Crown Commercial Service to stop charging departments for its services

Central procurement agency announces that it is to phase out reliance on managed service fees


The Crown Commercial Service is to hike its supplier levies and phase out charging departments for its services. Image: Anthony Devlin/PA

By Civil Service World

13 Jul 2016

The civil service's central procurement body is to stop charging individual departments for its services as it rethinks its funding model.

The Crown Commercial Service was set up in 2014 with the aim of driving down the cost of buying in goods and services by using the combined commercial clout of the whole of government. 

The body, set up as an executive agency of the Cabinet Office and run as a trading fund, took on several functions from departments when it was set up, including managing supplier relationships, data analysis and category management. 


New Government Commercial Organisation to employ "hundreds" of senior commercial staff on better pay and terms
Cabinet Office must "raise its game" in challenging departments over commercial performance – public accounts committee
Transforming Public Sector Productivity


In exchange for that end-to-end service, the CCS charges departments a managed service fee, which contributes to its income alongside levies imposed on suppliers.

But the latest business plan published by the agency says the CCS is now looking to change its funding model so that, over time, higher supplier levies replace the burden on departments.

"We will begin to phase-out the current system of charging government departments a managed service fee, instead using supplier levy income to fund our operating costs," the report says.

"We will start introducing marginally increased percentage levies."

According to the document, CCS raised £15.5m in 2015/16 from managed service fees. But the 2016/17 plans will see that fall to £11.4m. Meanwhile, levies imposed on suppliers will rise from the £49.1m racked up in 2015/16 to £58.7m in its 2016/17 budget.

The CCS says it will "re-align resources" to support the move to the new model, while the business plan also reveals that CCS has been asked to help central government departments make between £240m and £330m in savings over the year. It has also pledged to deliver between £200m and £250m in savings across the wider public sector.

The new business plan does not make clear the relationship that CCS will have with the newly-established Government Commercial Organisation, which has been set up to directly employ senior commercial staff across Whitehall.

A prospectus for the GCO, seen by CSW, says that work "is still continuing to determine the best funding model" for the new organisation, which will also oversee commercial training and accreditation. But it says the intention is for GCO to be "wholly" financed by recharging departments for its services.

The CCS is now being led by chief executive Malcolm Harrison, who has stepped into the top job following the departure of Sally Collier. Collier led the organisation since it was set up, but has now moved on to become the chief regulator at exams watchdog Ofqual.

Read the most recent articles written by Civil Service World - 'What keeps you awake at night?': A guide to the government risk management profession

Share this page