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Focus On Series


Commercial Skills for Complex Government Projects

UKNAO Commercial Skills for Complex Government ProjectsAudit Summary

Publication Date:
November 2009

Audit Office:
United Kingdom National Audit Office

Link to full report:
http://www.nao.org.uk/report/commercial-skills-for-complex-government-projects/

Audited Entity

  • Office of Government Commerce (OGC)

Audit Scope and Objectives

  • The report examines the current level of commercial skills and experience in Government, and considers whether the OGC and departments are being successful in improving them.

Audit Criteria

  • Not publicly available

Main Audit Findings

  • Departments continue to experience a shortage of staff with the necessary commercial skills and experience to successfully deliver complex projects.
  • Government departments have attempted to fill this commercial skills gap with interim staff and advisers. Whilst both interims and advisers can make a valuable contribution, particularly those with highly specialist skills, an over reliance on them can lead to: higher project staff costs; departmental staff failing to take proper responsibility for commercial decisions; and a loss of commercial knowledge when the interims or advisers leave.
  •  Departments have significant weaknesses in a number of the commercial skills critical to the delivery of complex projects. The shortcomings identified by NAO and Public Account Committee reports have been confirmed by the OGC’s Procurement Capability Reviews. The OGC’s reviews found that commercial skills were generally weak across all 16 central government departments.
  •  Pressure to reduce public spending and the frequency with which commercial staff move, both impact on the commercial experience of project teams. Senior Responsible Officers on complex projects believe their inability to pay market rates affects their ability to recruit experienced commercial staff. Rotation of staff can cause commercial knowledge to be lost to a project and prevent Government getting best use of an individual’s commercial expertise.

Audit Recommendations

Departments should by the end of July 2010:

  •  Put in place project assurance processes that will identify commercial skills gaps in individual project teams; and
  •  Produce an analysis of the commercial skills required across their future complex project procurements, and identify the contract management skills that are required to prevent value for money being eroded during the delivery phase of complex projects.

The OGC and departments should by October 2010:

  • Use these plans to establish an optimal cross-government commercial staff plan; and
  • Work together to make it possible for commercial staff to be seconded quickly between departments, addressing barriers preventing this. The OGC should act as a broker of such secondments where they are in both the government’s and the individual’s best interests.

As a key part of the cross-government staffing plan, the OGC should explore how to establish a cadre of experts that can be deployed if a project runs into difficulty.

Departments should:

  • Ensure adequate budgetary provision for individuals who have the commercial skills to support complex project teams. Departments should be flexible in determining the number, calibre and pay of the commercial staff needed to ensure successful project delivery.

The OGC should:

  • Set out guidance on the factors to consider in the recruitment of, and remuneration for, appropriately skilled commercial staff.

Departments should:

  • Produce strategies which set out how they intend to develop, retain and fully utilise commercial staff in critical posts on projects. These strategies should be produced in line with the recommendations set out in the OGC’s Building the Procurement profession in the Future. The strategies also need to investigate other options for improving the retention of commercial staff, such as allowing project staff to be promoted in their current post.

The OGC and departments should:

  • Establish a comprehensive set of best commercial practice and standard approaches to be applied across government wherever appropriate. Its adoption should be supported with guidance, training events, and access to experts. This work should draw on the contractual standards already developed for private finance projects, information communication technology, and construction.

The OGC and departments should further develop information sharing on:

  • Learning and development opportunities; and
  • Individuals’ experiences of interacting with different private sector companies.

The OGC should:

  • Collect data from commercial directors, to assess the impact of OGC’s commercial skills initiatives against their objectives. This could include tracking the impact that initiatives have had on the future retention of commercial staff, their career progression, and confidence in dealing with commercial challenges; and
  • Establish by October 2010 a performance measurement framework, with key  performance indicators for commercial skills capability across government. The OGC should coordinate the collection of relevant data from departments and make use of existing sources such as the Government Procurement Service annual survey and PCRs.