in the COVID response, has shown me that the Government Commercial Function (GCF) will be front and centre to all of these strategies, objectives and issues. In all of their interactions with internal and external stakeholders, Commercial Officers will be wrestling with how to influence existing and new Suppliers in contributing to these initiatives:

Net Zero and Social Value elements to contracts. All through the commercial lifecycle, Commercial Officers will be trying to figure out how to incorporate these requirements into their contracts in terms of how to evaluate strategies as part of a bid response and then how to measure and track the supplier’s contribution to the targets and have confidence that it’s not just words to satisfy a bid evaluation.

Value for Money will always be a central objective in all commercial activity – but many confuse this with cost reduction and a race to the bottom on fees, with an impact on quality downstream. Departments will be looking for savings for sure, however, ensuring the right value for the services being delivered is going to be key, and the up-front service delivery model definition and associated should cost modelling is going to be a key activity. Contract management and ensuring up front savings aren’t eroded will be a key factor too.

Talking of Delivery Models (DM), Commercial will need to support the policy teams in the design of the DM for their services and they need to be cognisant of whether the internal resources have the capacity (given caps, freezes and reductions) and capability to deliver over the life of the contract. This will then need to feed into the Business Cases and subsequent procurement activity, and of course – then be managed!
As part of reducing commercial risk and ensuring resilience in the supply chain, Commercial Teams were already looking at disaggregating contracts as set out in the Sourcing Playbook through the Delivery Model Assessment (DMA) process. The pandemic has brought a new angle to that resilience and more of that will be explored by my colleague Brett in a later blog, so I won’t steal his thunder.