The Department appointed a commercial director in 2002 who has led the development of a corporate commercial strategy that applies to the Department for Work and Pensions, its agencies and associated non-departmental public bodies (NDPBs). The strategy sets out the vision, values, objectives and targets for the procurement function and has a general principle of continuous improvement. With board level agreement the strategy was strengthened in 2004 to respond to the challenges for departmental procurement under the efficiency review and again in 2006 to support the Department in delivering its services within budget allocations under the comprehensive spending review 2007.
Under the commercial strategy, the Department has delivered significant improvements to its procurement capability. These include:
(i) The first overall reduction in DWP commercial spend—in 2005-06 spend with external suppliers reduced by 3 per cent. to £4.161 billion;
(ii) An increase in procurement value for money gains reported to the Office of Government Commerce from £326.5 million in 2004-05 to £471 million in 2005-06. The improvement derives from significant renegotiations of our IS/IT commercial relationships with EDS and BT and from improved procurement and contract management performance across other supply categories;
(iii) Board level engagement with our top suppliers to manage the relationship at a strategic level, identify ways to reduce mutual costs and develop a shared vision of future goals and objectives;
(iv) Improved professionalism—the proportion of professionally qualified staff in the Department’s 634 key specialist procurement posts exceeded the 75 per cent. target by December 2005;
(v) Completion in September 2006 of a procurement modernisation programme that introduced category management, supply chain management and integration, benefits realisation and improved commercial intelligence. It also established better links between procurement and business and finance staff to identify ways to optimise business demand and specifications for goods and services. A new operating model, which will result in a 22 per cent. smaller and more highly skilled procurement organisation, will be in place by April 2007;
(vi) The launch in December 2005 of a DWP Sustainable Procurement Strategy with related targets to ensure the Department uses its purchasing power and market influence to further economic, social and environmental policy initiatives; and
(vii) Successful lead of collaborative procurements including a public sector-wide travel booking service and a Government-wide telephone interpreters framework.