Transforming Government Procurement The Pan Government Energy Project

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Transforming Government Procurement The Pan
Government Energy Project

• LCE Workshop Monday 28th April

Susie Owen Energy Category Manager
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Content

• Transforming Government Procurement - Overview
• Pan Government Energy Project
• LCE Energy Project
• Savings Methodology

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Background Transforming Government Procurement

• Transforming Government Procurement (TGP)
  established January 2007
• Aim is to meet public demand for high quality
  public services
• securing VFM
• in a sustainable way
• Strands Include
• Collaborative Procurement
• Government Estate Transformation

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Background Collaborative Procurement

• 4 Pilots launched (April 2007)
• Energy sponsored by MOD
• Fleet sponsored by NHS PASA
• Office Solutions sponsored by OGCbs
• Travel sponsored by OGCbs
• Challenge to address the current procurement
  landscape and deliver savings.
• Organisations own all savings achieved through
  TGP

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The Pan Government Energy Project

• Current Landscape
• Electricity and Gas 3.25 Billion per annum
• 7 of UK total consumption
• 250 OJEUs for energy contracts over 2 years
• No common TCs
• No common requirements
• Multiple Channels to a few major suppliers
• 50 spend un-aggregated

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Energy Strategy Team

• 60 of total public sector spend represented

OGCbuying.solutions
OGC
Ministry of Defence
NHS Purchasing and Supplies Agency
Eastern Shires Purchasing Organisation (ESPO)

The Energy Consortium
London Centre of Excellence
Department for the Environment, Food and Rural
Affairs
Department for Work and Pensions
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The Pan Government Energy Project
Commercial Delivery Board
Reporting and Compliance
SSF
60 of total public sector energy spend
represented here
Collaborative Category Board
Programme Direction and Implementation
Energy Stakeholder Forum
Energy Strategy Team

Energy Strategy and Programme Plan
Implementation Projects
Aggregation OGC
Communications - MoD
Sustainability - DEFRA
Buying Risk Mgmt NHS PASA
Competitive Dialogue - OGCb.s
Supply Chain Reconfiguration OGC
Standard Terms Conditions - MoD
Emissions Trading - TEC
Public Sector Users and Suppliers
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Energy Category Strategy

• Energy Category Strategy approved January 08
• 15 recommendations focused on improving public
  sector energy procurement and energy management
• Designed to save public sector money and carbon
• Helping to meet CSR07 commitments
• Improving corporate social responsibility
• Estimated to deliver 300m savings by 2010/11

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How can we influence price?
Supplier Margin can be influenced by tendering
Margin
Process costs and tendering can be influenced
through aggregation
Cost of proc.
Wholesale cost on energy is influenced by time to
market. Greater contract options and services
Increasing Volume and opportunities
Wholesale Energy Price
Greater influence on wholesale energy cost
through direct purchasing and reducing supply
chains
Regulated charges
Levies and regulated charges, can be influenced
by self generation etc
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Recommendations

• Focused primarily on energy procurement and
  sustainability
• Best practice energy procurement
• Robust risk management strategy with appropriate
  governance
• Future proofing contracts
• Ability to deliver energy direct from generators
  traditional or renewable
• Industry agreed standard Ts Cs
• EST will be challenging existing and new energy
  procurements to ensure they meet best practice
  recommended solutions
• Sustainability
• Demand reduction programme in place
• Roll our of AMR

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Delivering the Recommendations

• 8 implementation projects being taken forward,
  including
• Buying and risk management
• Risk management governance strategies
• Savings methodology
• Sustainability
• AMR
• Energy Efficiency Equipment, i.e. contract for IT
  Power Management software
• Supply chain reconfiguration
• Long term power purchase agreements (PPAs)
• Renewable PPAs
• Aggregation
• Reducing amount of disaggregated spend

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Where does the LCE project fit in?
Commercial Delivery Board
Reporting and Compliance
LCE represented at CCB and EST levels
LCE represented at CCB and EST levels
SSF
Collaborative Category Board
Programme Direction and Implementation
Energy Stakeholder Forum
Energy Strategy Team

Energy Strategy and Programme Plan
Implementation Projects
Aggregation OGC
Communications - MoD
Sustainability - DEFRA
Buying Risk Mgmt NHS PASA
Competitive Dialogue - OGCb.s
Supply Chain Reconfiguration OGC
Standard Terms Conditions - MoD
Emissions Trading - TEC
Public Sector Users and Suppliers
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Where does the LCE project fit in?

• LCE project board will not recommend solutions
  that do not meet the EST best practice
  procurement recommendations
• LCE project board is going a step further
  evaluating solutions against customer
  requirements
• In LA space, added value services are crucial to
  any procurement solution
• Aggregation project will use this work to take
  forward nationally
• LCE work forms template for engaging LAs in
  other regions

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Savings Methodology

• BRM project is developing two savings
  methodologies
• Capturing commodity price savings
• Sets base line just below market average
• Monitors purchasing performance
• Savings through aggregation
• Better supplier margins
• Better profiles across portfolio
• Benefits
• Will be approved by HM Treasury
• Will be carried out by PBOs savings data passed
  to customers
• Data will be verified by the Collaborative
  Category Board

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Any questions?

• OGC Energy Category Team
• Susie Owen susie.owen_at_ogc.gsi.gov.uk or 020
  7271 2626 / 07780797845
• energy_at_ogc.gsi.gov.uk

Thank you for your time