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Redefining the rules of engagement?
24 November 2017
Baskar Sundaram, director of Baachu Works, explains why the next-gen CCS framework will be the driving force of public sector FM spend in the years to come
Public sector FM spending in the UK – comprising of one-third of the total FM spend – is a marketspace which historically has helped several FM players develop considerable scale. The majority of this contracting spend is routed under the current framework agreement ‘RM1056’, governed by Crown Commercial Service (CCS) – an executive agency sponsored by the Cabinet Office. As the current framework is due to expire in 2019, CCS has initiated groundwork to shape up its successor.
The pan-government collaborative framework is set to become the foremost route for public sector FM spending in the years ahead, covering organisations such as central government departments, local authorities, schools, NHS, etc. The uniqueness of the public sector FM marketspace is the sheer size of its opportunities which has even reached hundreds of millions of pounds historically. The size of the pie – c.£40bn as of 2015 – is also forecasted to grow at a moderate pace and reach c.£45bn by 2019, despite economic and socio-political headwinds. The next-gen framework is expected to cover c.60% of public sector contract and is split into two phases:
• Defence specific - eight suppliers to be selected
• National FM market (£8bn - £11bn, including defence specific) - 25 suppliers to be selected
• Localised FM market - 125 suppliers
• OJEU will be released in November 2017
• Awards in April 2018
• Phased roll out for one year
• Integrated services (£25m-£75m) - five suppliers
• Security services (£0bn-£1bn) -10 suppliers
• Linen and laundry (£40m-£50m) - 10 suppliers
• Catering services (up to £250m) - 20 suppliers
• OJEU will be released in March 2018
• Immediate roll out
National and local suppliers have historically competed ferociously just to be the part of the framework. But despite it being the dominating route for procurement, stakeholders have voiced their concerns time and again. Lately, in a few contracts, high bid costs and complex operating principles even forced large companies to pull out of the opportunities.
CCS has been gathering inputs from both buyers and suppliers to address their concerns in the new framework. Its survey revealed a few astonishing facts, including the government being increasingly seen as not a customer of choice by the market and that buyers are concerned with inadequate competition.
The newer version is likely to feature an improved service lot categorisation; a fit for purpose commercial model suitable for large and small packages; and potential for direct contract award for lower value banded services. The government has also mandated inclusion of social value considerations into evaluation models (inclusion of SMEs, apprenticeships, etc.).
Despite challenges, this arrangement - as a government policy - will continue to tighten hold over public sector spending in the long term, and buyers will have no choice but to get the best out of the CCS framework.
Is CCS for you?
Government’s mandate to bring social value and innovation to the table for bidding would drive a collaborative approach within the supplier community. Large FM players will be hunting for experienced local players to find ways to impact the local economy and demonstrate social value. Furthermore, suppliers of chemicals, laundry, pest control, waste management, hygiene, etc. will also have the opportunity to demonstrate their innovation led proposition to large FM players.
While the final framework would include 25 national and 125 local suppliers, the need for collaboration will benefit a considerable number of FM products and services providers.
The framework’s in or out condition also makes it critical for suppliers to decide whether leaving aside the public sector FM pie is in the best interest of their organisation over the long term, especially when socio-political issues such as Brexit and migration are looming over a fragile economy.
While challenges in the current framework are overwhelming, CCS’ quest for improvement and a localised approach towards contracting and social value generation are likely to make it attractive for both buyers and suppliers. With the government planning to rationalise procurement policies and costs, going forward the CCS framework may be the only route to tap sizeable contracting opportunities. The framework is likely to revise the market dynamics, impacting all stakeholders.
Collaborative capabilities, localised supply chain, innovation and social value generation will be the key competitive propositions to enter the new framework. To know more about how your organisation can build or measure such differentiators, please get in touch at email@example.com