The management of procurement carries a responsibility to deliver goods and services which support the delivery of public services with the best possible value for money. Appropriately managed, the uptake of innovation can achieve a number of benefits, such as accelerated technology adoption, support to SMEs, improved market stimulus and improved performance against the wider procurement objectives.
We recognise that such changes can produce better solutions at lower cost and this document sets out the policy and plans to inspire innovation throughout the procurement process within HMRC.
HM Revenue & Customs (HMRC) are responsible for the administration of the UK tax system. We make sure that the money is available to fund the UK’s public services by collecting taxes and duties as laid down by Parliament.
We are responsible for ensuring that money is available to fund UK public services and to help families and individuals to receive targeted financial support. We are committed to closing the tax gap, ensuring our customers regard our service as even-handed, accurate and based on mutual trust and respect. We also want to make it as easy as we can for you to get things right. In the current financial climate this takes on an even greater importance.
Within HMRC, the Commercial Directorate runs a centralised purchasing function and is responsible for, or has influence over, all commercial arrangements covering the Department's £1.8 billion annual external spend. Our key aim is to support the Departments strategic objectives whilst maximising value for money in procurement through our strategic policies and strong customer and supplier relationships.
As Head of Profession, HMRC's Commercial Director owns the Innovation in Procurement Plan (IPP) on behalf of the Department. Our aim is to create a strong, shared culture which engenders, encourages and rewards the implementation of innovative solutions which support our Departmental Strategic Objectives. Through innovative thinking, our goal is to produce better solutions at a lower cost, without compromising customer service, than would otherwise be achieved without change.
This plan supports and complements existing Departmental and commercial plans and our strong view is that innovation is not ‘an add’ on to our duties, rather it forms part of our business as usual activities that maximises value for money and helps to drive forward operational performance improvements. We will do this in the following priority areas:
Procurement innovation is a strategic aim that complements our Corporate Responsibility agenda and the Department's continuing drive to understand total cost of ownership, achieve value for money and lower costs of trading. HMRC intend this IPP to be the vehicle to drive innovation in the delivery of goods and services and realise added value from procurement across the Department.
There are three areas in procurement where innovation will be developed over the next two years:
Supplier Relationship Management (SRM) will be used to encourage and develop innovative ideas. HMRC will work to assist the supplier to develop and implement relevant innovative ideas that will allow; risk management, service delivery, improvement in quality, increase Value for Money and development of a sustainability agenda.
Monitoring innovation from our contracts is already built into our processes, through the use of our eCommerce tool. This tool helps the business to assess our supplier’s performance, whilst also allowing them the opportunity to provide feedback on our own operations.
We will continue to work closely with our key suppliers ensuring there is engagement at a strategic level between the supplier, business area and procurement. This approach helps to ensure product/service development and innovation.
HMRC will look to use the knowledge of the wider business environment. This will be captured through our approach to category management in which dedicated managers are appointed to the major spend categories and develop deep knowledge of the supplier landscape within those categories.
If a firm who does not currently supply HMRC has an innovative idea that could provide a benefit, we will actively look to harness them through our category management approach.
We will continue to develop our people, processes and our procurement tools in order to influence improvements in quality, efficiency and value for money throughout the organisation.
HMRC already utilises a fully integrated eCommerce tool for all aspects of the procurement process, which is already having a direct impact on value for money as eSourcing activity has reduced procurement timescales and eAuctions have provided savings. For greatest effect we have ensured these tools are embedded within our processes and our staff have received the appropriate training.
Whilst we believe HMRC has already demonstrated the ability to procure innovatively (see appendix A for our case studies), we are conscious that we must not only take advantage of innovation when it presents itself, we must continue to work actively to encourage it amongst our stakeholders and suppliers.
Through this we will:
Using this information we will look to drive continuous improvement year on year, ensuring innovation stays at the forefront of our procurement processes.
HMRC is committed to the professional development of people involved in procurement, commissioning and contract management and ensuring that they are properly qualified and skilled to do their job and have continuous professional development.
Key to this will be an active participation in developing professional procurement skills across Government working through active membership of the Chartered Institute of Purchasing and Supply and the Government Procurement Service. This will help provide the input to develop procurement skills across our commercial landscape to support procurement initiatives and meet the specific needs of buyers at all levels.
HMRC will look at how best to help our stakeholders understand the potential for procurement and innovation in order to ensure the effective delivery of the Department’s procurement opportunities.
This plan will be communicated to all staff and embedded in the operations of the Department. This will be achieved through, for example:
HMRC views this IPP as a tool to facilitate a strategic approach to the procurement of innovation across the Department. To ensure this plan remains relevant, HMRC is committed to the following actions:
New requirements are usually advertised in the Official Journal of the European Union (OJEU), national or trade press as appropriate.
HMRC is committed to monitoring the implementation of the IPP and reporting on progress and what is achieved. In addition to publishing the IPP and the updated versions of this, HMRC will monitor progress on a monthly basis and produce a summary report on its performance in meeting the objectives of the IPP on an annual basis.
HMRC is also keen to receive feedback from suppliers and stakeholders on this Innovation in Procurement Plan, and any other aspect of the Department’s procurement rules and processes. This will feed into the six monthly reviews of the IPP.
Streamline ++ is a continuously evolving VfM initiative that aims to re-engineer HMRC’s print and postal services to deliver quality communications with our customers at the right price. The ++ programme combines the standardisation and rationalisation of communications with demand management activities to improve as well as reduce outputs. The aim is to deliver sustainable efficiencies and cash-releasable savings at a pace that reflects the Government’s austerity challenge to the public sector. Since it’s inception in 2008-09, ++ has delivered print and postal savings totalling of £58m.
Delivery of these significant operating efficiencies and savings is underpinned by light but rigorous governance, involving the development of quality management information, and a comprehensive programme of internal and external stakeholder engagement. Our suppliers have worked with us to generate ideas for improving their and our performance, and contribute to the more detailed metrics required to form a more accurate picture of HMRC’s print and post activities.
Postal savings have been achieved by setting out our priorities in a joint three year strategic plan, developed in partnership with Royal Mail, with the aim of maximising mail discounts on bulk outputs. A concerted drive on bulk mail has seen the proportion of undiscounted mail reduce from 60 per cent in 2007-08 to 6 per cent in 2009-10. The indications are that discounted mail remains to be fully exploited by central Government, and HMRC will lead on a cross-departmental initiative to deliver efficiencies across central Government.
Recognising the criticality of high-quality management information in procurement,
HMRC has introduced through Emptoris a fully integrated eCommerce toolkit
- a set of collaborative web-based tools which enhance the supplier management
process from sourcing through to performance management, enabling a more strategic
approach to procurement activities.
The ‘Spend Analyser’ is one element of the toolkit – a database of spend information which is extracted from the ERP system. Transactions can be analysed by a wide range of parameters such as supplier, category, cost centre, business unit etc. to identify management information which is then used directly in procurement strategies and discussions with major suppliers. Better deals through more accurate bulk-buying provide one example of the benefits.
The eSourcing element of the toolkit provides the facility to conduct online
procurement competitions including eAuctions where suppliers can submit bids
in response to specific requirement. This is a very transparent process which
avoids the need for individual negotiation with suppliers.
HMRC has also adopted the contract and performance management elements of the toolkit. This is also a transparent process in managing the life of a contract, creating efficiencies for all parties and helps to ensure continuous improvement.
Emptoris provides our commercial team and the wider HMRC procurement community with the clear benefits:
Our approach in adopting the full approach in utilising the toolkit is we believe leading the way in government and provides a step change in commercial capability.
This innovative solution we believe is not only unique amongst Government but is also helping to shape the market in the provision of a closed loop solution of public sector paper waste being recycled into Government branded paper.
Through working in partnership with a supplier we have successfully trialled the closed loop concept and the paper has been well received and withstood rigorous machine testing at a paper mill.
Whilst working with our supplier on this trial we have also reviewed our processes to streamline our restricted paper waste arrangements and assure collections were only received when waste bins were full. This has helped to reduce our environmental impact whilst also achieving savings of approximately £65k per annum.
All Departments currently report against the Defra Quick Win standards for copier paper which mandate copying and graphic paper must have 100 per cent recycled content, to include only genuine recovered fibre. The concept of using public sector waste to produce a bespoke A4 copier sheet far exceeds this mandate.
CAESER (Corporate Assessment of Environmental, Social & Economic Responsibility) an innovative on-line assessment tool is being collaboratively used in both HMRC and the Home Office to assess the extent to which suppliers are promoting diversity, equality and the environment in the way they operate their businesses.
This approach has led to over 400 of our key suppliers having their performance against these areas benchmarked with implementation plans being set as appropriate. We believe this is the first time within Government an initiative this size has been undertaken.
Carlson Wagonlit are HMRC’s provider of travel services, including rail and air travel, hotel bookings, and venue-finding.
Previously, the business travel-booking process had a number of flaws, such as the inability to book low-cost rail fares. HMRC recognised the need to address these flaws, and has consequently implemented a new, self booking tool in association with Carlson Wagonlit.
This tool enables employees to procure their own travel arrangements online, significantly reducing both time and costs. It has high flexibility, and is simple to use. The majority of employees today also feel more comfortable booking through online services where different options are easier to present.
Through introducing a new low-power setting for our computers we have helped to develop green IT solutions whilst also significantly cutting our energy bills.
The system, called Wake on LAN, automatically puts computers into the new mode shortly after users have logged off – saving energy and money as well as cutting down on harmful greenhouse gases.
The machines will then be woken up during the night to receive software updates before returning to low-power mode.
Through this innovative approach we will dramatically cut carbon emissions and the Department’s energy bills.
By 2020, HMRC must slash its carbon emissions by 30 per cent – relative to 1999-00 levels – which is a reduction of just over 39,000 tonnes of carbon dioxide per year.
Wake on LAN should cut our carbon dioxide emissions by 12,000 tonnes per year.
Recognising an opportunity to not only provide an innovative solution but to also contribute to our sustainability objectives we have taken a radical look at how we manage our highest road mileage users.
We have invested in 89 low carbon vehicles for our staff to use. Through this we anticipate savings to be in the region of: