At a recent Civil Service World round table on travel procurement, participants considered how departments can support centralisation of spending in this notoriously emotive area. Colin Marrs reports on a moving debate.

David Cameron knew it when he revamped the ministerial code to reduce the use of government cars; Tony Blair learnt it when he was forced into a rubber-burning U-turn over the fuel duty escalator in 2000; Lin Homer has discovered it after joining the transport department this year – the fact is that people have surprisingly strong feelings over the issue of travel. So when civil servants met to discuss the process of centralising travel procurement at a recent Civil Service World round table, held in association with American Express, it wasn’t surprising that many of them highlighted the cultural changes which will be needed if this strand of the Efficiency and Reform Group’s procurement reform is to be a success.

Unlike other areas of spending, staff are well used to tracking down the best transport deals in their personal lives, and may want to transfer this experience to their work lives. “People in our offices don’t think: ‘I don’t like this computer or desk, so I will buy my own’ – but they do with travel,” said Terry Plumer, travel and logistics manager of the corporate procurement group at the Foreign and Commonwealth Office. Other attendees agreed that staff often attempt to beat quotes from departmental travel and management companies (TMCs) by doing their own research. “When you have devolved budgets, people think it is their money and want to use it as they see fit,” said Plumer.

Obviously, civil servants seeking to find the best deals on work travel have good intentions. But Andrew Buckley, vice president of global product management at American Express, pointed out that comparing quotes from a department’s travel desk with those sourced online is often unfair. Others agreed with his view that there’s often a valid explanation for why TMC prices are often higher than those available online. Critics of TMC pricing are often “taking a headline figure that has no flexibility and maybe a different, less popular, travel time”, said Buckley. “The end user just thinks: ‘You are more expensive than Expedia and we are being ripped off’.”

Because of its familiarity and high visibility, travel procurement will be a good indicator of success in the wider agenda to centralise procurement of key commodities, suggested Julia Painter, head of procurement at Ordnance Survey: “Because it is so emotive, if you manage transport successfully, it is a very big win,” she said.

How is the journey going?

Currently, departments purchase travel and accommodation independently – though they can make use of a number of frameworks provided by government procurement agency Buying Solutions. Last month, Buying Solutions issued a pre-qualification questionnaire which indicated that it plans to replace the existing framework agreements for central government with two direct contracts for travel services. One contract will focus on departments with largely domestic requirements; a second will focus on those with a higher level of international travel. TMCs will be allowed to bid for both contracts, but will only be allowed to win one of them. Shortlisted TMCs are expected to be invited to tender this summer, with the new arrangement in place later this year.

When delegates met, these reforms had not yet been announced; but the decision to appoint just two TMCs would probably have garnered support from Buckley. Most American Express clients have one or two TMCs, he said, rather than a plethora; this makes data much easier to collate. Ensuring that the government can use two TMCs, though, will encourage an element of competition to keep prices low.

Plumer, who had been involved with supporting the central procurement team directly, explained that the split between domestic and international contracts (already anticipated at the time of the round table) was intended to address the need to meet differing travel needs within a centralised procurement system. He also explained that before the central category team began drafting the tender, each department had been sent a questionnaire asking for feedback on their transport requirements.

Neil Griffiths, deputy director of procurement services at the Department of Health, suggested that although departments will no longer be directly responsible for buying travel, they should still make it a priority to engage with the central team to ensure contracts are fit for purpose. “Our role is to make sure that we give the centre the experience and learning that we have,” he said.

The ERG has made it clear that departments buying substantial amounts of travel services will have to make their purchases through its two contracts – a level of compulsion endorsed by some delegates. Traditional framework agreements – in which participation is optional – can’t guarantee enough trade to realise economies of scale, Griffiths observed. “With frameworks, the supplier can’t be guaranteed a market,” he said; they may increase prices from those given in the original agreement if turnover is disappointing.

There was consensus, however, that appointing just two TMCs would almost guarantee that both will be major companies. “It is likely to be a bigger company because of the sheer volume you are putting out,” said Plumer. This prospect caused a degree of nervousness in the room, with some expressing worries that the larger firms have not provided good value in the past – particularly for smaller departments.

Taking staff on the journey

Most delegates agreed that the new regime will only realise its potential if there are genuine sanctions for avoiding the system. John Belza, head of procurement and property services at the Ministry of Justice, took a hard line, saying: “It is reasonably simple to put in. You tell staff: ‘If you don’t buy it this way, you won’t get paid for it.’ If they were told that, they would only [buy elsewhere] once.”

Buckley agreed: in his experience, those companies that took a strong approach to mandating employees to buy through a central system did achieve savings; while those that took a softer line failed to reduce spending. “There is no halfway house,” he said. He claimed that when the Canadian government took a mandated approach to reducing travel spending, it achieved 9.1 per cent savings in the first year of operation.

Niall Mackin, vice president of UK sales at American Express, agreed that mandation is the norm in private sector travel procurement – and pointed out that policing is the key to ensuring the success of a mandated policy. “We have got great examples in the private and public sector, but also examples where a lack of policing leads to a disappointing outcome and ultimately, a lack of control,” he said.

Plumer agreed, but said that civil service job cuts make such policing harder; even before staff losses, accounting officers did not have the time to go through each individual item of spending. Others pointed out the importance of introducing a compliance process, management checks and careful communication in ensuring the success of any new policies. Micheline Baines, a CIO adviser at the Ministry of Defence, said: “People come and go in the civil service, so the rules need to be made clear as part of any induction process.”

The role of technology

Delegates also discussed the role of booking systems and technology in supporting the centralisation process. Mackin pointed again to the example of the Canadian government, where a single system provides an end-to-end travel-buying solution and helps to ensure a high level of compliance with the new centralised travel buying process.

There was agreement that some form of centralised IT system could help improve compliance and reduce costs, but Belza pointed out – to general agreement – that putting a new system in place would in itself be costly. He also suggested that channelling all access to the new contracts through a specified booking system could present a major barrier to take-up, as departments may have to buy and install that new system. Within the MoJ organisational family, there are “organisations with 10-15 people, spending just £10-15,000 each year on transport,” said Belza, warning that capital costs must be low. “It has got to be economically advantageous for these bodies to adopt a centralised system.”

Belza suggested that the costs of any new systems should be borne by larger departments. Plumer agreed in principle, but pointed out that existing organisational culture would have to be overcome to make it work. “We are in silos,” he said. “My responsibility is to the FCO. If I came to my bosses and said: ‘We are going for centralised travel and it is going to cost us a bit more than it would have done,’ I would be picking up my P45.”

Other concerns were raised, not least the patchy performance of government in delivering large-scale changes to ICT. Plumer said: “It is not easy. There are issues with making sure centralised systems can operate behind firewalls, and that the bandwidth can cope with a surge in demand at peak periods – particularly lunchtimes. It took us a year to install a system just for our own department.”

Reducing demand

The move to centrally manage procurement and contract management of key categories of spending will change the way in which departmental commercial teams work, freeing up time to focus on other more strategic procurement or commissioning issues. In the travel category, Griffiths suggested, departmental teams will have more time to focus on engaging with their organisations to reduce the demand for travel in the first place. This, most delegates agreed, will be crucial to achieving meaningful savings in travel spend.

“We are never going to eliminate the need for travel altogether,” said Baines, “particularly for discussions over secret and sensitive matters, but we could do a lot to bring the number of journeys down.”

Delegates mentioned webinars, tele- and video-conferencing as some of the key ways in which technology could help to bring down the numbers of government journeys. “This is where the real savings are,” said Belza. “We have got to think: ‘Why do you need to travel in the first place?’ There are many methods that we can [use to] communicate with people on the other side of the world.”

Asking ‘why do we need to travel’, suggested Pat Kelly – an adviser on information assurance at the Office of the Chief Information Officer in the Home Office – should start at the earliest possible stage. She mentioned the common practice of specifying the amount of travel required in job descriptions and adverts, and suggested that managers should be made to document how they arrived at that assessment – forcing them to really consider the need for travel, and possible alternatives, in a given job.

Policy to support procurement

Kelly’s suggestion indicated that achieving the required savings in travel spending won’t be a job for commercial teams alone. Departmental travel policies, which set out how people can travel and how they can purchase that travel, are often put together by HR teams. These will also need to change to reflect the evolving procurement environment, said Belza, adding that HR teams “have got to understand what we are driving at in terms of spending money”.

Would it, then, be a good idea for government to establish a centralised travel policy in support of the centralised procurement agenda? “Centralised policy is a good idea,” said Belza, but he added: “What I don’t like is the one-size-fits-all scenario. You should be able take out the bits that don’t pertain to your department. It goes wrong when we say that everyone has to squeeze into it.”

Griffiths agreed that such a policy would need to allow departments enough “wriggle room” to adapt it to their needs withoult losing its core aims. As an example, he said that sometimes it is cheaper to buy a first class ticket than a standard class one, so policies should not insist on an outright ban on first-class travel.

As well as getting travel policy right, Baines added, there will need to be good communications plans in place to disseminate and support those policies. This, she suggested, could prove problematic in a shrinking civil service as the number of communications professionals within departments is reduced. “We have got to put our money where our mouth is and communicate and raise awareness,” she said. “Putting a policy in place does not change behaviour. Without communications, you don’t get the message across.”

Procurement to support policy

The relationship between policy and procurement also works the other way: attendees discussed the need for government purchasers to support wider coalition agendas around climate change, for example, and the drive to give more business to small and medium-sized enterprises (SMEs). Belza said this interest in achieving wider social objectives makes a stark contrast with private sector purchasing, making comparisons difficult. “Comparing private and public procurement is like comparing a pizza to an apple,” he said.

He added that the big-business nature of the travel sector means that it will be harder to promote the SME agenda than in other purchasing categories. But, he said, it’s not impossible. “We need to be able to look at the second tier on the supply chain,” he said. “If we can’t influence the suppliers directly, we need to say to them: ‘Show me how many SMEs you’re working with’.”

Griffiths agreed, but said that the centralisation agenda means that individual departmental buyers will now have to worry less about this issue. “We should influence that, but it is signed off at the centre – they have taken on the risks and responsibilities [of aligning procurement strategy to wider policy aims]. The debate for us isn’t about whether the strategy is right, but about how we support it.”

Written by Colin Marrs