Gareth Rhys Williams Reflects - Part 3

This is part 3 of my interview with Gareth Rhys Williams, the UK government Chief Commercial Officer (GCCO) for 8 years until this summer. Part 1 is here and Part 2 is here.

Vendor management, commercial tools and techniques

Another indisputable success during the Rhys Williams period has been the various published ?‘playbooks’ that focus on the more difficult sectors and challenges, such as construction and outsourcing (now renamed ‘sourcing’, as it includes insourcing issues). He is particularly pleased that the supplier side has contributed to the material, and multiple industry CEOs endorsed the construction playbook, for instance. In fact ‘the industry group Build UK asked if they could use our playbook for private sector to private sector contracts!’ ?

KPIs for major contracts are now published, another major innovation and step forward. ‘14,000 KPIs are published and 83% are now met.? It’s important that the public and media can see this, and we can see how contracts and vendors are progressing. It’s good to see the successes but even more so to see where things aren’t going so well’.

So this is also a tool to drive more competition – ‘other suppliers can maybe see where a rival is struggling and think about positioning themselves to win that contract when it next comes to market’.

Now that is an interesting aspect of transparency that I confess hadn’t occurred to me.? KPIs also ‘force the internal client to think about what they really want and need from the contract and the supplier’. Rhys Williams is not impressed with what we used to see too often in contracts - a vague statement around the parties agreeing in good faith to develop KPIs at some stage. ?‘What sort of rubbish is that! No, you have to nominate and publish your KPIs and someone will spot if it’s a nonsense KPI’.

Guidance for Ministers now in place includes advice on how to specify KPIs and this is key ‘to hold the vendor to account. The number of challenges and disputes has fallen, and the commercial function is delivering ￡3.5-4.5 billion in savings per year’, Rhys Williams claims. (We didn’t get into a discussion on savings methodologies, I should say).

But perhaps unlike some predecessors, Rhys Williams is far from being a ‘beat up the vendors’ person. His earlier career including in the automotive industry has informed this view, as he saw the downsides of trying to ‘grind your suppliers into the ground’.? ?He is proud that the public sector vendor base has become more profitable under his watch, with fewer company collapses.? He spent time talking to investors, emphasising that ‘we’re not here to drive prices down. ?Suppliers should want to win government contracts, and we want our suppliers to make a fair profit, to be appropriately profitable. We want vendors to be sustainable, to invest.’? He also takes some credit for educating Treasury that ‘ if you push all the risk onto suppliers and they go bust, the consequences are often severe’!

We digressed somewhat onto his new role and the UK’s record on major capital programmes. HS2 is of course the biggest disaster of recent years, and one issue has been a lack of clarity from the beginning about the exact purpose of the new lines. Was it capacity or speed and reducing journey times? A ridiculous percentage of the cost has arisen because of that desire for speed for instance – the last few minutes off the London to Birmingham journey time has cost many billions. But now the claim is it was always about route capacity, really.

Letting contracts before the design was clear is another cause of overspend. ‘Actually, Highways has a fantastic record on delivery to time and cost’, Rhys Williams says. ‘Our people work out what the contract is about before the process starts. They rarely get stalled because something unexpected comes up – ground conditions for example. Time spent up front pays off, but we tend to rush into things in this country’. In his private sector career he saw how efficiently shipyards in South Korea work – ‘but they spent three times longer on design, planning the materials flow and so on, than we did’.?

Coming back to the playbooks, he is keen that they capture learnings from unsuccessful projects as well as the better examples. ‘We test the playbook against issues that have come up in projects. Everything, including the training, is reviewed annually to keep it current, so it doesn’t get stale’. Presumably there is a lot of HS2 learning going into the system for the next iterations!

Sustainability (and Frameworks)

We moved on to ‘sustainability’ issues next. Rhys Williams highlights four issues where progress has been made in terms of these wider questions – ‘modern slavery, prompt payments, social value and climate’.

The UK government was the first in the world to stipulate that suppliers bidding for major government contracts must have a company-wide net zero policy and plan, available on their website. ‘There are around 3,000 companies that have done that now, and something like ￡300 billion of contracts let to firms with these statements.? I think that has genuinely changed things and lots of other governments have been interested in what we’ve done’.

95% of companies have welcomed this, as it levels the playing field for everyone. But could we have gone further, perhaps introduce it for smaller contracts?? Or interrogate the plans a little harder, look at the actual trajectory towards the target?

Rhys Williams talks about how existing data collected by BEIS (Department for Business, Energy and Industrial Strategy) has been used to report on prompt payment performance of suppliers. That has worked well particularly for smaller firms.? Turning to net zero, scope 1 and scope 2 emissions data is reasonably available via BEIS too but scope 3 is more difficult. ?So this makes it hard to analyse company performance against the target, Rhys Williams says.

He would like to go further but “we need better and standard global definitions to move forward on that, so we might eventually get emissions data reported as we do with calories on food packaging, but that needs global agreement’.? This isn’t something the UK government commercial function can simply resolve itself. But Rhys Williams says, ‘I do think eventually we will see carbon tariffs or similar, and what we have done helps firms prepare for this. We do also have to be careful that we don’t create barriers to entry for smaller firms’.

Then there are the social value requirements that often form part of supplier selection for individual contracts. Rhys Willaims thinks use of these criteria ‘is brilliant’.? ‘The public sector has a reputation for buying the cheapest product that meets the spec. Using measurable social value helps to differentiate between vendors and proposals, helps get us away from price being the main factor’.?

Again though there is a danger this could rebound on smaller firms. ‘When metrics proliferate it can accidentally make it harder for SMEs to compete. Large suppliers will naturally be doing more social value-type activities just because of their size and because they want to be seen as doing the right things, so we have to be careful in how we assess this’. ?Making social value linked to the specific contract helps avoid this, and the new NPPS (National Procurement Policy Statement) should help define the categories of social value that are prioritised.

Rhys Williams also believes the Procurement Act will help contracting authorities incorporate these issues in more creative ways. ‘You can design your own process under the new regulations, and as long as you follow the process you have written down, that should be fine. That includes how you want to get social value delivered.? The central team will be producing templates so everyone won’t be starting from scratch, but they won’t be prescriptive. We don’t want everyone re-inventing the wheel, but you don’t have to use them and we expect people to amend and develop the templates’.

Another procurement tool that has become somewhat controversial is the use or over-use of frameworks. ‘There’s nothing wrong with frameworks, particularly if they are dynamic’ Rhys Williams says (the Act opens up options for more flexible frameworks). AI could be useful here, he thinks, as ‘there are too many frameworks, we need to identify the best ones, encourage buyers to use those. Single supplier frameworks are generally not good, and we’re banning ‘pay to play’ arrangements’.? That’s certainly a positive development.

Rhys Williams is happy generally with where the Act ended up. ‘I think it has been universally welcomed. We had the highest ever number of consultation responses, a lot of thought went into it. ?I might have gone for more transparency, but there is a burden there. And once everything is working and systems are integrated it will be easy to change things like the levels where transparency requirements kick in’. ??

?