9. The original business case was based on the Crown Commercial Service (CCS) centrally managing £13.4 billion of purchasing on behalf of all 17 departments over four years, generating £3.3 billion of net savings. But in practice tensions built up quickly with departments and the transition programme stopped twice; in May 2014 and again in 2015. By October 2016, CCS managed only £2.5 billion of spend on common goods and services on behalf of 7 departments. Furthermore spend from the wider public sector in 2015-16 through framework contracts was £6 billion against the original target of £7.5 billion.10
10. CCS told us that departments supported the concept of central buying but were not confident in the services they were signing up for. CCS had been badly designed from the start and the transition process had also been executed poorly. For example, some activities, such as the intelligent client function, which should have remained with departments, had been transferred to CCS. CCS also considered that the categories of common goods and services to be transferred to CCS had not been specified correctly. For example, jet fuel was labelled as a common good while in reality this is a highly specific product.11
11. The Cabinet Office told us that CCS had had different arrangements with each department and had focused heavily on increasing the volume of transactions transferred from departments instead of assessing what activities should be carried out by CCS. It also believed the Civil Service did not have the experience to transfer procurement from departments to CCS at the pace that was set out. Following an operational review in 2016, CCS has now redefined its operating model, but still needs to set out how it will work with departments.12
12. The Cabinet Office believed that central buying could generate savings and value by getting more volume through the centre. CCS supported this and told us that on average it could generate 10% savings on common goods and services. The Cabinet Office told us that in 2015-16 CCS helped departments to save £521 million against a 2014-15 baseline and in 2014-15, it helped save £1.9 billion against a 2009-10 baseline.13
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10 Qq 2, 26, 57, C&AG report, paras 1.23, 1.24, Figure 7 and Figure 10
11 Qq 12, 13, 14, 15, 16, 17, 19, 24, 58, 59