Capability and Capacity Review of Central Procurement Function

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Capacity and Capability Review of Central Procurement Function
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DRAFT
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Table of Contents
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Executive Summary ..............................................................................................................6

1.1 Approach to the Review .................................................................................................6
1.2 Spend Analysis Findings ................................................................................................7
1.3 Capability and Capacity Assessment Findings ...............................................................9
1.4 Recommended Strategy ...............................................................................................11
1.5 Recommended Procurement Operating Model .............................................................11
Introduction .........................................................................................................................13
2.1 Background ..................................................................................................................13
2.2 Objectives ....................................................................................................................13
2.3 Scope ...........................................................................................................................14
2.4 Review Approach .........................................................................................................14
2.5 Structure of Document .................................................................................................16
3 Procurement Spend Analysis Findings ...................................................................................18

3.1 Spend Analysis Approach ............................................................................................18
3.2 Spend Analysis Challenges ..........................................................................................19
3.3 State Spend Profile ......................................................................................................20
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Capability and Capacity Assessment Findings ....................................................................25

4.1 Overview ......................................................................................................................25
4.2 Capability Assessment Approach .................................................................................26
4.3 Procurement Organisation............................................................................................27
4.4 Detailed Capability Assessment Findings .....................................................................32
Recommendations ..............................................................................................................48
5.1 Introduction ..................................................................................................................48
5.2 Spend and Savings ......................................................................................................49
5.3 Opportunity Identification for Non-Addressable Spend .................................................56
5.4 Strategy and Governance.............................................................................................58
5.5 Category Management Approach .................................................................................71
5.6 Supplier Relationship Management ..............................................................................74
5.7 Requisition to Pay ........................................................................................................75
5.8 Master Data Management ............................................................................................75
5.9 Technology ..................................................................................................................76
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5.10 Savings Definition and Measurement .........................................................................77

5.11 Savings Calculation Methodology...............................................................................78
5.12 People and Workforce ................................................................................................80
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Implementation Roadmap ...................................................................................................82

6.1 Phase 1 ........................................................................................................................83
6.2 Phase 2 ........................................................................................................................83
6.3 Phase 3 ........................................................................................................................84
Appendix ...................................................................................................................................85
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Categories ...................................................................................................................85
Data Sources ..............................................................................................................89
List of Interviewed/Surveyed Stakeholders ..................................................................92
Capability Assessment Framework for Analysis .......................................................94
Organisational Data.....................................................................................................95
Supplier Data ..............................................................................................................96
Referenced Materials ..................................................................................................97
Acronyms ....................................................................................................................99
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1 Executive Summary
A key government priority is to substantially reduce costs and achieve better Value for Money
(VFM) through reforming public procurement with the area of procurement being identified as
one of 14 Public Service reform initiatives announced by the Minister for Public Expenditure and
Reform in November 2011.
The Department of Public Expenditure and Reform (D/PER) engaged Accenture following a
public procurement process to:
Identify the actions required to realise substantial savings in public procurement in the
short to medium term, and to
Identify the actions to build additional on-going procurement sourcing capabilities and
structures for continued procurement practice improvement and greater efficiencies
This review was conducted over a 6 week period between May and July 2012. This report sets
out the key findings and recommendations.
1.1 Approach to the Review

Accenture used a structured approach which had four key elements as illustrated in Fig 1.0
below: these compose a rigorous analysis of procurement spend data; an extensive programme
of engagement with buyers, suppliers and procurement staff; structured surveys to benchmark
current capability; and comparison with external benchmarks. This approach means that the
findings and recommendations are grounded in a strong evidence base. The approach was
underpinned by Accentures High Performance Procurement Model (HPP).
Evidence-Based Approach
Spend Data
Conducted a comprehensive data gathering
and analysis from multiple sources including
vote estimates, Departmental financial
accounts, purchase order data, contract
listings and historical reports
Over 24 data sources used including D/PER,
NPS and individual sectors ranging from
school accounts to HSE ERP platforms and
Justice Finance Shared Services
Stakeholder Engagement
Interviewed buyers, suppliers and internal
customers - 73 interviews were conducted
Engaged Ministers, Secretaries General, Agency
CEOs, Procurement Officers, School Teachers,
Doctors, Garda, Local authority engineers, industry
groups including IBEC and IMSTA and supplier key
account managers and CFOs
External Benchmarks
UK, European and global procurement
interviews conducted to provide international
insight and experience
Accenture Benchmarks were used to support
the assessment and provide qualitative and
quantitative benchmarks
Accentures High Performance Procurement
(HPP) Model was used to assess current
procurement capabilities
Surveys
Qualitative structured capability assessment
surveys based on Accentures HPP framework
were used across all sectors
Self-assessment surveys completed by
procurement representatives from across the five
sectors and validated against interviews with key
stakeholders
Figure 1.0: Data Sources Used to Support Evidence-Based Approach
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1.2 Spend Analysis Findings

The analysis of available spend data indicated that the State currently spends 9b on supplier
goods and services. A breakdown of this spend is presented below in Figure 1.1.
Figure 1.1: State Spend Breakdown (2011)
Analysis of this spend shows that:

6.9b is currently sourced through State purchasing processes and therefore can be
classified as being Addressable by Procurement. Most of this spend is at sector level.
The Health sector accounts for 3.1b (45%), with Education and Local Government
accounting for approximately 1.1b each. Justice and Defence combined account for
647m and other central agencies account for the remaining 890m
2.1b is not addressable through procurement as it is not currently managed through
State purchasing processes, e.g. the General Medical Scheme, and supply of blood
through the Blood Transfusion Service. This was therefore out of scope for identifying
procurement savings. However, savings could be delivered through other means
4.3b is deemed suitable to be managed by a central procurement function
2.1b is deemed not suitable to be centre managed and should be managed within
sectors
888m annual spend is currently managed by the central procurement functions (NPS
and CMOD) with 187m actively contracted delivering 37m annual savings
Based on analysis and information provided, the review estimated that annual savings between
249m to 637m can be achieved through a structured cost reduction programme. However,
this will require investment in the capability to ensure sustainable benefits. Figure 1.2 overleaf
summarises central-managed and sector-managed spend and the potential savings to be
achieved. It is worth noting that there is currently no standard categorisation for spend data
across the Public Service . The categorisation used in Fig 1.2 below is based on the category
analysis conducted as part of the review.
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Figure 1.2: Breakdown of Estimated Savings (Annual)
Savings are calculated on a figure of 6.2b (476m unclassified and 170m school bus
scheme removed from 6.9b total) giving an annualised savings range between 249m
to 637m
180m to 438m of these savings could be realised by greater central aggregation of
common categories, challenging demand/specifications, and driving compliance
A further 69m to 199m savings could be realised by adopting similar category
management principles within sectors to sector-specific categories
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1.3 Capability and Capacity Assessment Findings

A key question considered by the review is the current capability and capacity of the central
procurement service to deliver identified savings. For the purpose of this review, the central
procurement function refers to the National Procurement Service (NPS), the National Public
Procurement Policy Unit (NPPPU), and the procurement processes of the Centre for
Management and Organisation Development (CMOD). The review assessed the central
procurement functions capability against the High Performance Procurement (HPP) model that
measures procurement capability across six key dimensions. The summary assessment
findings are presented below in Table 1.2:
Procurement
Dimension
Maturity
Rating
(Consolidated
Average)
Summary Findings
Procurement
Strategy
Lack of integrated procurement strategy and structured planning

Incomplete procurement policy coverage and fragmented policy
management
No agreed standard procurement performance targets or metrics
No standard methodology to baseline, measure and report
procurement benefits
Sourcing and
Category
Management
Lack of visibility and categorisation of spend, inconsistent

methodology, demand management and category expertise
No central access to accurate and timely spend data
Lack of consolidated, accurate demand forecasts and demand
challenge
Lack of engagement with stakeholders on central framework
tenders
Contract and
Supplier
Management
Supplier led model, fragmented contract management and lack of

consistent supplier performance scorecard
No central visibility or management of contract data
No accurate data on total State suppliers
Requisition to
Pay Process
Lack of compliance management process to monitor contract

compliance and leakage
No buying channel strategy
Contracts are not integrated into ordering processes
No central management or control of spend and vendor master
Workforce and
Organisation
Accountability is fragmented across central procurement - single

point of contact not always available due to decentralisation of
purchasing operations and control
No central list of procurement professionals across the State
NPS lacks authority to deliver savings optimally
Lack of consistent roles and responsibilities, structure and
operational performance management
Structured skills training and supplier education
Limited cross-sector communities of practice
Procurement
Technology
e-Tenders platform in place but lack of integration to analytics

and operational and financial management systems
Table 1.2: Summary of Capability Assessment Findings
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Whilst there are many examples of good procurement practices within the Irish Public Service,
when compared to industry and Public Services globally, these practices are not applied
consistently across State procurement functions. Examples of best practice across the central
procurement functions include CMODs approach to ICT demand management, the NPS energy
framework pricing, and the CSSO development of standard framework contracts and the HSEs
vendor dashboard.
The key findings impacting the ability of central procurement function to realise sustainable
savings are:
1. Central procurement functions are not organised in a manner to enable delivery to
realise optimal savings for the State:
Central procurement functions are not integrated or aligned to common goals and
targets
NPS lacks the authority to influence senior stakeholders on spend decisions
The Procurement Officer role as currently implemented is focused on financial cost
control but lacks visibility of supplier, price and specification data
Purchasing is devolved in many Departments and operational control is therefore
dispersed resulting in lack of control of demand
2. Central procurement functions lack timely access to accurate spend data that is
required to inform category management decisions:
Procurement information is fragmented across multiple financial accounting systems

across sectors and departments
No single consistent classification for spend and supplier data. The review identified
over 200,000 suppliers but this is likely to be inflated as many are likely to be supplying
multiple agencies
No automated mechanism to consolidate or manage spend data nationally
Central procurement functions lack analytical skills and tools to interpret spend data,
identify opportunities and prioritise execution.
3. Procurement lacks a holistic approach to managing categories of spend, suppliers
and compliance
There are inconsistent approaches to spend portfolio and category management

approach in use across central procurement functions
Limited centralised visibility of spend has made it difficult to identify category
opportunities, prioritise planning and to track implementation and benefits measurement
There is no single source for information on supplier performance, nor a state-wide
supplier management strategy
Fragmented sourcing, ordering and payment processes and systems have restricted
central procurements ability to drive framework implementation and monitor compliance
4. The State lacks monitoring or reporting arrangements that focus on procurement
metrics:
Today departments and agencies have a focus on financial management but lack
visibility of usage and pricing information to monitor spend from a procurement
perspective
There is no standard definition of a procurement saving or ability to measure and track
benefits
There are no standard procurement metrics to track procurement performance
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1.4 Recommended Strategy

The review has identified annualised potential savings between 249m to 637m in
addressable spend that can be achieved through a centre-led strategic cost reduction
programme (see Section 5.2.2 for how this was calculated). We are recommending a total cost
of ownership approach to procurement rather than the traditional focus on third party supplier
price and cost reduction which will typically only deliver one-third of potential total cost savings.
Our recommendations to achieve the total cost of ownership include the following levers:
1.
2.
3.
4.
Strategy and policy

Demand
Specification
Price
Achieving the identified level of savings in addressable procurement spend will require
significant investment in the capability and capacity of procurement. The review has identified
pockets of excellence but these need to be replicated and implemented in a consistent manner
across all sectors. A key recommendation is to establish a single integrated procurement
function accountable for policy, sourcing and category management of common categories and
support operations. This function should be led by a Chief Procurement Officer (CPO) within a
National Procurement Office (NPO). The NPO would need as a priority to prioritise visibility of
spend, and the development of an appropriate governance and operating model in order to
deliver strategic savings.
This recommendation is consistent with approaches taken in other European and Global Public
Service organisations including the UK CPO who established the UK Government Procurement
Service. Our benchmarking has underlined the need to prioritise centre-led procurement
organisation focused on common categories of goods and services, supported by visibility of
spend through investment in technology and the support and engagement of senior civil
servants in key Departments to effect sponsorship of initiatives.
1.5 Recommended Procurement Operating Model

The review considered a number of options for strengthening how procurement is managed. It
recommends a Hybrid Centralised Model (as described in sections 5.4.2 of this document) as it
provides the capability to drive efficiencies from the centre, leverage buying power, and remove
duplication of effort. We recommend that the proposed organisation be centralised in a single
location in Dublin. The organisation will require significant engagement with senior procurement
officers across sectors. The recommendations with respect to the proposed model key features
are as follows:
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Establish Chief Procurement Officer Role and National Procurement Office
Appoint a new Chief Procurement Officer (CPO) accountable for national procurement
strategy, policy, implementation and effective compliance framework
Establish a National Procurement Office (NPO) as an Office under the aegis of D/PER
Transition the current NPS, NPPPU and CMOD procurement processes from their
current reporting lines and locations to the CPO in Dublin
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Establish Organisational Alignment
NPO to manage all strategic spend for common categories of goods and services Policy
Unit within the NPO to be responsible for strategic and operational procurement policy
and compliance across sectors
Transition some experienced resources from individual procurement teams within each
sector to the new NPO in Dublin
Establish a fulltime Procurement Officer within each sector to be responsible for
procurement across relevant Departments and Agencies
Establish robust governance model for procurement with senior executive level
involvement and sponsorship across the sectors. In addition, the creation of Category
Councils is a key element of the recommended governance model
Enable Savings Delivery & Compliance
Implement centralised Spend Analytics technology and capability to capture, cleanse

and accurately categorise all state spend by type, location and vendor
Develop detailed spend and savings targets across sectors with detailed integrated
plans for delivery by NPO and sector procurement
It is recommended that Secretaries General be made accountable to provide monthly
reports to the CPO
Manage Transition of Project
We recommend that Five major work streams to be established under a common
program to deliver the new organisation and capability:
1) Establish Governance and Operating Model
2) Create and transition NPO from current organisations
3) Plan and implement Strategic Sourcing
4) Design and implement Spend Analytics
5) Plan and implement Procurement Operational Shared Services
The report also makes sector-specific recommendations for managing procurement in Health,
Local Government, Education, Justice and Defence sectors. In addition, it includes detailed
recommendations on:
Category management approach

Strategic sourcing approach
Supplier relationship management
Requisition to pay
Master data management
Technology
Savings definition and measurement
People and workforce.
The review has identified short and medium term savings and recommended steps to achieve
these. The review has also identified that the current procurement functions at a central and
sectoral level are not currently in a position to deliver the identified savings. Changes in how
procurement is governed and managed are required and investment in the people, process and
supporting technology are outlined in the report in order to ensure sustainability of the savings
and procurement organisation.
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2 Introduction
2.1 Background
In November 2011, the Minister for Public Expenditure and Reform launched the Governments
Public Service Reform Plan. This plan identified procurement reform as one of the major
projects of key strategic importance.
The procurement recommendations and actions in the plan focused on the following areas:
Policy Framework and Procurement Reform Plan

Aggregation
Enforcement
Performance Measurement and Expenditure Analysis
Capability
E-Procurement
Logistics and Inventory Management
While work is on-going on the implementation of procurement reform, there is a need to take
stock of the capacity and capability in this area to ensure that the procurement reform
programme is successfully and strategically coordinated, managed and implemented.
Accenture was commissioned to undertake a six week capacity and capability review of the
States central procurement function. This document is the final report from this initiative.
2.2 Objectives
The objectives of the procurement capability and capacity review are to identify the actions
required to realise substantial savings in public procurement in the short to medium term, and to
build additional on-going procurement sourcing capabilities and structures for continued
procurement practice improvement and greater efficiencies1.
In particular, the review was explicitly requested to focus on the following key areas:
An analysis of the total procurement expenditure for the State by category and by sector
The identification of priority categories and sectors for a central procurement function to
deliver savings from procurement
To quantify the savings potential from the priority categories and sectors
To outline the requirements of a central procurement function to deliver and sustain the
savings from a perspective of:
- The required approach to carrying out sourcing and category management
- The approach for managing the top suppliers across Government
- The skills and competencies required to deliver and sustain the savings
- The operating model, governance and organisation structures required to enable
successful and timely delivery of savings
- The technology that will enable visibility of spend and adherence to centrally and
competitively tendered frameworks and contracts
Request for Tender - A capacity and capability review of the central procurement function to identify the actions required to realise
substantial savings in public procurement in the short and medium term, Department of Public Expenditure and Reform, March
2012
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2.3 Scope
The primary focus of the review was on central procurement processes, including the NPPPU,
NPS and CMOD.
Central government Departments and bodies under their aegis, local authorities and noncommercial semi-States were also included in the review in order to understand procurement
capability and capacity across the Public Service, and inform recommendations for realising
substantial savings.
Commercial semi-states were deemed to be out of scope as not part of the Public Service.
The review only looked at non-pay current expenditure on goods and services. Capital
expenditure was excluded due to time limitations and differences in stakeholders. However it is
anticipated that many of the findings identified in this report would be equally applicable to
capital expenditure and that capital procurement should be considered as a further source of
savings.
2.4 Review Approach

The review was conducted over six weeks between May and July 2012 using a holistic
assessment framework based upon Accentures research into high performance procurement in
both public and private sectors.
Figure 2.1: Capability Assessment Approach
The review was carried out in the following three phases:

1. Understand and assess the current Public Service Third Party Spend
2. Identify savings opportunities and capability recommendations
3. Develop implementation roadmap
The understand and assess the current Public Service Third Party Spend phase focused on
baselining the current state of State spend and central procurement practices. Work was split
over two workstreams:
a. Analysis of State Spend Portfolio: What is the total State spend on goods and services, what
are the categories of spend, and what can be addressed by central or sector procurement to
deliver savings and/or other non-financial benefits?
b. Assessment of Current Procurement Capability: How does procurement operate currently
within central procurement and across State bodies when compared to leading public and
private sector practices (i.e. organisation, process, technology, skills and competence), and
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what are the gaps in capability and capacity that will need to be addressed to enable the
realisation of savings and sustainable procurement benefits.
As part of the identification of savings opportunities and capability recommendations, the
findings of the spend analysis were used to identify the following:
Total State spend that should be managed centrally or within sectors

Optimal savings that might be realised through procurement, based upon external
benchmarks
Using the findings of the capability assessment, recommendations for procurement
organisation, governance, process, technology and skills that are required to enable the
realisation of these savings
The review team then prioritised recommendations and developed a high-level implementation
roadmap to rapidly deliver the recommendations and enable savings.
The evidence-based approach used external and internal data sources to corroborate
recommendations as outlined in Table 2.1 below.
Evidence-Based Approach
Spend Data
Conducted a comprehensive data
gathering and analysis from multiple
sources including vote estimates,
Departmental financial accounts, purchase
order data, contract listings and historical
reports
Over 24 data sources used including
D/PER, NPS and individual sectors ranging
from school accounts to HSE ERP
platforms and Justice Finance Shared
Services
Stakeholder Engagement
Interviewed buyers, suppliers and internal customers
- 73 interviews were conducted
Engaged Ministers, Secretaries General, Agency
CEOs, Procurement Officers, School Teachers,
Doctors, Garda, Local authority engineers, industry
groups including IBEC and IMSTA and supplier key
account managers and CFOs
External Benchmarks
UK, European and global procurement
interviews conducted to provide
international insight and experience
Accenture Benchmarks were used to
support the assessment and provide
qualitative and quantitative benchmarks
Accentures High Performance
Procurement (HPP) Model was used to
assess current procurement capabilities
Surveys
Qualitative structured capability assessment surveys
based on Accentures HPP framework were used
across all sectors
Self-assessment surveys completed by procurement
representatives from across the five sectors and
validated against interviews with key stakeholders
Table 2.1: Data Sources Used to Support Evidence Based Review Approach
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2.5 Structure of Document

The structure of this report, which represents the findings and recommendations arising from
the procurement capacity and capability review, is as follows:
Chapter 1 summarise the context and approach taken by the review, identifies the key findings
and outlines the recommendations.
Chapter 2 introduces the background to the review project. It describes the scope of work and
approach that was taken by the review team.
Chapter 3 presents the key findings of the analysis of current State spend. It identifies the total
State current spend on goods and services and categories of goods and services the State is
buying. It also describes what each of the State organisation is buying and where this spend is
being managed (i.e. central, sector or local).
Chapter 4 presents the findings of the assessment of current procurement capability. It
describes the current central and sector procurement functions in terms of organisation,
governance, process, technology, skills and competence, and how these compare to leading
practices in industry and other government organisations.
Chapter 5 presents the potential savings available to the Public Service through centre-led
procurement initiatives and describes the recommended developments in procurement
capability and capacity required to realise these savings.
Chapter 6 presents a proposed implementation roadmap to deliver and to sustain the identified
procurement savings.
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3 Procurement Spend Analysis Findings

This chapter describes the findings of the spend analysis, including:
The approach taken to gather and analyse spend data

The key challenges faced by the review team in accessing and analysing State
procurement data, and the impact of these on overall central procurement performance
The findings of the spend analysis, including how much of State spend is currently
addressable by procurement
3.1 Spend Analysis Approach

There is no central database or reporting of procurement spend within the Irish Public
Service. Therefore, in order to complete this review the project team were required to gather
and collate the required spend data manually from across more than 24 disparate systems, a
number of financial accounts and historic reports to enable a comprehensive analysis of State
spend on goods and services.
The approach taken to gathering and collating spend data was as follows:
Estimates for Public Services (2011) provided by Department of Public Expenditure and
Reform, supplemented with local government report on expenditure (2009) and a more
detailed spend breakdown provided by the HSE (2010/2011), were used as an initial
baseline
As there is no common spend categorisation for the Public Service, a master spend
categorisation to classify spend in a common manner was developed by the review
team using existing categorisations within the National Procurement Service (NPS) and
Health Service Executive (HSE) supplemented where gaps existed with a combination of
international standard categorisations as applicable (i.e. UNSPSC and eClass)
Each non-pay line item within the estimates was mapped to a spend categorisation to
normalise data across sources and to enable analysis
Spend that cannot be addressed by procurement currently was removed from the
data set as this was considered out of scope. For example, spend on blood products
where the price is set by the Blood Transfusion Board cannot be influenced by
procurement
Approximately 1.5 billion of the estimates data that was used as a spend baseline did
not have sufficient information to enable it be classified. This was due to insufficient
quality and consistency of procurement spend data provided resulting in the need for
more detailed spend data to be gathered from individual agencies .
With the support of the NPS and Department of Public Expenditure and Reform, an
initial list of 23 contacts were identified across the Public Service to support the project
team to get access to more granular procurement spend data. Where the point of
contact within an agency could not provide spend data, the review team were required to
identify other individuals themselves who could provide information on procurement
spend
For a number of agencies, a complete data set could not be extracted in the short
project timeframe and a spend breakdown was extrapolated based upon the data
available (full details of what data sources were used and any assumptions used to
extrapolate spend details can be found in the Appendices)
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A total of 73 stakeholders and 24 systems were examined in an effort to gather

sufficient spend data to complete the analysis
3.2 Spend Analysis Challenges

Procurement spend data is available within the multiple individual department systems and
could be extracted; however, as illustrated by the work undertaken by the review team,
gathering and collating this data is complex and labour intensive:
Data is fragmented across multiple systems: It is estimated that there over 4,000
instances of financial systems in operation across the State when consideration is given
to the individual systems operated across all sectors, such as education where primary
and secondary schools have independent systems.
Purchasing and operational control is dispersed: While each Department is required
to appoint a Procurement Officer, it is the observation of the review team that these roles
are not clearly differentiated from that of the Finance Officer. While there is a strong
focus on financial control evident across Departments, purchasing is decentralised in
many Departments and operational control is dispersed
Data is not consistently categorised: While there are examples of standard spend
categorisation used by organisations, there is no standard spend categorisation currently
in existence that is used across the Irish Public Service. For example the National
Procurement Service (NPS) has developed a high-level categorisation for the sub-set of
State spend that it currently manages, while the Department of Agriculture, Food and the
Marine and local authorities are independently in the process of developing their own
standard categorisation; however these categorisations are not applied consistently and
there is no common language to describe what goods and services are purchased by
the State
Financial accounting is insufficient for procurement analysis: The estimates used
to determine the initial spend baseline were produced as part of the Public Service
budgeting process and while they do provide information on where spend was accrued,
they do not always provide a breakdown of how money was spent that is sufficient for
procurement analysis, for example grants to universities are not broken down into how
the grant was spent
The ability to access and analyse spend data is fundamental to enabling procurement to deliver
savings and enables timely and accurate access to State procurement spend data. This is one
of the key recommendations arising out of this review and will be dealt with in more detail in
Section 4.
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3.3 State Spend Profile

The total State non-pay expenditure on goods and services, excluding capital expenditure and
commercial semi-States, was approximately 9 billion based upon the vote estimates in 2011. A
breakdown of this spend is provided in Figure 3.1.
The analysis carried out as part of this review estimated that 6.9 billion of this spend is
addressable by procurement to deliver savings as it is currently sourced through State
purchasing processes and, as a result, can be influenced by procurement. The remaining 2.1
billion, of the total 9 billion goods and services, was considered to be non-procurement
addressable as it not currently managed through State purchasing processes, and therefore
out of scope for this review.
Figure 3.1: Breakdown of State Spend (2011)
The non-procurement addressable spend figure includes approximately 1.3 billion of the total
State spend on drugs, where price is negotiated by Minister of Health, and a further 100 million
spend on bloods, where price is set by the Irish Bloods Transfusion Board. While this spend is
considered to be non-addressable by procurement, it could be addressed through other nonprocurement initiatives. It is a recommendation of this report that this spend be considered for
future cost-savings initiatives.
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3.3.1 Procurement Spend by Sector

The breakdown of spend by sector is as follows:
Figure 3.2: Breakdown of Procurement Addressable Spend by Sector ( million)
Of the total 6.9 billion procurement addressable spend, the Health sector alone accounts for
3.1 billion, or 45%, of the total 6.9 procurement spend, with Education and Local Government
accounting for approximately 1.1 billion each, Justice and Defence combined accounting for
647 million and other central government agencies accounting for the remaining 887 million.
3.3.2 Spend by Category

As highlighted above, there is no standard categorisation for spend data currently in
existence across the Public Service, although there are multiple instances of spend
categorisation currently in use throughout the State, including those used by the NPS, HSE,
Garda, Irish Prison Service and local authorities, which are not integrated or aligned.
All State spend was mapped to a common categorisation, developed by the review team, to
provide a single, integrated understanding of State procurement spend.
Spend data from each sector was mapped to seventeen categories that grouped spend
according to comparable characteristics, such as similarities in supply market profile, end users,
product type, etc. (see Table 3.1 below).
Of these categories, medical products and professional services accounts for 2.6 billion,
or 37%, while the top six categories accounted for 82% of the total procurement addressable
spend.
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Table 3.1: Breakdown of 2011 State Spend (in million)
These figures are estimates based upon data gathered from a sample of 24 data sources.
There are currently over 4,000 sources of spend data across the Public Service, when the
financial accounting systems within schools are taken into account and gathering data from
these systems is a complex and labour intensive exercise. It was not feasible to extract and
collate data from all these sources in the six week timeframe allocated to the review.
3.3.3 Unclassified Spend

There was approximately 1.5 billion of estimates data that could not initially be categorised due
to insufficient data. This included grants to schools and universities where the allocation of
spend is not discernible from the data. This unclassified spend figure was reduced to 476
million once estimates had been reconciled with other sources of spend data provided by
sectors.
Figure 3.3: Classified/Unclassified Procurement Spend ( billion)
It is the opinion of the review team that the majority of this unclassified spend is likely to be
procurement addressable and could be successfully categorised with further work. It is
recommended that a follow-on exercise should be completed to identify and categorise this
unclassified spend.
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3.3.4 Spend by Supplier

Vendor data is not standardised or maintained consistently across the Public Service resulting
in a lack of clarity on supplier numbers, spend by supplier and category both within and across
sectors, departments and agencies.
During the review we identified some good examples of vendor data management, including the
HSE and Enterprise Ireland.
It is estimated, based upon the data provided, that there are up to 212,000 vendors supplying
to the State. However this figure does not take into account that many vendors may be
supplying to multiple agencies and are counted multiple times in this figure.
Figure 3.4: Total # of Suppliers by Sector
As there is no central management of supplier data or vendor classification it is not

possible to easily identify multiple instances of common suppliers across systems and sectors
and, as a result, the actual number of vendors supplying to the State is likely to be significantly
lower.
3.3.5 State Contracts

Related to the above, there is also no central database for State contracts or standard
contract management processes. There are several organisations, such as An Garda Siochana,
that have put in place contract repositories and good contract management practices. Examples
of where contracts and contract management is decentralised and highly fragmented across
organisations, to such an extent that no information on the total number of contracts could be
provided, was also in evidence.
24
This lack of a standard contracts management process across the State impacts the ability to
record and manage contract compliance and manage supply chain risk, including understanding
of how State spend is impacting the national economy and how much is being spent with
SMEs, national companies and multi-nationals.
It was also observed that the State has multiple contracts with the same vendors, often for the
same goods and services. While this was not explored in detail as part of this review, it is highly
probable that prices are not harmonised and multiple prices are being paid for the same good or
service at different locations.
The findings of the spend analysis was used by the review team to estimate the total State
spend that could be addressed by central or sector procurement, and to estimate the range of
potential savings that could be delivered by State spend through procurement.
25
4 Capability and Capacity Assessment Findings

4.1 Overview
This section describes the approach taken to assess the capability and capacity of central
procurement functions to realise substantial, and sustainable, savings. It describes how
procurement is currently organised within the State, both in the central procurement function
and across sectors, and then assesses current capability against leading public and private
sector practices using Accentures High Performance Procurement framework.
While the review team interviewed and surveyed a broad sample of customers and procurement
resources from across sectors, along with a sample of cross-sector suppliers, the outcomes of
the assessment are presented as consolidated findings for the State as a whole. The focus of
the review is on identifying substantial savings and the means to deliver these savings through
the central procurement functions. Correspondingly, the review has presented capability and
capacity gaps in evidence across the Public Service that will present a potential barrier to
deliver these savings, and did not set out to compare and contrast the procurement capability of
one organisation against another.
A common theme that emerged from the assessment is that while there are many examples of
good procurement practices within the Irish Public Service when compared to industry and
Public Services globally, these practices are not applied consistently across State procurement
functions.
The key findings impacting the ability of central procurement functions to realise sustainable
savings, which are described in more detailed within this section, were as follows.
1. Central procurement functions are not organised in a manner to enable delivery to
realise optimal savings for the State:
Central procurement functions are not integrated or aligned to common goals and
targets
NPS lacks the authority to influence senior stakeholders on spend decisions
The Procurement Officer role as currently implemented is focused on financial cost
control but lacks visibility of supplier, price and specification data
Purchasing is devolved in many Departments and operational control is therefore
dispersed resulting in lack of control of demand
2. Central procurement functions lack timely access to accurate spend data that is
required to inform category management decisions:
Procurement information is fragmented across multiple financial accounting systems

across sectors and departments
No single consistent classification for spend and supplier data. The review identified
over 200,000 suppliers but this is likely to be inflated as many are likely to be supplying
multiple agencies
No automated mechanism to consolidate or manage spend data nationally
Central procurement functions lack analytical skills and tools to interpret spend data,
identify opportunities and prioritise execution
26
3. Procurement lacks a holistic approach to managing categories of spend, suppliers

and compliance
There are inconsistent approaches to spend portfolio and category management

approach in use across central procurement functions
Limited centralised visibility of spend has made it difficult to identify category
opportunities, prioritise planning and to track implementation and benefits measurement
There is no single source for information on supplier performance, nor a state-wide
supplier management strategy
Fragmented sourcing, ordering and payment processes and systems have restricted
central procurements ability to drive framework implementation and monitor compliance
4. The State lacks monitoring or reporting arrangements that focus on procurement
metrics:
Today departments and agencies have a focus on financial management but lack
visibility of usage and pricing information to monitor spend from a procurement
perspective
There is no standard definition of a procurement saving or ability to measure and track
benefits
There are no standard procurement metrics to track procurement performance
4.2 Capability Assessment Approach

The review used a holistic assessment framework, based upon Accentures research into high
performance procurement, to assess central procurement capability against the following
dimensions:
Procurement Strategy
Sourcing and Category Management
Supplier Relationship Management
Purchase to Pay
Workforce and People
Process and Technology
The framework comprises of a clearly defined capability maturity scale (i.e. from basic to leading
practices) for each dimension of procurement. A structured, Excel-based survey consisting of
144 detailed questions covering each of the six dimensions was completed by 14 buying
organisations.
The results of the surveys were then collated for each sector and then compared to a capability
maturity scale to determine how each agencys procurement capability should be rated.
The project team also conducted interviews with 73 senior procurement staff and procurement
customers from agencies across all sectors.
Interviews were also conducted with a sample of State suppliers and industry groups to provide
an external perspective.
Due to the short project timeframe, the project team could not engage all buying groups within
the Public Service. A sub-set of agencies was selected from across sectors which accounted for
27
the majority of data gathering. Interviews and surveys were prioritised on a sub-set of agencies
from across sectors who are the main buyers in the State.
Recommendations for capability and capacity developments to enable sustainable savings were
informed by qualitative and quantitative public and private sector benchmarks, along with
leading practices based upon Accentures High Performance Procurement research. These
were developed in consultation with the Department of Public Expenditure and Reform to
ensure that they were aligned to government strategy.
The review also took into consideration procurement operating models in use in other countries,
including Sweden, UK, Denmark, Canada and US, to ensure that any lessons learned by these
governments were incorporated into the final recommendations.
A full account of all data sources and assumptions used in the report can be found in the
Appendices.
4.3 Procurement Organisation

4.3.1 Central Procurement Function
For the purposes of this review, the Central Procurement Function is taken to refer to the
National Public Procurement Policy Unit (NPPPU); the National Procurement Service (NPS), the
Procurement processes of the Centre for Management and Organisation Development (CMOD)
and the Commercial Contracts Section of the Chief State Solicitors Office (CSSO).
Figure 4.1: Central Procurement Functions
National Procurement Service (NPS) was established in 2009 to further develop national
framework agreements to allow public bodies to procure commonly used goods with the
primary objective of ensuring optimum efficiency and value for money in the public
procurement; to provide professional procurement advice to central government and State
agencies; to develop targeted and accredited training and education measures and to
further develop E-Procurement tools. It currently sits within the Office of Public Works under
the aegis of the Department of Public Expenditure and Reform and has 47 staff.
National Public Procurement Policy Unit (NPPPU) was established in 2002 to develop a
National Public Procurement Policy Framework designed to drive the development of
analysis based and target driven Corporate Procurement Plans. The NPPPU is currently
responsible for setting a broad strategic direction for procurement implementation. The unit
has responsibility for national public procurement policy, legislation and construction
procurement reform. Prior to 2009 the NPPPU was responsible for the development of a
28
national eProcurement portal (e-tenders.ie) and the piloting of framework projects to

demonstrate the benefits of aggregated arrangements. The NPPPU currently resides within
the Department of Public Expenditure and Reform and has 4 staff.
Centre for Management and Organisation Development (CMOD) is responsible for
monitoring and approving ICT spend in civil and public service bodies, telecommunications
policy and infrastructures, eGovernment policy and infrastructures, technology research and
policy, central ICT procurements and frameworks, and common IT systems including payroll
and HR Management. It is a Division of the Department of Public Expenditure and Reform.
The centre has 2 staff dedicated to its procurement function.
Commercial Contracts Support, Chief State Solicitors Office (CSSO) is responsible for
the provision of legal advice and support to procurement users in contracting goods and
services across all sectors. The unit is also responsible for the development and provision of
legal templates for use in sourcing and contracting goods and services. The commercial
contracts function lies within the Chief State Solicitors Office, which is a constituent element
of the Office of the Attorney General. The unit is responsible for the provision of standard
terms and conditions for procurement use in sourcing and contracting with the objective of
ensuring compliance to legislation in respect of EU directive and Irish law. The CSSO works
with the NPS in the development of Framework Agreements, standard contracts and
support materials for end users. The Unit is comprised of six staff.
Figure 4.2: Central Procurement Function Spend Breakdown (Not to Scale)
The NPPUs role is primarily around the issuance of policy guidelines and circulars with the aim
of ensuring that bodies were informed of their requirements under EU law and also best practice
around putting tenders in place; they do not have spend under management. The C& AG for
example report on the level of compliance with these circulars across the public service. The
unit is also tasked with developing and overseeing the implementation of contracts2 for Public
Works and Construction-Related Services. It does not have any spend under its management.
However, the NPS and CMOD are more directly involved in spend management. The
estimated annual central procurement framework spend is 888 million based upon 2011
figures. Between these groups, there are approximately 50 procurement staff, with 47 of these
staffed within the NPS alone.
Recent changes here allow optimal risk transfer from public bodies to contractors and consultants by costing for
risks as a fixed price lump sum thus giving greater cost certainty at tender stage for capital projects.
29
As of 2011, the NPS had put in place framework agreements that covered an estimated 434
million, or approximately 6%, of the States procurement spend. Of this 434 million, the actual
usage of NPS frameworks was 180 million, or 40%, of the total spend under frameworks. The
NPS has no role in monitoring compliance and up to very recently bodies were not obliged, or
mandated, to comply to frameworks. The NPS has estimated a total saving of 37 million in
2011 alone, or approximately 9% of total procurement addressable spend through more
competitive pricing and efficiency savings through centralised procurement.
As referred to above, CMOD, amongst other things, is responsible for central ICT procurement
frameworks and, while CMOD does not track spend under its framework agreements, based
upon total ICT State spend in 2011, it is estimated that 454 million is currently spent against
ICT framework agreements or sanction of ICT spend.
There has been some coordinated activity between the NPS and CMOD on ICT consumables,
and the NPS and NPPPU on procurement policy; however the fragmented structure of the
central procurement functions is not optimal to enabling collaboration between these groups.
The commercial contracts function lies within the Chief State Solicitors Office, which is a
constituent element of the Office of the Attorney General. The function has a small team of six
resources and is responsible for the provision of standard terms and conditions for procurement
use in sourcing and contracting with the objective of ensuring compliance to legislation in
respect of EU directive and Irish law. The CSSO has worked with the NPS in the development
of Framework Agreement standard contracts and support materials for end users. The
development of standard terms and conditions is welcomed throughout the procurement
community but there is concern both within the CSSO and the procurement community about
the lack of understanding of the compliance implications, level of awareness and capability to
comply with them and the resulting potential impact of the remedies directive in the event of
non-compliance.
During the review a number of suppliers across categories and sectors were interviewed,
including Swords Medical and Codex Office Products. From a supplier perspective the terms
and conditions are seen as too broad and an attempt to cover all risks with heavy risk burden
being levied on suppliers. The suppliers were also conscious of the risks involved in tendering
for business in the public service with traditionally low levels of contract compliance.
Buyers are broadly welcoming of the guidance and standards but are concerned about the lack
of education and training required to ensure compliance to legislation. The NPS and CSSO
conduct training in standards but this is not co-ordinated and the focus is on fulltime
procurement professionals resulting in a risk of part time procurement professionals, e.g.
primary school board members, not being aware or compliant to legislation.
4.3.2 Sector Procurement Organisation

Out of an estimated annual addressable spend of 6.9b across the State the central
procurement functions are involved in approximately 888m (13%). However the organisation
and operation of procurement varies significantly between and within sectors. The HSE and
Prison Service, for example, operate their own central procurement functions, while primary and
secondary schools have highly decentralised purchasing operations and decision making.
30
The procurement organisational structures within sectors are synopsised in the Table 4.1 below:
Sector
Procurement Organisations
Spend
(est.)
Procurement
FTE (est.)
Health
The HSE operates a central procurement function that

is supported by 70 resources, out of its total 573
resources who work in procurement and logistics, and
has 1.2bn spend under management.
Voluntary hospitals, which account for 600m of the
total Health spend, have a central Hospital Procurement
Services Group (HPSG), that is independent to the HSE
procurement function and is supported by 13 resources
who currently manage 72m of voluntary hospital
spend.
3,093m
83
Local
Government
While procurement is predominantly managed locally

within each of the 34 local authorities, there is some
collaboration amongst authorities. The Local
Government Management Agency has recognised the
potential benefits of improved collaboration and has
proposed recommendations for formal structures to
enable regional collaboration. Local authorities have
begun to collaborate on cross-authority initiatives to
improve procurement efficiency, including the national
roll-out of LA Quotes e-procurement tool and an ongoing project to harmonise how spend is categorised.
1,142m
108
Education
Procurement is highly decentralised within the

Education sector. Universities have mature central
procurement functions in place and actively collaborate
on procurement opportunities, while Institutes of
Technology operate a central procurement hub. VECs
have a central resource in place to provide support and
guidance on compliance with each VEC, and while
there is some opportunistic collaboration, procurement
operations are pre-dominantly managed at a VEC level.
Of the 4,034 primary and secondary schools, there is
currently no central procurement oversight or support .
1,114m
72
Justice and
Defence
sectors
Procurement within the Department of Defence is

decentralised across military cells, however there is
oversight of compliance by a central procurement
function and initiatives in place to centrally consolidate
all contracts, and dedicated purchasing units within
each cell.
Under the Department of Justice and Equality, An
Garda Siochana and the Irish Prison Service operate
mature central procurement functions and good
contract usage and control over compliance. The
Department also process all invoices out of a shared
service in Killarney providing a central source of
procurement spend data.
646m
95
Other Central
Government
Purchasing operations are decentralised across central

government with developing central procurement units
in key spend areas, such as Department of Agriculture,
Food and Marine.
887m
66
Table 4.1: Summary of Procurement Organisation by Sector
31
There are pockets of leading procurement practice in evidence across the Public Service and
the NPS, in particular, has been pro-active in promoting awareness of procurement policies and
compliance amongst staff involved in procurement from across sectors. However practices are
not standardised or applied consistently across agencies, and maturity of procurement
capability also varies significantly across and between agencies.
There are estimated to be at least 536 FTEs who are currently working in procurement across
the Public Service. However, as the number of resources who have procurement as part of their
role is not monitored or recorded by the State, the actual number of resources involved in
procurement is likely to be considerably higher.
For example, the estimate accounts for a total of 72 procurement resources in the Education
sector based upon a tally of procurement resources in the Universities, ITs and VECs. While
the review team could not identify any full-time procurement resources across the 4,034 primary
and secondary schools, the estimate does not take into account the time spent on procurement
activities on a part-time, ad-hoc basis as this information is not available.
Figure 4.3: Spend per Procurement FTE (m)
Based upon these conservative estimates of procurement headcount, the State currently
spends 12.9m per procurement FTE. This contrasts with the cross-industry median is 18.1m
per FTE and leading is 28.6m.
This is based upon Accentures High Performance Procurement Benchmark that includes public
and private sector organisations. Even with consideration for the decentralised organisation
structure within the Irish Public Service, there is a clear opportunity to reduce the number of
resources involved in non-value adding purchasing activity.
As purchasing is devolved in many Departments and operational control is dispersed resulting
in lack of control of demand, the ability of central procurement functions to deliver savings
through coordinated strategies and initiatives have been hampered by the need to engage with
a large, disparate group of stakeholder with different, and sometimes opposing, requirements.
Although there is a requirement for each Department to have a Procurement Officer, in practice,
this is not always a dedicated role. There is strong focus on financial cost control evident across
sectors, however procurement discipline, such as control over contract compliance and what
money is spent on, is not as rigorously enforced or applied.
32
4.4 Detailed Capability Assessment Findings

Overview
The summary findings of the central procurement function capability assessment are
summarised in the Table below.
Procurement
Dimension
Maturity Rating
(Consolidated
Average)
Summary Observations
Procurement
Strategy
Lack of integrated procurement strategy and structured planning

Incomplete procurement policy coverage and fragmented policy
management
No agreed standard procurement performance targets or
metrics
No standard methodology to baseline, measure and report
Sourcing and
Category
Management
Lack of visibility and categorisation of spend, inconsistent

methodology, demand management and category expertise
No central access to accurate and timely spend data
Lack of consolidated, accurate demand forecasts and demand
challenge
Lack of engagement with stakeholders on central framework
tenders
Contract and
Supplier
Management
Supplier led model, fragmented contract management and lack

of consistent supplier performance scorecard
No central visibility or management or contract data
No accurate data on total State suppliers
Requisition to
Pay Process
Lack of compliance management process to monitor contract

compliance and leakage
No buying channel strategy
Contracts are not integrated into ordering processes
No central management or control of spend and vendor master
Workforce and
Organisation
Accountability is fragmented across central procurement - single

point of contact not always available due to decentralisation of
purchasing operations and control
No central list of procurement professionals across the State
NPS lacks authority to deliver savings optimally
Lack of consistent roles and responsibilities, structure and
operational performance management
Structured skills training and supplier education
Limited cross-sector communities of practice
Procurement
Technology
e-Tenders platform in place but lack of integration to analytics

and operational and financial management systems
Table 4.2: Consolidated Public Service Procurement Capability Maturity Rating
33
While interviews and surveys were conducted with stakeholders from across the central and
sector procurement functions, the assessment of procurement capability has been provided as
a consolidated average for the Public Service. As the purpose of the review was to identify
substantial savings realisable through central procurement, detailed assessment of procurement
capability by sector have not been developed.
One of the core findings of the review is that there is wide variation in capability and practices
across sectors. Examples of good practices or variations in practices have been highlighted
were applicable in an effort to underline the impact of this fragmentation on the ability of central
procurement functions to realise these savings.
Table 4.3 below provides a high-level breakdown of capability assessment summary findings by
sector. However, it is important to note that even within sectors there wide variations in practice
and capability. For example within Education alone, Universities do have mature, central
procurement capabilities while schools have highly decentralised procurement organisation and
limited capability.
Table 4.3: Summary Capability Maturity Assessment by Sector
Each of the components as outlined in Table 4.3 above are discussed briefly and the findings
outlined as the following sections:
34
4.4.1 Procurement Strategy

Procurement Strategy is concerned with understanding the following:
How objectives are set and how procurement plan to deliver them
What policies and procedures are in place to support delivery
How central procurement is aligned and planned with sectors
What metrics procurement is measured on
How procurement measures spend, savings and compliance
a. Finding: No integrated procurement strategy and structured planning

The NPS has a multi-year strategy that sets out its strategic goals and targets for the
forthcoming three years, however this is internal to the OPW and has been developed in the
absence of formally engaging other central procurement functions and customers. There is no
integrated strategy for Public Service procurement that sets out how the State will manage
the total spend portfolio on goods and services to deliver optimal benefits, and ensures that
procurement goals and targets of the NPS and CMOD are aligned with customer requirements
and Government strategy.
The NPS has established a cross-sector steering committee that is tasked with ensuring that
NPS strategies and plans are fully informed. However, from our interviews and discussions
there is evidence of a lack of clarity amongst end users as to how opportunities are prioritised or
sourcing strategies for framework agreements developed.
This lack of strategic alignment has led to, but is not limited to, challenges in the following areas:
Silo mentality within sectors and missed opportunities to benefit from greater crosssector coordination on sourcing initiatives
Duplication of effort between procurement groups, for example there are several
initiatives on-going independently to standardise spend categorisations
Ineffective management of trade-offs between conflicting objectives between sectors,
such as trade-offs between spend aggregation
At a sector level, there are pockets of collaboration between purchasing units within and across
sectors around common areas of spend, however this tends to be ad-hoc and opportunistic.
b. Finding: Incomplete procurement policy coverage and fragmented policy

management
There are a number of groups across the State that make decisions that directly, or indirectly,
impact upon procurement policy, including a number of SME advisory panels and SEAI on
energy efficiency. The NPPPU is responsible for managing national procurement policy, in
particular policy related to EU Directives and EU Treaty Principles; the NPPPU publish guidance
to assist public bodies with their interpretation of procurement rules; however definition of
operational procurement policy, that describes how national procurement policies translate to
day-to-day procurement operation for the end-users and procurement staff, is decentralised to
local purchasing functions.
With the roll-out of mandated compliance to NPS frameworks, there is a requirement on central
procurement functions to provide guidance and support on operational procurement policy as it
relates to categories under central frameworks, along with policy on areas such as savings
measurement and reporting which are covered in more detail below.
35
For example, while not a Policy Unit in itself, the NPS have been proactive in building
awareness of procurement guidelines and EU directives across State purchasing groups and, in
a recent survey of procurement staff conducted by the NPS, over 52% felt that they had good,
or excellent, knowledge of EU Procurement Directives.
However, the survey also identified that 22% also responded to having limited or no knowledge
of directives and over 31% had limited or no knowledge of EU Remedies Directives. The
penetration of EU procurement guidelines training has not been as prevalent in organisations
where accountability of procurement is unclear, such as within primary and secondary schools
under the Department of Education and Skills. Also greater awareness of compliance
requirements has coincided with increased uncertainty amongst some procurement resources,
especially those engaged in procurement on a part-time basis, which is slowing down the
implementation of tendering processes.
The implications of EU procurement directives and compliance to Irish competition law and the
remedies directive have placed a large compliance and administrative burden on procurement
within the Public Service. The NPPPU provide general guidance and instructions to the public
service through circulars that issue to accounting officers. Compliance with these guidelines is
audited both internally by the public body concerned and by the Local Government Audit
Service or by the Comptroller and Auditor General. There is a lack of a single owner across the
NPPPU, CSSO, NPS and CMOD procurement activity and legal support to define and
implement a coherent and comprehensive legal and procurement policy, framework and
guidelines to ensure compliance across Public Service procurement. The risk of noncompliance due to lack of awareness is greater outside the permanent procurement resources.
c.Finding: Single point of contact not always available due to decentralisation

of purchasing operations and control
The perception of procurement as being important to delivering value has improved in recent
years amongst senior Public Service leadership as a challenging economic backdrop has
focused attention on cost reduction. In response, a number of sectors and agencies have been
pro-active in developing procurement capability to respond to the current challenging
environment, and there are notable examples, such as the Department of Agriculture, Food and
Marine, who are building capability to enable improved central coordination and control of
purchasing activities.
One of the key challenges for a central procurement function, and the NPS in particular, is the
lack of a single point of contact within organisations that can support stakeholder engagement,
champion procurement strategies and ensure benefits are delivered. Departments are required
to have a Procurement Officer, however purchasing operations are still decentralised in many
sectors and good procurement discipline, such as contract coverage and control of maverick
buying, is not applied with the same rigour as financial cost controls.
This has meant that the NPS has had to expend more effort on engaging fragmented customers
when developing tender requirement and building buy-in for central frameworks. For example
over 250 buyers were engaged in preparation for the National Stationery Framework alone.
Recent developments within Local Government, which will simplify the interface with the NPS
and drive benefits delivery, are commendable, including the establishment of the National Local
Authority Procurement Group (NLAPG) and regional procurement specialists.
36
d. Finding: There are no standard procurement performance targets or

metrics
There is limited or no accurate information on how procurement is performing across the
State. Reporting is currently a manual, labour intensive and inaccurate exercise partially due to
fragmented systems, lack of data standards and unclear accountability for monitoring.
There is no central systematic tracking or reporting of procurement performance against a
standard suite of procurement metrics. While the NPS does track coverage, usage and savings
under central frameworks, these metrics only cover 6% of State spend and are gathered on an
ad-hoc basis. Organisations within the Public Service do track savings and compliance levels
locally, however these are not reported centrally, are also typically measured on an ad-hoc
basis, do not allow for double counting and are not measured using standard methodologies
(e.g. there is no standard savings measurement approach).
Reported performance metrics, in general, are focused on compliance, framework coverage and
savings. These should be broadened to align procurement with desired behaviours across
sectors and drive national procurement strategy. Performance indicators for non-financial
benefit, such as including sustainability, SME coverage, supplier performance and employee
development, are not systematically tracked or reported centrally making it difficult to effectively
target and take action to improve performance.
There are notable exceptions, such as NPS and SEAI who are currently working on establishing
central monitoring and reporting of energy consumption and savings across the State.
e. Finding: No standard methodology to baseline, measure and report

While there is focus on cutting costs across the Public Service, there is currently no standard,
agreed methodology for calculating and reporting savings realised through deliberate
procurement action across sectors. Procurement savings are reported by several agencies,
including NPS, HSE and Local Government, however the approach taken to calculating savings
varies by agency, resulting in different savings being reported for identical initiatives and
potential double counting.
For example the NPS have reported savings of 850,000 on State advertising contracts,
whereas local government alone has reported a 2.7 million reduction in Advertising spend
through the NPS framework.
The typical issues we identified in our review are:
There is an inconsistent understanding as to the different types of savings

There are inconsistent terms and definitions used to describe the different types of
savings
Savings methodologies that have been established are often based on forecast levels of
future expenditure rather than actual
Procurement savings are often delivered at the point of sale or purchase which negates
the ability for the saving to be captured or realised fully
The measurement of savings at the point of invoicing can be costly and time consuming
In recent years, the challenging economic and fiscal environment has forced the State to put
more focus on procurement savings. Whereas procurement savings where not systematically
tracked and reported in the past, purchasing units are starting to report savings. There is a
37
requirement for a standard measurement definition to allow confidence in savings reported and
an expectation that central procurement functions should provide guidance on these standards.
4.4.2 Sourcing and Category Management

Sourcing and Category Management is concerned with understanding the following:
Visibility of accurate and timely spend data

How opportunities are identified and prioritised
How category strategies are developed and managed
What industry and category expertise is available
The methodology used for sourcing and implementing strategies
How demand and project delivery are measured and managed
a. Finding: No central access to accurate and timely spend data

The central procurement functions do not have access to reliable, accurate and timely spend
data which is critical to identification and prioritisation of category opportunities, and
development of sourcing strategies.
For example, the most up-to-date spend available to the NPS was gathered through a 2010
survey of State buying organisations requesting a breakdown of the top thirty categories of
spend. This data covers only 2.4 billion of the total State procurement spend and does not
include information on suppliers, contract coverage or transaction volumes.
b. Finding: Lack of consolidated, accurate demand forecasts and demand

challenge
A symptom of the Public Service top-down annual budgeting process, is that detailed
information identifying how budgets will be spend are not systematically produced. The result of
this is that procurement does not always have visibility of demand until after key decisions have
been made and, as a result, their ability to influence purchasing decisions is reduced.
This has meant that central procurement functions do not have access to accurate forecasts of
what goods and services will be purchased in the coming year, and are reliant upon incomplete
historic spend data to prioritise category opportunities and developing sourcing strategies
Limited availability of accurate forecast data, along with decentralised purchasing, has also
meant that procurement is not positioned to challenge demand, which is one of the main levers
that procurement can use to deliver savings. Mandated compliance to central frameworks, for
example, will allow the State to leverage aggregate spend but will not control volumes of spend
or purchase of over-specified goods.
c. Finding: No central list of procurement professionals across the State

Within the central procurement function, the NPS, in particular, has been proactive in engaging
stakeholders from across sectors on broader procurement issues or matters, for example they
have used bi-annual procurement seminars and the procurement.ie web portal, which is used to
provide both buyers and suppliers with information on planned framework tenders, best
practice, and upcoming events
The State does not maintain a record of resources currently working in the procurement
area or on procurement activities. The NPS maintains a repository of procurement
38
stakeholders that is manually kept up to date and is used for communications purposes. As
sectors and agencies change procurement staff without notifying NPS, the list of NPS
stakeholders can frequently become out of date resulting in communications not reaching the
required recipient.
d. Finding: Stakeholder engagement in central framework tenders

While communication under the NPS has improved, information on framework tender timelines
are not up-to-date or of sufficient accuracy to allow sector purchasing units to be aligned to their
own purchasing plans. Actual dates for key tendering milestones, such as tender publication
and forecast award date, are either not communicated or can change without sufficient
notification. Local end users maintain their contracts and milestones without updating
procurement.
System solutions, such as the National Tender Tracker within Local Government, have been
deployed within sectors that allow procurement resources to track progress of tenders online
and similar solutions should be considered by central procurement functions to facilitate
communication and alignment with stakeholders.
While the NPS have invested heavily in relation to engaging with sectors, interviews indicated
that cross-sector stakeholders are still not routinely consulted on key sourcing and category
management decisions impacting customers, including user requirements, award criteria and
overall satisfaction with framework and supplier performance.
e. Finding: No standard category management methodology, tools and

templates
The Public Service has dedicated procurement category managers who manage categories of
spend within the NPS and HSE, and there is evidence of good category management principles
in practice within these functions. However processes and practices are not consistently defined
and implemented across category management teams and there is no standard, documented
methodology for strategic sourcing or category management currently in place.
As a result of varying levels of category management there are lost opportunities to leverage
efficiencies in cost, quality and value added services from suppliers due to a focus on local short
term needs instead of strategic long term partnering.
4.4.3 Contract and Supplier Management

Contract and Supplier Management is concerned with understanding the following:
How is supplier and contract data managed

How are suppliers tiered, segmented and categorised
How supplier and contract performance is rated, measured and managed
How supply chain risk is evaluated and managed
How supplier education is managed
39
a. Finding: No central visibility or management of contract data

The State has no central tools for managing contracts over their lifecycle or tracking usage
against contracts. While not in place at the time of writing, the planned upgrade of the eTenders
system is due to include a contracts management module which will go some way towards
resolving this issue.
There is no central monitoring and reporting of contract coverage (i.e. the volume of spend that
is covered by a contract) and contract usage (i.e. the volume of spend that goes through a
contract) for all spend, although there are notable exceptions, including Irish Prison Services,
HSE and Garda.
The NPS does track the volumes of spend under its own frameworks, currently estimated at
40% contract compliance, on an ad-hoc basis using data provided by suppliers and spend
estimates based upon a 2010 survey. As highlighted above, this information does not accurately
reflect the overall usage as accurate and timely spend data is not currently available. At the time
of writing, the NPS was putting in place a process and tools to track framework compliance and
savings more efficiently though issues with data quality still remain unresolved. CMOD also do
not currently monitor or report on framework usage and compliance despite recent attempts to
request supplier information in order to track compliance. Both the NPS and CMOD
procurement activity is supplier dependent for information and as a result there are gaps in the
visibility and quality of the information currently available.
At the time of writing usage of central frameworks were not mandatory and this has contributed
to the low level of compliance, currently 40%. The government has recently decided to
mandated the usage of NPS frameworks, except in exceptional circumstances, which will see
the Comptroller and Auditor General and individual public bodies becoming accountable for
actioning non-compliance. This should help improve visibility of the usage of central
frameworks.
b. Finding: No accurate, up-to-date data on total State suppliers

The central procurement functions frequently and systematically engage national framework
suppliers to review and manage framework contract performance, raise any performance issues
and, if required, agree corrective actions. There are examples of sectors and buying groups
within sectors actively managing suppliers, such as the HSEs use of a metrics dashboard to
monitor top supplier performance.
The NPS has also conducted surveys with sectors to determine the top suppliers across the
State, albeit almost two years ago, and this information has been used to enable cost saving
strategies to be targeted at top suppliers.
The State does not have accurate data on the total number of suppliers and there is no single
central repository for recording, maintaining and reporting supplier master data. Supplier
information is dispersed and duplicated throughout Public Service systems. Based upon the
sample data gathered as part of this review, it is estimated that there are upwards of 212,000
State suppliers, however due to the limited control over vendor master data across procurement
and financial systems it is not possible to deduce the number of duplicate vendors within this
data over the short timeframe of the review.
Over 61% of respondents to the recent NPS survey stated that they would like to see the
creation of an electronic public procurement passport holding supplier details that would not
only reduce effort required by local procurement teams in maintaining this data for themselves
but would allow greater control in how master data is managed.
40
c. Finding: No integrated supplier management approach

One consequence of not having accurate and up-to-date supplier information is that the State
does not monitor and manage supply chain risk, or gather accurate information on spend with
SMEs across the State that may inform national policy.
While relationships with suppliers under central frameworks are closely managed, the majority
of suppliers are not segmented and managed across the State. This results in professional
procurement resources being engaged in lower level tactical and operational buying levels
instead of of focusing resources on large strategic cross sector spend, suppliers and savings
initiatives.
The figures illustrated in Figure 4.4 show the number of suppliers per 100m across a range of
public service areas and provides a benchmark of best practice. This highlights the lack of
segmentation and prioritisation of procurement professionals to larger spend areas.
Typically, procurement will segment the supplier base based upon level of spend, criticality of
the service and level of risk, This allows procurement to focus on the top suppliers and
categories in order to maximise the return on investment.
The benchmark illustrates that 228 suppliers is the average number of suppliers per 100m of
spend, however the number of suppliers currently active across the state is greater than this.
This is partially down to a lack of control over procurement demand but also linked to duplication
of supplier data within sectors, as relationships with suppliers are managed locally and remain
uncoordinated nationally.
Figure 4.4: Number of Suppliers per 100m
On a positive note, the National Procurement Service has been proactive in enabling more
transparent and open communication with suppliers through the procurement.ie web portal
and use of supplier engagement forums. It has also run initiatives to educate suppliers in the
public tendering process and provide SMEs with the skills to compete in public tenders to the
mutual benefit of both the State and SME sector.
Although more than 67% of respondents to a recent NPS survey of State suppliers indicated
that they had limited or no knowledge of EU Procurement Directive and 75% indicated limited
or no knowledge of EU Remedies Directive. This highlights the risk of non compliance across
large numbers of suppliers and contracts in the Public Service.
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4.4.4 Requisition to Pay

Requisition to Pay is concerned with understanding the following:
How requisition to pay master data is managed across sectors

What guidelines and support is provided to end users
How compliance and non-compliance are managed
a. Finding: No buying channel strategy

There are a number of different procurement processes that can be used to manage the
sourcing, contracting, ordering, delivery, receipt and payment activities. Procurement
organisations typically define standard processes and select the appropriate process depending
upon the category of purchase, level of activity and scale of spend.
Goods and services can typically ordered using one of the following processes:
1.
2.
3.
4.
5.
6.
7.
Purchase Order
Non Purchase Order
Catalogue Order
Non Catalogue Order
Purchasing Card Order
Cheque Requisition
One Time Vendor Expenditure
The review found that there is no State-wide buying channel strategy for how goods and
services should be bought across the State for all spend. While central procurement functions
are responsible for establishing central framework agreements, it is the local contracting
authorities that are responsible for putting in place the contracts under these frameworks and for
enabling their local end-users to order or call off of these contracts. There are multiple
fragmented, non-standard processes and supporting systems across sectors that enable
ordering of goods and services by end-users, including paper-based purchase orders,
buying portals, p-cards and e-catalogues. This causes additional internal order administration
and external supplier administration in dealing with difference departments and agencies
supplying the same goods or services.
For example p-cards are available to some buyers within local government for low value, ad-hoc
purchases, while schools are exploring the use of a PayPal-enabled solution to manage low
value, spot buys.
b. Finding: Contracts are not integrated into ordering processes

There are groups within the Public Service whose contract databases are integrated into their
requisition to pay processes. An Garda Siochana, ensures that end users are both aware of
what contracts are in place at time ordering and are channelled towards using them This is the
exception rather than the rule and, in general, compliance with contracts is dependent upon
manual checks by procurement at time of order or retrospectively at time of invoice.
Usage of NPS framework agreements was approximately only 40%, but the State is currently
mandating their use. As highlighted above, the central procurement functions have limited
visibility and control over orders under central frameworks. Responsibility is with contracting
authorities to ensure that framework agreements are easily accessible to end users and
that local buyers are compliant.
42
While this does not prevent enforcement of compliance through central reporting and
establishment of clear sector level accountability to deliver compliance, it does mean that the
NPS does not have the ability to control demand within sectors. This is one of the key levers
that the Public Service can use to deliver savings from its third party spend.
CMOD are engaged in the sanction of ICT spend and have a more proactive role currently in
supporting end users in the development of appropriate technical specifications. In this role
CMOD have the opportunity to be involved at an earlier stage in the procurement process and
can positively influence the demand/specification through the sanctioning of spend from existing
framework contracts.
4.4.5 Receipt to Pay

While the Receipt to Pay process was not covered extensively as part of the review, there are
some general observations related to process efficiency and effectiveness that should be
explored in more detail.
The NPS is piloting an e-invoicing solution with five organisations (HSE, Defence, LGMA,
Justice and Enterprise Ireland) as part of PEPPOL (Pan-European Public Procurement OnLine). e-Invoicing is not supported extensively across the State, although there are notable
exceptions such as the Department of Justice and Equality. e-Invoicing has potential to
significantly reduce both internal and external indirect administrative processing costs and also
to support greater compliance and supplier performance through more rigid financial approval
on satisfactory completion of work against contracts and purchase orders.
The Department of Justice and Equality also operates a Financial Shared Service in Killarney
for all bodies under its aegis as well as a number of other central government Departments. It is
notable that bodies under the Department of Justice and Equality had some of the highest
contract compliance levels across the State.
Due to limited system integration, there is evidence to suggest that significant manual effort is
required to complete of the approval of invoices against purchase orders due to the manual
matching of paper based invoices.
Finding: No central management or control of spend and vendor master

There is no standard classification for spend across sectors (i.e. common classifications for
State spend). Goods and services are categorised differently across sectors, and even within
sectors, making it difficult for the State to determine where it is spending its money and to
identify where there is commonality across sectors.
There are examples of classification currently in use, or in development, by purchasing units,
however these are not aligned. For example the Department of Agriculture, Food and Marine
are currently developing a standard categorisation for their spend as are the local authorities,
while the NPS have their own top level categorisation for spend under their management.
As highlighted above, the State also does not have a standard vendor classification or have
a central approach to managing vendor data.
A cursory review of supplier data from across sectors shows multiple instances of the same
vendors codified with different vendor IDs and different names. This makes it difficult for the
State to understand how much it is spending with any one supplier, manage supplier
performance across sectors, or understand where there is risk in its supply chain.
In general, master data management is decentralised and controls to ensure the integrity of
data is maintained are not rigorously applied across sectors.
43
4.4.6 Workforce and People

Workforce and People is concerned with understanding the following:
Are there standard roles and responsibilities across State, sector and department
procurement
Is there a capability assessment and personal development plan in place
Are staff managed by objectives
Is capacity sized and optimised against spend
Are there gaps in the organisations capability
a. Finding: Accountability for procurement policy, strategy and delivery is

fragmented across central procurement functions
As highlighted above, the fragmented structure of central procurement functions has meant that
the procurement objectives and practices of CMOD, the NPPPU and the NPS have not always
been fully aligned. There is no one central group accountable for procurement policy,
strategy and delivery across the State.
b. Finding: NPS lacks the authority required to deliver savings optimally

Furthermore, while the location of the NPS within the OPW may have been optimal when the
NPS was being set up, the NPS has lacked the authority to influence senior stakeholders
on spend decisions, which has undermined its ability to implement category strategies within
sectors and deliver savings to the States bottom line.
In theory, the Procurement Officer should be the first point of contact for the NPS within each
sector to engage stakeholders and build buy-in for central strategies. While there is good
financial cost control in place across the Public Service, the reality has been that purchasing
decisions are mostly decentralised and that the NPS has had to engage multiple, fragmented
buyers within sectors to implement category strategies and realise savings. For example
approximately 4,000 schools have been supported under the Energy framework.
c. Finding: Clear career path for procurement within the Public Service is not
available
In general, procurement is still perceived as an area which offers limited career opportunities
and development prospects. For example anecdotal evidence captured through interviews
referred to resources within the civil service been encouraged to continue their career outside of
procurement having recently finished a Masters qualification in Procurement.
Relatedly only 12% of procurement resources identify themselves as having a full-time role in
procurement, with 43% indicating that procurement formed only a minor part of their role within
the organisation.
If the State is to realise the substantial savings that it hopes to deliver from its spend, then it
will need to invest in skills development, define clear career paths and position procurement as
an attractive place to work.
44
d. Finding: No integrated competency development programme

The NPS, in particular, has made progress in up-skilling its own people and training
procurement staff across sectors in tendering processes and how to be compliant with EU
directives.
NPS and CSSO have produced a standard contract templates for goods and services that
are currently available to all sectors through the Procurement.ie buyer portal that has helped to
reduce the effort required to run a tendering exercise and to develop consistency in how the
Public Service go to market.
However, in a recent survey of procurement staff across the Public Service carried out by the
NPS, only 54% of respondents stated that they were using the template and 65% of
respondents stated that their own Departments templates were better suited to their needs.
The same survey found that less than 23% of resources who procure goods and services as
part of their role have a procurement or supply chain qualification, and over 46% have not
undertaken any public procurement training within the last 3 years.
Standard roles and responsibilities are not defined for procurement across the Public Service
and national training programmes have tended to be one-size fits all and focused on
compliance. There are many different types of procurement resource currently working within
the Public Service from part-time buyers responsible for processing purchase orders to senior
category managers responsible for managing national categories of spend. The skills and
competencies required to successfully carry-out these roles are very different, and training and
development needs should be correspondingly so.
e. Finding: Limited cross-sector communities of practice or opportunities for

procurement management to engage one another
The NPS run bi-annual procurement seminars that are open to Public Service procurement
professionals across the State and have been well received. Outside of this event, there is no
forum, or structure, currently in place to enable networking and information sharing
amongst procurement staff. It has been evident from interviews that there are a lot of
initiatives being implemented by some sectors to develop their own internal procurement
capability and that, while there is some ad-hoc sharing of lessons learnt and practices between
procurement groups, procurement organisations operated largely in isolation from one another.
There is a lot of re-invention of procurement practices taking place.
Exceptions are in evidence at a sector level, such as the National Local Authority Procurement
Group (NLAPG) that was recently established within local government.
4.4.7 Procurement Technology

Procurement Technology is concerned with understanding the following:
What standard tools are in place for RFI, RFT, Supplier Addition, Requisition and P/O,
One Time Vendor
What IT Procurement Strategy is in place to manage the end to end process and provide
visibility and control of spend
What are the delegation of authorities, authority to contract, approval limits
What tools are in place for sourcing, contracting, supplier performance, buying, eprocurement, receipting and payment
45
a. Finding: eProcurement systems are fragmented

There are a wide variety of systems currently in operation across the Public Service that, to a
varying degree, are being used to enable procurement processes within sectors. For example
there are over 30 instances of Agresso in use across Local Authorities while VECs use Sun
Systems solutions.
These systems are highly fragmented with over 4,000 separate instances of financial systems
across the State when primary and secondary schools are taken into consideration. In contrast
to leading organisations, simple buying is still an overly manual process for the majority of
sectors with manual support required to approve, submit requisitions and issue a purchase
order to suppliers.
Based upon the data gathered and interview feedback, there would seem to be a significant
number of administrative staff working across the State supporting transactional procurement
activity as part of their role. These resources could be freed up to support other areas of the
Public Service through greater utilisation of e-Procurement technology, amongst other things.
b. Finding: Central eSourcing systems are used and further upgrades are in
progress
The e-Tenders sourcing solution, which is maintained by the NPS, is being used by the State to
manage above threshold tenders in compliance with EU procurement guidelines. Local
authorities have also rolled-out their LA Quotes tool, developed by Kerry County Council, to
support requests for quotations nationally.
The current version of eTenders only supports basic tendering activities, including tender
notification, communication and awarding. The system is being upgraded and future versions
will support tender appraisal, e-auctions and improved communications management. While not
in place at the time of writing, the eTenders upgrade is also expected to include integrated
contract management and supplier relationship management functionality.
However it is also worth noting that there is still a substantial number of tenders that do not go
through eTenders. Over 30% of respondents to a recent NPS survey of procurement staff stated
that 50% or more of the contracts they put out to tender in the last 3 years were not advertised
through eTenders.
c. Findings: No central contract database

There is no central contracts database or contract management process, and visibility and
control of contracts varies greatly between purchasing groups. An Garda Siochana, for
example, use a third party solution to centrally manage their contracts, while the Defence
Forces and Department of Agriculture, Food and Marine are in the process of building a
consolidated database of all their contracts.
The fragmentation of purchasing systems and limited integration between sourcing and ordering
systems has meant that, while there is focus across the State on ensuring that costs are being
managed, the State does not have the systemised control over buying channels to enforce
compliance with contracts and reduce maverick spend.
A new version of e-Tenders is scheduled for deployment by the end of 2012 that will include
integrated contract management module and will go some way to resolving this issue for
contracts tendered through e-Tenders.
46
d. Finding: Basic spend analytics tools are only in use within central
procurement functions
The large number of fragmented systems has also been one of the main barriers to central
visibility of accurate, regular and timely State spend data. Significant manual effort is
currently required to extract spend data from across the States financial systems, cleanse and
normalise the data so that it can usefully be analysed.
Access to quality spend data and spend analytical tools, which helps procurement understand
what is being bought, who is buying it and who they are buying from, is critical to informing
procurement strategy and setting realistic targets. The NPS are currently using Microsoft Excel
and Suprem to support basic spend analytics.
Other procurement technology solutions, such as p-cards and Achilles, which is used for vetting
perspective suppliers, are also in use in pockets across the State.
47
48
5 Recommendations
5.1 Introduction
The review of the central procurement function has identified findings that have been
consolidated in to a number of common themes across Public Service procurement that need to
be addressed in order to ensure and effective and sustainable procurement organisation:
Figure 5.1: Summary Observations and Recommendations
The above themes are not new to Public Service procurement and have been identified in
previous reports, including the PWC Strategy for the implementation of e-Procurement in the
Public Service report in 2001. Actions have been taken including the establishment of the
National Procurement Service in 2009 but we have not seen a significant impact on the core
underlying themes. In order to ensure the successful implementation of recommendations, we
need to address the core issue that is Why has the central procurement function not been
successful in implementing procurement policy, frameworks and savings ?
The report has identified annualised potential savings of between 249m to 637m that can be
achieved through a centre led strategic cost reduction programme, but this will require
significant investment in the capability and capacity of procurement to deliver the benefit.
49
This section will outline the following:

1. Addressable Spend and Savings that can be delivered
2. Capability and Capacity areas that need to be addressed in order to deliver a sustainable
procurement organisation:
-
Strategy and Governance

Sourcing and Category Management
Supplier Relationship Management
Requisition to Pay
Workforce and Organisation
Technology
5.2 Spend and Savings

5.2.1 Recommendation for Addressable Spend
From a total addressable spend of 6.9bn, as defined in section 3.1, we have identified the
following top categories of goods and services:
Table 5.1: Total Procurement Addressable Spend (2011)
The review conducted a spend analysis and validation of spend using existing financial estimate
and procurement spend data together with supplementary contract, pricing, invoicing and
supplier data to validate the high level spend categories. UNSPSC, NATO NSC and e-Class
Medical Categorisation standards were combined to develop a single combined categorisation
of spend that was validated with individual departments and agencies for accuracy. The review
identified sixteen (16) high level categories of common goods and services that are purchased
across the public service. Unclassified spend is not deemed to be a standard category.
We recommend a more detailed in depth spend analysis is conducted to provide further
granularity given that this was a rapid six week review with multiple data sources.
50
In order to effectively manage these categories we recommend that a category assessment be

conducted to determine where the ownership of the category should lie. At present there is no
clear ownership and responsibility for managing common categories at either a national, sector
department or local level and this creates duplication of effort and dilution of spend leverage.
Categories of goods and services that have high levels of standardisation, are commonly used
across all sectors and that have multiple users, e.g. stationery and office supplies, are deemed
suitable to be managed by procurement from a central perspective. Categories of goods and
services that are non standard, have single or few users and that require a high level of
technical knowledge, e.g. defence supplies and medical suppliers, are deemed to be not
suitable to be managed from a central procurement perspective and are recommended to be
managed either within the specific sector or department with the usage.
A standard category assessment model, in Fig 5.2, outlines the objective method of
understanding the characteristics of the demand and supply side of the category. This method
enables us to determine whether or not a category is suitable for central management.
Figure 5.2: Category Mapping Framework
Following the above high level category assessment exercise it has been estimated that
procurement addressable spend of 4.3b is suitable to be led from the centre. The balance of
2.4b is deemed not suitable to be centre led and is recommended to be managed within
sectors.
The categories deemed suitable to be centre led are contained in the Table 5.2 below that
shows the level of spend within each category across the sectors.
51
Table 5.2: Target Centre-Led Categories
The common categories identified are used by all Departments with many buyers and are
suitable for a centre led procurement approach.
Table 5.3 below describes the categories not deemed suitable to be managed from the centre
and to remain managed within Sectors or Departments.
Table 5.3: Target Sector/Department-Led Categories
5.2.2 Saving Opportunities

Accentures approach to estimating the savings opportunities was to conduct a high level
analysis of the categories, buyers and suppliers in use in order to determine the following:
Category Maturity For each common category it was identified how and what is being bought
in order to gauge the level of sophistication and maturity of the category. This was benchmarked
against Accentures Global Category Management Models and market research on category
strategies to gauge how mature the categories are from a supply perspective.
Buyer Maturity Interviews were conducted for each category which analysed the internal
buyers and their contracts to determine the level of sophistication and maturity in their sourcing
strategies. For each category the level of contracts in place, percentage compliance, total
number of suppliers, requirements gathering approach, sourcing strategy and historical savings
achievement was researched. This data was benchmarked against Accentures High
Performance Procurement databases to validate areas of opportunity.
Ease of Adoption/Implementation Procurement and key business stakeholders were
interviewed to ascertain the level of interaction and support for procurement led initiatives. This
was validated against the buyer interviews contract, spend and compliance data captured in
52
order to validate the level of co-operation, potential ease of implementation and adoption of
procurement initiatives.
Following completion of this exercise the project was able to identify saving ranges that are
typically achieved across indirect categories in the Public Service.
Table 5.4: Breakdown of Estimated Savings Target Range (Annualised)
In order to estimate savings the 6.9b addressable spend figure was reduced by removing
476m of unclassified spend. The figure was further reduced by removing 170m from Travel
within the Education sector for the school bus scheme that is deemed already contracted with
little opportunity for further cost reduction. The revised figure of 6.2b is then considered to be
53
80% addressable, from a savings calculation perspective, due to 20% of spend being
considered highly fragmented spend with small suppliers across all categories and sectors. The
revised figure of 4.98b is used as the basis for savings calculation.
Savings ranges have been recommended based upon Accentures prior experience with public
sector strategic sourcing engagements with similar spend and supplier fragmentation.
Supporting this is our global category and marketplace knowledge that provides insight into how
additional benefits can be derived across common categories.
Our calculations have factored in the geographical spread of spend across the country and the
current maturity level of buying across sectors. In addition we have factored in the current
frameworks, compliance and savings achieved to date.
For each category we have estimated a specific low, medium and high savings range that could
be achieved through a combination action that we have described as of demand and supply
levers. The low range figure is based upon the achievement of 60% contract compliance to the
80% addressable spend figure. The mid range and high range figures are based upon the
addition of demand side levels and increase contract compliance to 80% and 90% of the 80%
addressable spend target. Typically procurement organisations can achieve up to 60%
compliance to frameworks through structured planning and requirements gathering followed by
strategic sourcing and contracting. However, there still remains significant leakage to local
alternative sources. With a focus on contract compliance and proactive demand challenge
internally we typically expect to deliver increased savings ranges up to 80% to 90% compliance.
5.2.3 Demand and Supply Levers

The traditional focus for procurement savings is on third party supplier price and cost reduction.
This cost typically represents about one third of the total cost to serve. Additional savings can
be achieved through a combination of looking at what, why and how the Public Service conduct
certain activity and challeng demand. By addressing the internal and external elements the
Public Service can achieve an average of 10% cost reduction through a strategic cost reduction
programme.
In order to address the immediate and on-going need to reduce and manage cost it has been
recommended taking a total cost of ownership approach. Focusing on the third party supplier
cost alone will deliver a tactical short term efficiency that is limited in scope and is unsustainable
without a significant organisation transformation. Third party cost typically only account for a
small percentage of the total cost to serve.
Total cost of ownership looks at the end to end business process and addresses the cost to
serve from four perspectives:
1. Strategy and Policy Review the requirements from a make or buy decision and consider
if there is a better way of doing it. For example, provide this service internally (make) or using
third parties (buy). What is the internal total loaded cost added to third party cost over a five
year period. Is this a fixed or variable service with changes in technology and innovation? What
are the risks involved in doing or not doing this? Is there a way to control this from a policy
perspective and reduce the direct involvement?
2. Demand Identify if there is a justified need for this product or service? Can we stop buying
it? If there is an on-going justified demand can we reduce the demand or quantity. Implementing
a cost conscious culture of challenging demand is very effective in controlling total cost.
3. Specification Following demand challenge is specification review. This is where the
Public Service look at what they are buying and standardise the requirements. For example,
how many types of stationery pads and blue pens are used and how many types are actually
54
needed? By standardising on the specification the Public Service will be able to leverage their
spend by increasing buying power. The other area within specification is to lower the average
specification. Again, using stationery is a leading branded ballpoint pen required or will a
generic pen do the job just as well. Challenging the specification in both these ways will reduce
the cost to serve.
4. Price Finally, the total cost from the other three aspects has been addressed. This is
achieved through consolidation of suppliers and competitive negotiation. Leveraging National
Frameworks and volume through competitive tendering will achieve substantial results for
common categories in this area.
In summary total cost of ownership is addressed by:
Buying Better
Buying Smarter
Buying Less
To summarise the opportunities for savings through supply and demand levers we have
compiled an opportunities list highlighting the levers that can be used in each category.
Table 5.5: Breakdown of Category Savings Levers
Table 5.5, Breakdown of Category Savings Levers, highlights the demand and supply levers for
each category of spend identified in the review. The four levers that can be used are Price,
Usage, Risk and Process.
Each category has specific internal and external market place dynamics and depending upon
the category will dictate greater or lesser use of the four levers.
For example, Print & Stationery can be influenced by Price and Usage. Price refers to the
strategic sourcing and price reduction that can be achieved through tendering. Usage refers to
the internal ability to reduce the usage of products through proactive demand challenge and
55
limit usage at point of delivery/usage. Price can also be influenced by specification

standardisation and rationalisation of the range of products in office supplies. Compare this
approach to Medical supplies where there is less opportunity to change specification or usage
due to patient needs and clinical product approvals.
A detailed category analysis and strategy development is required for each major category and
individual sourcing project and during this exercise the specific levers will be determined.
5.2.4 Sourcing Wave Delivery

To implement the identified opportunities it is recommended that the creation of a strategic cost
reduction programme sponsored by the CPO governance model outlined above is created.
In order to successfully implement the category specific initiatives a phased approach to
sourcing projects prioritised by the level of savings potential and the ease of implementation has
been suggested.
Figure 5.3 Strategic Sourcing Wave Plan is a suggested prioritisation of category initiatives
across sectors based on our high level understanding of the spend, opportunities for savings
and ease of implementation internally and externally. The review did not consider the
departmental and sectoral project dependencies within the six week timeframe. The proposed
approach focuses on initial quick wins and improvement in framework compliance in categories
where there are typically least amounts of resistance and impact of change on the business.
The exception to this is the medical category and this is suggested to start and continue across
all phases given the scale and timeline involved in implementing clinical trials and contracts.
This approach allows procurement to build momentum before approaching more traditionally
resistant categories such as professional fees. The suggested approach takes into
consideration that there is also a limit on the level of change that can be taken on by local end
user departments before there is an operational service delivery impact. This is the reason why
the activity is spread out in three waves covering two years.
It is recommended that a detail strategic planning exercise is conducted in order to validate the
following recommended approach. The initial six week analysis did not cover a detailed
integrated planning and dependency mapping in order to finalise a detailed sourcing plan. This
activity should be completed together with a validation of national, sector and Departmental
initiatives as part of an overall programme for cost reduction.
It is important to note that strategic savings are typically delivered over a number of sourcing
waves, prioritised to deliver bang for buck and build momentum. The ability to implement and
deliver savings is limited by the capacity within procurement to deliver and the ability of end user
Departments to manage the level of involvement and change while maintaining business
continuity. This is the reason a senior cost reduction programme governance with sponsorship
and participation from senior leadership across all sectors is recommended.
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Figure 5.3: Strategic Sourcing Wave Plan
The above sourcing wave is a high level view based upon a high level six week spend
assessment. It will require a detail spend assessment at a more granular level with a detailed
integration and alignment plan with sectors and Departments before a final plan is executed.
5.3 Opportunity Identification for Non-Addressable Spend

During the review of central procurement a data gathering and spend analysis was conducted in
order to identify procurement addressable spend. Procurement addressable spend is defined as
spend that has the potential to be influenced directly by procurement using either demand or
supply strategies to influence price, quantity and or specification.
The scope of the procurement review included annual reoccurring operational expenditure but
excluded capital expenditure. Capital Expenditure is estimated at 6bn and there may be
opportunities to leverage the procurement review for common categories and generate savings
within the capital expenditure. We recommend a detailed review of capital expenditure in a
separate exercise to determine the opportunity.
From an estimated annual reoccurring revenue spend of 9bn we identified an annual
procurement addressable spend of 6.9bn following a data gathering, cleansing, mapping and
validation with sectors and Departments.
The remaining 2.1bn of spend was classified as either non-addressable or addressable but not
addressable by procurement. The reasons behind spend being considered non-addressable
were either where the spend was clearly not a procurement addressable item, e.g. wages or
grants, or where we did not receive granular enough information and were unable to validate the
spend. We believe there is spend within this that could be classified as procurement
addressable but within a short six week period we were not able to identify the actual category
or spend, supplier or buyer. Examples of the spend deemed un-addressable by sector are
outlined in Table 5.6 below:
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Table 5.6: Non-Addressable Spend by Sector
Addressable spend but not by procurement is a classification we have developed where the
spend is a negotiable good or service but managed outside of procurements remit at present.
The largest element identified in this category is within the Health Sector where the Department
of Health engages in negotiation directly with the market place or where ministerial/legislative
intervention dictates the market pricing. In these cases we deem the spend to be negotiable but
not by procurement.
Recommendations for non-addressable spend:

During the review we identified a number of significant spend areas that are addressable but are
not influenced or controlled by procurement today. The following areas are examples of where
procurement can add value in this category of spend and we recommend they are actioned.
1) General Medical Scheme this category of expenditure relates to the portion of
medicines dispensed through pharmacies and doctors under the medical card scheme
and is controlled by the Department of Health with direct Ministerial intervention and
price setting.
This expenditure has three components; drug supply; pharmacy fulfilment or GP prescription
and fulfilment.
The drug supply comes from the same suppliers as the HSE and we recommend the
negotiation and control of this through HSE procurement who specialise in drug procurement.
This will allow greater leverage and control of the spend and specifications through HSE clinical
engagement and procurement negotiation. In addition the standardisation of drugs and adoption
of generic medicines through policy within the scheme would reduce total cost and remove
supplier led decisions by GPs on prescriptions.
The pharmacy fulfilment recommendation is to challenge the model and to consider alternative
fulfilment models, including direct fulfilment either from the HSE central logistics centre or from
an outsourced logistics provider. This model would utilise online prescription for patients either
from the GPs office, hospital or community care centre and would result in a large reduction in
fulfilment cost.
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2) Blood Supply The current blood supply in Ireland is managed and controlled by the
Blood Transfusion Service who set the price for blood supply with the Department of
Health. To influence this price we recommend competitive price negotiation against
international sources and the adoption of cost plus model
5.4 Strategy and Governance

In order to address the potential savings and on-going management of spend a strategy is
required for procurement that outlines its role in the planning, execution and monitoring of spend
and savings.
Within our findings we have identified pockets of excellence in procurement across the Public
Service within specific Departments and agencies. The challenge however is that there are
different customer groups for procurement with very different levels of maturity and associated
demands. At the centre, procurement is expected to deliver value for money and savings for the
taxpayer with the focus on national framework implementation and benefits tracking. Across
sectors there are a variety of requirements, from immature Departments who want an end to
end purchasing service to the mature sectors who want additional strategic sourcing capacity,
supplier performance metrics and spend analytics. Customer expectations and satisfaction with
service levels are very different due to a lack of a consistent strategy and approach to managing
procurement services.
In order to address these issues we recommend that shared vision for procurements role in the
management of spend be defined, shared and supported.
The recommended procurement strategy is for the development of a single, integrated
procurement function accountable for policy, sourcing and category management of common
categories and support operations. This should have senior leadership and we therefore
recommend the appointment of a Chief Procurement Officer (CPO) within a new National
Procurement Office (NPO).
We recommend the NPO prioritise visibility of spend, creation of the necessary governance and
support model and the delivery of strategic savings.
The recommended approach has been developed from both interviews conducted with public
sector procurement organisations and Accentures Supply Chain global insight and thought
leadership. This included interviews with senior procurement leaders, including the CPO of the
UK Cabinet Office, and supply chain leaders in the UK, Canada, Sweden, the Netherlands and
the US. This provided context and insight on the lessons learnt and key success factors that
were adopted in other geographies. Accentures global insight and thought leadership in public
service procurement was included, specifically Seven Procurement Initiatives that can stretch
Public Sector Budgets, Consip Spa spearheads efforts towards high performance in
government procurement and High Performance through Procurement in Public Services
In the UK and Europe we have compared the procurement strategy to understand both the
challenges and approaches taken to ensure effective delivery of procurement. The consistent
themes across Public Service procurement organisations have been the lack of governance
model; organisational alignment and visibility of spend. In each benchmark discussion the
approach taken has been to redevelop the procurement strategy into a strategic centre led
organisation focused on common categories of goods and services, supported by visibility of
spend through investment in technology and the support and engagement of senior civil
servants in key Departments to effect sponsorship of initiatives.
Another key learning from other public service organisations is that automation will not solve all
issues. In particular, it is limited value to implement fully automated compliance monitoring and
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control on day one. What is effective is having accurate spend categorisation in order to inform
sourcing priority, coupled with the effective governance to drive implementation and benefits.
Simple reporting measures and accountability from accounting officers are seen to be more
effective that trying to automate a compliance monitoring reporting capability initially.
5.4.1 Operating Model Recommendations

To implement the strategy, the procurement function needs an effective operating model. The
operating model describes the interactions and responsibilities between the accountable
Department, the central procurement function and the sector and Department procurement
functions.
We have learnt from our findings that the current operating model is not effective and requires
restructuring.
Earlier we discussed the various stages of procurement maturity. This evolution helps us
understand the different procurement operating models and how they support current and future
Public Service procurement needs.
This in turn helps to identify the most appropriate one for implementation in the Irish Public
Service.
The key criteria to be met for a procurement operating model are:
Accountability The organisation must be accountable for procurement policy and delivery of
sourcing and savings. It must be able to achieve its financial and customer goals.
Alignment The organisation must be aligned across central support functions with a
consistent approach to managing policy and strategy across categories.
Clarity The organisation must have clearly defined roles and responsibilities for the central,
sector and Departmental procurement functions
Enablement The organisation must have the right people, processes and technology to effect
delivery. It must be easy to implement and adopt and efficient in operation.
Visibility The organisation must have visibility and control of spend.
Four procurement operating models were considered and outlined in Figure 5.4 below:
Figure 5.4: Procurement Operating Model Options
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Decentralised There is no central procurement function and every Department and

sector is focused on its own needs. Procurement reports to the local Department.
National policy guidelines exist but local Department policies are put in place to meet
local needs. Procurement functions reside in local Departments or sectors and there is
limited co-operation across sectors.
Hybrid Decentralised A central procurement function exists but is limited to policy coordination and category strategy advice. Sectors and Departments have their own
procurement functions who report within sectors and sourcing and buying is done within
the sectors. There is limited co-operation between category buyers across sectors.
Procurement operations are managed within sectors and Departments.
Hybrid Centralised A central procurement function exists and has accountability and
responsibility for policy and sourcing for common categories of goods and services.
Procurement is a centre led model with sectors limited to sourcing proprietary categories
against central policy and procedures. Sector procurement reports within the sector but
has a dotted line to the central procurement function. The central function manages
common categories of goods and services with cross sector category implementation
teams. In addition the central procurement function provides an operational shared
service for Technology, Reporting, Compliance, Master Data Management, Training and
assisted buying centres for local adhoc purchasing.
Centralised A single centralised procurement function exists for all sectors and is
housed in a single location. All strategy, policy and delivery are managed from the
centre.
An additional variation of the operation model would be to outsource the procurement
function. This model is described below but is not recommended at this point in maturity.
We would recommend reviewing this following the completion of the procurement
roadmap. This is described below.
Outsourced The central procurement function would retain strategy and policy with
delivery outsourced to a third party. Procurement is process driven with client
relationship management, demand management, strategic sourcing, assisted buying
and operational shared services managed by a third party. Procurement manage the
service level and performance against a balanced scorecard.
The central procurement review identified the current operating model at a national and sector
level as a Hybrid Decentralised.
Of the operation model options described above, we recommend the Hybrid Centralised model
because it provides the ability to drive efficiencies from the central function, leverages buying
power and removes duplication of effort across procurement functions.
Sector and Departmental procurement officers retain their responsibility for procurement service
delivery within their sectors and the central functions provide service levels to support them.
A fully centralised model is not recommended as it would result in implementing a one size fits
all approach. This model is not likely to be effective considering the scale and complexity of the
Public Service. It could also lead to a reduction in the local knowledge and engagement on the
ground with a single procurement function physically located in the centre.
A decentralised model is also not recommended as it could reduce the ability to develop a
common approach to procurement and to provide leadership and direction on strategy, policy
and strategic sourcing. Decentralised models focus on local needs and dilute efficiencies in
price, service level and create duplication of effort in procurement.
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The hybrid decentralised model is currently in operation and lacks ability to deliver against
common categories.
5.4.2 Recommended Procurement Operating Model

The recommended procurement operating model is a Hybrid Centralised Model. The model
envisages the following elements:
Establishment of a new CPO accountable for national procurement strategy, policy,

implementation and compliance
The CPO role should be established as an office under the aegis of the Department of
Public Expenditure and Reform.
A Policy and Compliance function responsible for policy, guidelines and compliance for
procurement at an EU, National, Sector and Department level.
A Centre Led Strategic Sourcing and Category Management Model with responsibility
for common categories of goods and services across all sectors. The model would
provide a central procurement function responsible for strategic planning, category
expertise & leadership, demand management, framework delivery, savings target and
performance management responsibility.
A Procurement Operations function with responsibility for procurement technology,
master data management, reporting, communications, training and development,
operational helpdesk, assisted buying centres of excellence and compliance monitoring
Sector and Department Procurement responsible for proprietary categories of goods and
services
Sector and Department Procurement would continue to report within sectors but have a
dotted line responsibility to the CPO for policy, strategy and implementation compliance
5.4.3 National Procurement Office (NPO) Organisation Structure

We recommend the establishment of a new National Procurement Office (NPO) as a separate
office under the aegis of the Department of Public Expenditure and Reform. This will provide
procurement with the credibility and support required in order to drive strategic cost reduction
across sectors.
We recommend that the NPO be responsible for procurement strategy and policy, sourcing and
category management and procurement operations support. This will ensure alignment across
procurement functions and address the gaps identified in our findings.
In order for procurement to be effective it requires senior stakeholder engagement and
involvement in early planning discussions with senior officers across sectors. We have
recommended a governance model that will require significant interaction between procurement
leadership, policy and category management functions and senior department officials in D/PER
and across sectors. For this to be effective we recommend the NPO is setup as an agency
located in Dublin. The location will also facilitate greater sponsorship participation.
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Recommended NPO Organisation Structure:
Figure 5.5: Recommended Central Procurement Organisation Structure
5.4.4 Policy and Compliance Function

We recommend the establishment of a central policy and compliance function that combines the
existing central Policy Units and is responsible for the development and implementation of
national procurement policy, including the incorporation of EU directives, national policies and
sector requirements into operational policies, including sourcing guidelines and specific policies
on SME participation and sustainability.
The unit would also be responsible for construction policy and the development of specific
strategies and policies on SME participation and sustainability.
We recommend the development of SME participation targets, including the indirect supply
chain through the targeting of percentage of suppliers supply chain to be with SMEs. We
recommend the adoption of open competition as a preferred policy for competitive competition
and to allow SME participation.
We recommend that sectors and Departments maintain their ability to develop additional
specific policies to complement national policy but that they cannot contradict national policy.
5.4.5 Sourcing and Category Management Organisation

Following our identification of common categories of goods and services we recommend that
the sourcing and category management function takes full responsibility for the development
and management of sourcing strategy, strategic planning and management of national
procurement frameworks within those categories.
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Category managers should be appointed for the key categories outlined below and provide
leadership and direction within their category.
Figure 5.6: Recommended Central Category Management Structure
Within central government we recommend that ICT category procurement is led and managed
within the NPO with the CMOD organisation maintaining the technical specifications and
approval from an IT perspective. We further recommend the adoption of the best practice
sourcing approaches with CMOD be extended across all categories to achieve maximum value
for money.
NPO Category Managers should have deep category expertise and create cross sector
category teams working with the sectors procurement teams. They should complete detailed
planning and create a project pipeline with target projects, savings and timelines for delivery.
We recommend that sector procurement teams retain responsibility for national framework
implementation but that they take direction from the category manager in the NPO and
participate in the category team in developing requirements, defining sourcing strategy. They
should work as a team in completing tender, evaluation and framework completion.
The adoption of these strategies, and roles and responsibilities will remove the duplication of
effort across procurement functions today.
In addition we recommend the consolidation of all procurement groups and resources within
sectors to avoid duplication of effort and working at cross purposes.
In parallel to the development of formal category strategy and plans we recommend the
implementation of a demand management approach to spend. Category managers and
category councils should be tasked with developing and implementing demand side levels for
total cost reduction, including demand challenge, specification change, product substitution and
internal controls and policies to influence behaviour and reduce cost.
5.4.6 Procurement Operations

Following our review we identified the need to provide standard processes, standards
technology and operational supports from the central procurement function.
We recommend the setup of a procurement operations function within the NPO with
responsibility for:
Development of procurement technology strategy, including definition of information

technology requirements and the development and implementation of systems to
support procurement across all sectors
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Development of savings definition, measurement and the implementation of tools to

track savings
Development and implementation of procurement reporting and compliance, including
metrics definition and reporting
Development and implementation of supplier and contract databases across all sectors.
Procurement training and communications, including the development of the curriculum
and management of training programmes
Development of business requirements definition, development and implementation of
all common procurement processes and systems including e-sourcing, project pipeline,
contract administration, e-auctioning, e-procurement, master data management, pcards,
savings database, supplier database, categorisation, portal and content management
and spend analytics
We recommend the immediate prioritisation of spend analytics, a contract database
repository, categorisation definition and a pipeline project plan. These recommendations
are prioritised as they are the foundation for a successful procurement organisation.
Without visibility of spend a procurement function is not in a position to define spend
management prioritises, monitor contract performance, contract compliance levels and
to gathering detail requirements for contract renewals or new spend initiatives
The report has already identified potential savings but in order to start the strategic
sourcing projects the procurement organisation needs to have granular spend usage
information that is accurate and timely. The prioritisation of spend analytics, contract
database creation, categorisation data management and pipeline planning will enable
the successful implementation and monitoring of performance against the plan
We recommend the redevelopment of procurement training. This should move from the
current approach of raising the overall level of knowledge to specific targeted
professional procurement development to address gaps in capability. We recommend a
future capability and capacity detailed analysis is conducted and specific training and
professional development programmes are put in place for central, sector and local
fulltime procurement resources
Figure 5.7: Recommended Central Procurement Operations Team Structure
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As part of our review of current operations we identified a number of sector specific

initiatives aimed at improving procurement co-operation and support for tactical and
operational needs
Sectors have started to develop geographical approaches to common categories of
supply from a procurement support perspective. These initiatives are welcomed but
there is a lack of cross sectoral co-ordination to these initiatives. Sectors are looking to
the centre for direction and strategy
We recommend a phased approach to procurement shared service operations due to
the size and complexity of the challenges
With the development of national frameworks and adoption uplifts there will be a need to start
providing additional tactical support for lower level sourcing projects. Initial sectoral procurement
initiatives will look to support these initiatives but over time there will be a duplication of effort
across sectors in local areas and there is an opportunity to extend common procurement
support services across sectors, reducing duplication and allowing additional procurement
support to local areas.
To put this into perspective each geographical region in Ireland has either a County Council,
Urban District Council or City Council who buy common categories of goods and services.
Administrative offices, local depots, Fire Stations and local libraries have common needs for
goods and services such as IT equipment, consumables, maintenance, print and stationery and
utility services. These are supported through local authorities procurement who tender and
implement supply agreements. Local administrators act as part time buyers in managing the
locally appointed suppliers performance and issues.
In parallel to local authority procurement there are HSE community care centres and local
hospitals, Education local primary and secondary schools, Justice local Garda Stations, Social
Protection welfare offices, Central Government agency offices for the revenue commissioners,
port authorities, customs offices and National Roads Authorities all with the same need for
goods and services from common suppliers.
At present all these local needs are supported from multiple sectoral or central procurement
functions with duplication of effort.
Within sectors there are good initiatives underway to develop cooperation from a tactical and
operational buying perspective but there is a need to co-ordinate and co-operate across sectors
for common needs.
In the medium term we recommend planning for cross sector geographical assisted buying
shared services through a number of regional buying centres. This model would provide
standard purchasing helpdesk support, adhoc spot buying project support and provide on-going
contract compliance monitoring. Examples of the types of services would be purchasing card
implementation and support for schools, local ICT maintenance and support contracts for garda
and local authorities, local hospital IT hardware and consumables.
5.4.7 Sector Procurement Recommendations

Within the Health sector, we recommend as an immediate priority the centralisation of
procurement resources across the HSE and HPSG into a single procurement unit within the
Department. Health sector central procurement should prioritise the adoption of NPO led
common category initiatives and focus their sector specific sourcing on medical specific
categories.
Within health there is substantial opportunity to reduce total cost to serve but we
recognise the capacity constraints within the current procurement function
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We recommend the immediate benchmarking of medical specific spend on large spend

areas such as drugs and medical devices and the development of targeted cost
reduction initiatives utilising internal and external capacity. Consideration should be
given to alternative commercial models to incentivise the delivery of service and cost
reduction
Within local government we recognise the development of a centralised approach to
managing common categories and recommend the creation of a local authority
procurement function within the CCMAs remit. We recommend that the local authority
central procurement function be responsible for participation with the NPO strategic
sourcing function for common categories and take direction from the centre. In addition
we recommend the local authority central procurement function be responsible for sector
specific procurement policy and the sourcing and category management of non-common
categories, including the setup and management of regional geographic buying centres
Within Education we recommend the Department of Education and Skills procurement
function takes responsibility across the sector with responsibility for procurement across
primary, secondary and third level education as well as the central Department
We recommend the development of a supplier segmentation model for the education
sector with the establishment of a sector procurement team to conduct the sourcing and
category management of non-common categories. We also recommend the sector
procurement function has responsibility for participating with NPO strategic sourcing
category teams, including requirements gathering, tender participation and
implementation delivery
We recommend the appointment of dedicated fulltime procurement officers for primary,
secondary and VEC schools/colleges reporting into the Department of Education and
Skills central procurement function. This reporting line is recommended to ensure
objectivity and accountability. We recommend the resources are embedded across the
primary and secondary school functions, specifically the ACCS, CPSMA and the JMB for
secondary schools
For education we recommend the implementation of purchasing cards for common items
as a priority across the sector to enable visibility of spend. In addition, we recommend
the prioritisation of common consumable items and ICT maintenance and support
sourcing and the implementation of vendor catalogues to provide more efficient and
effective procurement
Within Justice and Defence we recognise the procurement compliance and operational
finance shared services creation. We recommend the establishment of a sector
procurement function with responsibility for sourcing and category management across
the sector. The function should be responsible for participation in NPO sourcing
initiatives and requirements gathering, tender evaluation and implementation across the
sector
Across central government we recommend the appointment of a procurement officer
with responsibility for the co-ordination, planning and execution of common initiatives
across central Departments. This is a key role that will avoid the NPO having to deal with
16 Departments and their agencies on an individual basis and avoid getting involved in
lower level tactical and operations support issues. The central government procurement
officer would be responsible for all procurement co-ordination, including requirements
gathering, participation in category teams and the implementation of frameworks across
central Departments and agencies
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We recommend that sector procurement functions retain category ownership for non common
categories and that they are responsible for category strategy, sourcing strategy, sector
sourcing and framework implementation against policy.
5.4.8 Recommended Governance Model

For procurement to be successful it requires the appropriate level of senior sponsorship and
engagement at all stages of the budgeting, planning and procurement process.
From our findings we have seen how a lack of awareness and understanding of procurements
role and value can lead to a lack of support from senior leadership for procurement. This results
in procurement being ineffective in influencing large spend decisions, leading negotiations and
delivering savings in time, quality and cost to the Public Service.
The central procurement functions were set up without a proper governance model resulting in a
lack of engagement and compliance with framework contracts.
There is a lack of senior sponsorship for procurement or forums for procurement to engage
leadership in cost agendas. For procurement to be effective the establishment of a procurement
board is required, chaired by the sponsor and attended by senior leadership from each sector
together with the Chief Procurement Officer. Through the establishment of a cost focused forum
under the aegis of the broader reform agenda, procurement can establish the right level of
engagement and support to drive change and deliver benefits at a strategic level.
To support the implementation of strategic cost reduction we recommend the creation of

category councils. These would be sponsored by procurement board members with
permanent Principal Officer representatives from the relevant sectors with responsibility
for spend in that area. The relevant NPO Category Manager would be a permanent
member and we would expect a technical lead from the relevant area, e.g. CMOD for IT.
The role of the category council is to develop the category management strategy,
including policy setting, demand management, sourcing strategy and executive decision
making on strategic sourcing initiatives, including implementation and compliance
measurement. The category council report up to the governing procurement council on
performance, approvals, escalations and decisions
Procurement functions at the central and sectoral level need alignment and a
governance model to ensure the required co-ordination of policy, procedures,
operational support and talent management. We recommend the establishment of a
procurement council, chaired by the CPO, and attended by the procurement leadership
from sectors together with the central policy, sourcing and category management and
procurement operations leads
Procurement governance requires senior civil service sponsorship and mandate for
procurement involvement in the early planning stages of spend. Procurement need to
have an effective communications and planning forum with senior leadership across
government Departments to ensure involvement and compliance to strategic initiatives
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The recommended governance model adopts six principles:
Figure 5.8: Procurement Governance Framework
1. Vision and Purpose A clear shared vision for procurement and the objectives of the
governance model within the context of the broader Public Service reform
2. Sponsorship and Mandate Clearly defined executive sponsorship at ministerial and
Secretaries General level which champions and endorses the governance and authority
3. Membership A procurement board representing leadership across the Public Service with
defined roles
4. Process A set of processes that enable the initiation, review and approval of category
specific initiatives across all sectors and measures progress
5. Structure The category councils and relationships with Departmental agencies and board,
roles and responsibilities in order to deliver the objectives and targets agreed at the
procurement council
6. Sustainability The methods followed to embed the councils into the Public Service and
enable the on-going delivery and management of spend
We recommend the NPO is sponsored by the Minister of State with responsibility for
Procurement and the Secretary General of the Department of Public Expenditure and Reform.
We recommend the creation of a procurement board to govern the overall sustainable
procurement programme, chaired by the sponsor with permanent representatives from Assistant
Secretaries General from each sector with responsibility for procurement. The CPO is also a
permanent member.
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Figure 5.9: Procurement Board
We recommend the procurement board is given the accountability for procurement

strategy and objective setting, target setting, strategic cost reduction programme setting
and performance measurement. The procurement board should be used as the vehicle
for ensuring objectives, targets and performance metrics are set and managed. We
recommend the council meets monthly to review the strategic cost reduction
programme, individual project initiatives, approve decisions and resolve escalations
impacting the programme
The Procurement Board should be responsible for procurement metric definition,
measurement and performance tracking. Our findings from Public Service benchmarking
have identified a number of key metrics that are recommended at a procurement board
level:
o Addressable Spend v Spend Under Management by Procurement (Frameworks)
o Spend Under Management v Contract Compliance/Adoption
o Spend Under Management v Savings
o Addressable Spend v SME Spend
o Addressable Spend v Sustainable Spend (Green)
o Days to complete procurement project
Category Councils should be setup for each major category of spend and be responsible for the
planning, target setting and alignment of spend across sectors. Category Councils are led by a
member of the Procurement Board with the NPO Category Manager providing the category
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insight, strategy and savings target. The role of the council is to ensure the planning, alignment
and implementation across the sectors.
The Category Managers role is to lead the cross sector procurement team in the
development and execution of category sourcing strategy. The team consists of the
procurement officers across sectors and are responsible for the category plan, project
requirements gathering, supplier selection, negotiation, contract implementation and
savings recording
Figure 5.10: Category Council
The role of the procurement council is to act as the leadership team for procurement in
the Public Service, ensuring strategy, objectives and targets agreed by the Procurement
Board are operationalized and that there is a management operation plan with joint
accountability and responsibility. The procurement council should be responsible for
ensuring policy, procedures, systems, resources and service levels are effective and
deliver against current and future organisational needs
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Figure 5.11: Procurement Council
5.5 Category Management Approach

With the implementation of a strategic cost reduction programme it is important to ensure that
the benefits are sustainable. We recommend the adoption of a Category Management model for
the management of spend and suppliers.
Category Management is the on-going process of managing the products, services and
suppliers selected for each category, led by a category manager.
From our findings we have learnt that there is limited category management in operation across
the Public Service. A holistic approach to managing supply across sectors on a category basis,
not a local, Departmental or sector level.
At present there are national and sector framework contracts in place and limited category
management activity supporting this. Category management combines strategic planning,
demand management, cross sector category led sourcing teams, contract compliance and
supplier performance management into a structured model for end to end supply chain
management.
We recommend that strategic sourcing and category management be centre led with cross
sectoral category teams working under the leadership of the central category manager for
common categories. Examples of this are Energy Supply, ICT, Travel and Print and Stationery.
The central category manager is responsible for establishing the cross sector category teams
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consisting of procurement officers from each sector procurement team with responsibility for
spend in that category within their sector.
We recommend the development of category managers within the NPO and the
commencement of detailed category strategy plans, industry and market analysis in order to
define the sourcing projects and savings plans.
For sector specific categories we have identified the categories as either being suitable for cooperation or local requirements.
For categories that are suitable to co-operation we recommend the category being led by the
largest buyer with a national framework being implemented by the category team consisting of
the relevant Departmental buyers. The reason for the largest buyer being recommended is that
they will have the greatest leverage either in volume or value and is a more successful model
that is in operation in an informal way today across sectors where co-operative buying is
conducted. We recommend national frameworks be used for this co-operative procurement in
order to allow State wide access to the category if required. An example of this category is
within Medical, where laboratory supplies, testing and chemicals are used within the health
sector, Universities, Garda and Prisons and Agriculture. HSE procurement would lead this
category from a procurement perspective with support and input from procurement in the other
Departments. The technical category lead would be provided by the most knowledgeable area
with input from all other relevant departments following the Category Council model already
described in Figure 5.10.
Strategic Sourcing Methodology Recommendation

We recommend the adoption of a seven step Strategic Sourcing Methodology across all sectors
and categories, whether centre or sector led. This will ensure consistency in approach to
planning, requirements gathering, sourcing strategy determination, sourcing and contract
execution and implementation.
Our findings highlighted a number of different approaches and processes to sourcing and
contracting. While some elements were well documented, the broader Public Service did not
have a single consistent process other than EU Public Service Procurement Directives requiring
openness, transparency and equity.
We recommend the development of a consistent, fact based, objective evaluation and awards
process covering the broader seven step methodology.
73
Figure 5.12: 7-Step Strategic Sourcing Process
EU Public Procurement Directive Compliant Sourcing Methodology
Figure 5.13: Strategic Sourcing Process (EU Compliance)
74
5.6 Supplier Relationship Management

Our findings identified a number of different supplier management processes across sectors
with different levels of maturity. At a national level there is no standard process for supplier
relationship management where suppliers are segmented and there is an objective structured
approach to relationship and performance management.
We recommend the implementation of a segmentation model for suppliers where suppliers are
grouped according to level of spend, criticality of the service and level of risk associated with the
supply. The Boston Scientific supplier segmentation model is recommended as a guide to
completing the segmentation.
Figure 5.14: Supplier Segmentation Model
We recommend that all suppliers and categories, whether centre or sector led, are segmented
with common categories managed from the NPO and proprietary categories managed within the
sectors.
Typically a segmentation of suppliers will result in a pareto type distribution of spend and
suppliers with 80% of spend being with the top 20% of suppliers. Strategic procurement
resources should be focused on spending most of their time and effort with the largest areas of
spend and the key suppliers within those. This will enable the development of more strategic
supplier relationships, development of good will and deep product and supplier insight that
provides a more competitive framework for tendering. We recommend that Tier 1(Partners) and
2 (Strategic) suppliers, identified through segmentation, are managed from the central category
management team with category managers appointed by supplier. It is not practical for senior
strategic procurement resources to manage the smaller tiers of spend as the volume of
suppliers grows exponentially and will require tactical and operational type support from
procurement within sectors and local departments.
We recommend that the NPO strategic sourcing and category management own the strategic
supplier relationship for common categories across all sectors for Tier 1 and Tier 2 suppliers.
We recommend that a structured strategic supplier management process is developed,
including development of standard supplier performance metrics for contract delivery, project
delivery, quality, innovation and savings. The model should outline the different relationship
levels, activities, meeting format and frequencies.
75
We recommend the development and implementation of a supplier performance dashboard is

put in place to provide visual measurement of suppliers across categories using the standard
metrics defined within the supplier relationship management model.
5.7 Requisition to Pay

The focus of the procurement review was not to assess the current procure to pay processes or
infrastructure, it did cover the framework compliance capability, master data management and
visibility of spend achieved through procure to pay data sources.
Our findings have identified over 4,000 independent financial accounting systems across the
Public Service with no procurement common standards for categorisation, mapping and spend
analysis.
5.8 Master Data Management

We recommend a holistic approach to developing master data management, informing strategic
sourcing and enabling the capture of buyer and supplier data to manage and monitor
compliance.
From our findings we confirmed:
no current industry standards for spend categorisation are in use across the Public
Service
no process or standard tools to gather spend data across sectors from the financial,
procurement and inventory systems in operation
no master data management strategy for procurement data resulting in our review
having to gather data manually from Departments and to build a categorisation to enable
accurate visibility and clarity of spend categories
We recommend the adoption of industry standards for spend data across the Public Service.
For health care we recommend the adoption of the UK NHS e-class categorisation or similar
classification that is in operation across Europe for common categories of medical supplies. For
defence we recommend the adoption of the NATO Supply Classification (NSC) that provides an
industry categorisation for common military and defence materials. For the remaining common
categories of goods and services we recommend the adoption of the United Nations Standard
Products and Services Codes (UNSPSC) as it is the global standard for common goods and
services across multiple sectors and industries.
In order to achieve accurate spend visibility we recommend the adoption of the above industry
standards and the creation of a master data management team to setup and maintain the
industry coding and mapping of data sets across the public service.
We recommend the acquisition of a system agnostic master data management tool that will
allow the mass data extraction, mapping and validation across the 4,200+ systems that we
identified during our review.
The first priority is to develop a baseline technical architecture allowing the development of a
technology interface to extract data from all financial and procurement systems on an
automated basis. We recommend the engagement of CMOD technical architecture skills to
baseline the landscape and to develop the requirements for investing in the technology.
The next recommendation is to provide supplier data feeds for framework agreements to enrich
the internal data and provide a holistic picture of spend, showing actual spend and category and
combining this with contract and non -contract data from framework providers. The Initial priority
76
should be to focus on Tier 1 and 2 suppliers identified through the segmentation exercise. This
strategy will avoid the required procure to pay detail integration and upgrading to show contract
data and remove the complete supplier dependency for data. The combination of these two data
sets will provide the necessary data sets to build a spend cube for spend analytics.
In the medium term we recommend considering developing standard procure to pay processes
and tools within the shared services environment, building upon the success of the central
government financial shared services. By using this approach procurement can develop
standard sourcing and buying processes, enabling the increase of contract compliance. This
activity should be a second priority to establishing governance, spend visibility and embedding
strategic cost reduction programmes. Developing a common vision and process for managing
these activities will allow a phased adoption of a common platform for purchasing across the
Public Service.
5.9 Technology
Our findings across procurement have identified a need for a strategy and ownership of all
procurement technology across the Public Service.
Our initial recommendation is to appoint a technology procurement owner responsible for base
lining existing procurement systems and for the development of a procurement technology
roadmap across sectors.
We recommend initial prioritisation of accurate data capture and categorisation. This will allow
strategic cost programmes to capture the required spend visibility to make informed decisions
on priority spend projects. This approach will avoid large scale ERP and local financial
accounting system replacements.
Our recommendation supports the best practice approach taken in both private and Public
Service organisations where the return on investment and time to deliver large scale p2p
process reengineering is too high.
We recommend immediate investment in a spend analytics solution to develop a single and
accurate procurement addressable spend picture. The largest single dependency on
procurement is spend visibility and it is imperative that immediate steps are taken to maintain
the manual spend analysis developed from the review and to develop the detailed functionality
and technical specifications for a supplier solution to be acquired.
We recommend a spend analytics project team is created from across sectors, led by a senior
procurement manager from the NPS and supported by a senior manager from each sector and
CMOD. The team should be tasked with developing business requirements within six weeks
and conducting a request for information (RFI) in the marketplace, leading to defined
requirements for a full tender and solution provision within six months.
We recommend that the NPO owns and maintains the spend analytics solution and that it is
implemented across all sectors, providing the necessary detailed information to allow national,
sector and local Departments analyse and inform their procurement decision making. The NPO
should provide the on-going spend analytics service to all sectors.
Our findings have identified a number of independent local spend and contract databases,
ranging from simple spreadsheets to more structured contract listings from SAP and Oracle
ERP systems. We have also identified core usage databases including the SEI database on
energy which is a key database for developing spend and usage data for energy contracting.
We recommend the development and implementation of a single supplier and contract database
across the Public Service. Initial priority should be given to on-boarding Tier 1 and 2 suppliers
77
and contracts, including all existing national, sector and Departmental frameworks. The
database should be used to develop the initial sourcing project pipeline and should be owned
and maintained by the NPO procurement operations function who provide a service to sectors
and Departments.
In order to conduct strategic sourcing and the implementation of framework agreements there is
a need to provide a single and consistent process and technology for the execution of sourcing
projects.
Procurement across all sectors needs a standard tool to initiate and deliver sourcing and
contracting projects. We recommend the NPO set up a project team, again consisting of CMOD
and sector procurement managers to develop standard business requirements and to engage
the market in an initial Request for Information (RFI) in order to develop final specifications for a
tender for the provision of a solution.
5.10 Savings Definition and Measurement

The final key recommendation from procurement technology is the development and
implementation of a savings database.
In order to have a clear understanding of the sourcing performance, the saving definition,
measurement and tracking processes need definition and adoption.
Over the past decade, many organisations in both the Public and Private Sector have
understood the potential value that procurement can bring. Many of those organisations have
started a journey of transforming the way in which procurement is undertaken and have
invested in increasing both the capacity and capability of procurement. In return for this
investment, organisations are seeking a return in the form of cashable savings and within a
timely payback period. Building the case for change for procurement is compelling but
evidencing the actual return is more challenging. The ability of procurement to show the real
value of its activity will shape the agenda for the next decade.
Our findings have identified that there are no standard definitions or measurement for savings
across all sectors. There is a need to define and implement a standard definition and
measurement process.
The typical issues we identified in our review are:
There is an inconsistent understanding as to the different types of savings

There are inconsistent terms and definitions used to describe the different types of
savings
Savings methodologies that have been established are often based on forecast levels of
future expenditure rather than actual
Procurement savings are often delivered at the point of sale or purchase which negates
the ability for the saving to be captured or realised fully
The measurement of savings at the point of invoicing can be costly and time consuming
From our experience the key enablers to tackling these issues are as follows:
A strong procurement governance framework that approves targets and monitors

performance
A methodology for procurement savings including:
o The establishment of a baseline from which to measure savings from
o Clear definitions of savings
78
o A continuous update of worked examples across all categories and all savings
types and definitions
Integration of relevant finance processes into the savings methodology e.g. budget
planning process
The ability to report the various stages of savings including:
o Forecast
o Agreed/enabled
o Delivered
The ability to report savings at different levels across the Public Service, including:
o National Frameworks
o Sector Frameworks
o Local Department Contracts
In order to have a clear understanding of the sourcing performance, the saving definition,
measurement and tracking processes need definition and adoption across all sectors.
5.11 Savings Calculation Methodology

For savings measurement, tracking and reporting to be credible we recommend the definition,
agreement and implementation of the following key activities:
Figure 5.15: Savings Calculation Methodology
79
Definitions
The following are types or categories of benefits that are included in savings calculation:
1. Price includes benefits from improvements in unit price, market basket price, discounts,
indices or other pricing arrangements based on improvement in negotiated pricing
associated with the award scenario recommended by the Project team. Savings due to price
reduction are calculated by multiplying the anticipated volume for the contract term by the
change in unit price under the approved award scenario
2. Usage includes projected benefits from standardisation, product specification
improvement, demand management, and other operational improvements identified (e.g.
yield improvements, carrying costs, shrinkage, damage, spoilage, reduced inventory levels,
cost of funds, transportation costs)
3. Process includes additional benefits from process improvements directly associated with
a project team effort. This savings result is generally calculated by subtracting the new or
improved process costs identified from the relevant historical process costs. A process
saving will occur where a reduction in FTE and an accompanying implementation plan to
manage that reduction has been put in place. For example, a process saving would not be
counted where 30 minutes of an FTEs time is saved each week, but will be counted where
there is potential to realise a saving
4. Other includes any other measurable benefits that do not fall within the Price, Usage or
Process categories but nevertheless impact Client benefits. Examples might include
preventions, recoveries and working capital improvements (i.e. payment terms (subject to
the Clients prompt payment policy), inventory reductions, etc.)
5. Cost Avoidance includes benefits related to Spot Buys and the rejection of
unsubstantiated price increase requests from suppliers that otherwise would have been
accepted
We recommend that savings are tracked across each stage in the sourcing process to provide a
consistent and accurate benefit tracking. This following diagram describes our recommended
approach:
Figure 5.16: Savings Calculation Process
80
We recommend the NPO develops standards and engages the marketplace for the provision of
a savings database.
Our experience in dealing with public and private sector procurement organisations has seen
the initial establishment of savings definitions together with savings targets by category on an
annual basis. Initially organisations implement a manual recoding and reconciliation process
with the gradual automation of the process and potential incorporation of the savings with the
strategic sourcing, contracting and reporting module of a dedicated
We recommend the initial prioritisation of savings definition and initial manual reporting within
the NPO. With the introduction of automated spend visibility and reporting we recommend the
development of savings reporting that combines savings project targets, supplier contract data
and transactional order information.
In addition to the NPO recording savings we recommend the implementation of mandatory
monthly key figure reporting from Secretaries General to the CPO. This should contain key data
including total prior month spend, total prior month framework spend and total prior month
spend with SMEs. This will allow the NPO to provide a simple consolidated monthly spend and
ensure support for Frameworks across sectors.
5.12 People and Workforce

Procurement needs to have the required capability within its workforce and to be organised and
structured in an effective and efficient organisation structure.
Our findings have identified gaps in the capability and between support functions to enable
effective delivery.
With the introduction of a NPO organisation and the development of a category management
approach to spend management we recommend the development of standard roles and
responsibilities for the procurement organisation.
In addition we recommend the development of a competency framework where roles are
aligned to competencies with level of skill and experience.
Procurement should have standard role definitions and competencies ranging from
departmental procurement officers, sectoral procurement leads, central category management,
central policy and compliance and procurement operations.
From our findings we learnt that training and development in procurement is a broad brush
approach to provide the same level of education in the procurement discipline but is not aligned
to competencies.
We recommend the adaptation of the current training and professional development programme
to requirements approach to building a high performance procurement organisation.
We recommend that a detail workforce planning and competency framework is developed for
central and sector procurement and the completion of a detail capability assessment of the
current and future roles to identify the training needs.
Across the Public Service there are currently over 400 resources employed in procurement
activity. While there are different levels of skills and expertise the total workforce deployment is
not optimised.
We recommend the completion of a detail workforce planning exercise on completion of the
detail spend analysis and sourcing project planning. This will enable the correct sizing of the
future NPO organisation and allow the prioritisation of procurement resource redeployment,
81
upskilling through training and supplementing of resource either through recruitment or

contracting temporary support to deliver strategic initiatives.
It is important to note that not all categories have the same level of complexity and strategic
procurement resource support. For example, Energy and Office Supplies have very different
market place and buyer characteristics that will dictate greater or lesser resource support. In
addition, there is currently a high level of buyer duplication of effort both within sectors and
across sectors with procurement resources working on similar categories and with the same
suppliers.
From a global perspective our benchmark of 18.9m spend per procurement FTE would
estimate 227 procurement resources are required to manage the 4b of common categories of
spend. At present there are 400+ procurement resources across the Public Service but they are
not all aligned to a consistent category management model. Training and professional
procurement development should be targeted at prioritisation of the strategic sourcing capability
and analytics in order to support the reform cost reduction agenda.
Our findings also established a procurement attrition and knowledge loss issue due to no formal
procurement career path in the Public Service.
We recommend the development of a procurement career path within the central and sector
procurement organisations in order to sustain the benefits identified. Without continuity of
procurement capability and professionalism the Public Service will not be able to achieve or
sustain the benefits identified.
82
6 Implementation Roadmap
The procurement review has identified substantial savings that can be achieved through a
structured approach to cost reduction, including demand management, strategic sourcing and
on-going contract and supplier performance and compliance.
We have detailed our findings and recommendations on the current capability and capacity of
procurement and recommended the short, medium and long term improvements required in
order to deliver and sustain benefits.
It is important to recognise that not all benefits can be delivered in the short term and that
parallel capability development will be required while delivery of sourcing and savings is in
progress.
Our suggested implementation roadmap is built upon the key principles of addressing
immediate opportunities while developing the building blocks of people, process and technology
to ensure sustainable progress.
The findings and recommendations within this report are based upon a rapid review of
procurement and it is important to highlight that a detail planning and design project is required
in order to develop the detail implementation plans and ensure alignment and understanding of
dependencies.
Our suggested implementation roadmap is phased as follows:
Figure 6.1: Proposed Implementation Roadmap
83
6.1 Phase 1
This phase should focus on establishing the key pre-requisites to enable the start of strategic
savings projects. We recommend the prioritisation of the NPO organisation and governance
model to drive implementation, detailed spend analysis and project planning. The key activities
to be completed during this phase are detailed below:
Establish National Procurement Office

Recruitment of CPO and Direct Reports for Policy, Sourcing and Operations
Detailed Transition Planning Development
Recruitment of Category Managers
Implement required Procurement Governance
Procurement Sponsorship, Council and Category Team governance
Procurement Operating Model Development
Development of Roles and Responsibilities
Development of Processes and Procedures
Detail Spend Analysis and Planning Alignment
Detail Spend Analysis and Category Profiling
Spend Analytics Business Requirements and Sourcing
Sourcing Wave 1 Planning and Target Definition
Procurement Council Establishment
We recommend the establishment of a project team with separate work streams for NPO
organisational design, governance model and strategic sourcing planning.
The organisational design stream will see the development of the roles and responsibilities
within the NPO organisation, the assessment of current and future capabilities and transition
plans to support the migration from the current to future state.
The governance model stream will see the development of the procurement board, category
councils, procurement council and category team structures, roles and responsibilities and
operational agendas.
The strategic sourcing planning stream will see the completion of detail spend analysis across
sectors and the integration planning and dependency planning for strategic sourcing projects. It
will also see the validation and confirmation of specific projects and savings targets.
6.2 Phase 2
During this phase the programme will commence delivery of the strategic sourcing waves. The
strategic sourcing waves will run over a number of fiscal years, dependent upon the internal
capacity and business change capability.
In parallel to the sourcing waves we would anticipate the development of system based spend
analytics and the development of procurement capability against identified needs in the design
phase. We also recommend the development of the technology roadmap covering e-sourcing,
spend analytics, e-procurement, contract and supplier databases, savings databases and
support systems.
A key activity in this phase is the development and rollout of the procurement category councils
where cross sector leadership and procurement establish the forums for tracking category
policy, sourcing and savings implementation. The typical deliverables from this phase are:
84
Procurement Category Councils establishment for Wave 1 sourcing

Sourcing Wave 1 Execution
Spend Analytics System Development
Sector Procurement Capability Development
CPO Technology Roadmap Development
The initial sourcing wave will take approximately six months to complete the sourcing and
contracting with implementation of the first initiatives commencing towards the end of this
period.
To support the completion of this activity and to manage the implementation and subsequent
sourcing waves we recommend the on-going support of the PMO function and the specific
Strategic Sourcing project support team. We would anticipate this team continuing through the
sourcing waves, supporting the category council establishment, policy creation, governance
execution and implementation tracking across sectors. Our recommendation is that this support
involves dedicated category specialists for each sourcing wave to ensure maximum value
targeting and delivery. The category subject matter expertise would supplement the NPO during
transition where there may be capability gaps. This level of support would be anticipated to
continue during the entire programme lifecycle.
6.3 Phase 3
In parallel to the rollout of sourcing waves, the procurement capability maturity will happen
through the development and implementation of procurement operations, including adhoc
tactical and operational buying support, helpdesk functionality, operational reporting and
compliance and geographical shared services across sectors.
Our recommendation is to focus on delivering the initial strategic sourcing for common
categories and sector specific initiatives with the support of governance model and operating
procedures. Following completion of this we recommend the focus moving to tactical and
operational performance through the establishment of common support services.
We recommend the engagement of experienced implementation resources in the development
and rollout of the model. This activity will require operational purchasing, shared services and
lean process skillsets.
85
Appendix
1 Categories
The following Table indicates the categories that addressable spend was mapped to.
Spend Category
Mapped To
Construction
Architect
Civil
Electrical
Materials
Mechanical
Other
Quantity Surveying
Defence
Aircraft
Aircraft Maintenance
Equipment
Equipment Maintenance
Naval Vessels
Ordinance Equipment
Other
Vehicle Maintenance
Vehicles
Vessels Maintenance
Facilities and Services
Building Maintenance
Catering
Cleaning
Couriers
Document Management
Grows
Health and Safety
Laundry
Other
Papers and Periodicals
Postage
Rental
Security
Waste
Water
Uniforms/Clothing
Sports Equipment
86
Farming
Livestock
Consumables
Equipment
Other
Services
Supplies
Food
Veterinary
Fleet
Fuel
General Vehicles
Maintenance
Other
Rental
Specialised Vehicles
HR
EAP
Health and Safety
Other
Pension
Recruitment
Temporary Staff / Contractors
Training
ICT
Hardware
Other
Services
Software
Telecoms - Data
Telecoms - Equipment
Telecoms - Mobile
Telecoms - Voice
Managed Service
Outsource
Marketing
Advertising
Creative Media
Other
Promotional Events
Research
Medical
Blood / Blood Products

Drugs and Medicines
Laboratory
Medical Equipment
Medical Gases
87
Medical Supplies
Other
X Ray / Imaging
Office Equipment
Copiers
Furniture
Multifunctional Devices
Office Equipment
Other
Plant
Equipment
Equipment Hire
Maintenance
Other
Plant
Plant Hire
Print and Stationary
IT Consumables
IT Peripherals
Marketing Printing
Office Printing
Office Supplies
Other
Production Printing
Professional Service
Advisory
Audit
Financial / Bank
Health and Safety
Insurance
Legal
Other
Subscriptions
Travel
Agents
Air
Car Hire
Hotel
Meetings Incentives Conferences and Events
Other
Taxi/Bus Hire
Train
Training
Unclassified
Unclassified
Utilities
Electricity
Fuels
88
Gas
General
Utilities
Table A.1.1: Spend Categorisation Used in Review
89
2 Data Sources
The following Table indicates the sources of the data used in this report
Sector
Health
Data Sources
Education
Local Government
Justice
Non-Pay cost 2009 -2011

"2011/2012 Outstanding PSR's"
"April 2012 PSR Report"
"PSR Received March 2012"
Procurement CTCRM BS - Key Result Areas
Procurement CTCRM BS - Logistics and Inventory Management
Procurement CTCRM BS - Portfolio Medical, Surgical and
Pharma
Dashboard Analysis of National Invoices 2011 V3
Overview HSE Procurement Staff JS110612
Extract - Universities spend data by supplier
Extract DEC VEC Goods and Services
Free Education Scheme Income and Expenditure Sample for
schools
The National Public procurement Service Cost Savings for
Schools Oct 2011
Extract SCPN Partner Profiles Spend by IOT Partner
Academic year 2010 2011
Extract Procurement Update IUA Council
Extract Sample Income and Expenditure
VEC Corporate Procurement Plan Template
VEC savings sheet
Stationary Price comparison
Extract Combined LA Procurement Data.
Interim Report to the Minister of the Environment, Community
and Local Government and the LGER IG March 2012.
Dn-Laoghaire Rathdown Procurement Review of Council
Expenditure in 2010
Extract Procurement Summary
Dn-Laoghaire Rathdown County Council Procurement
Guidelines
Sligo CC Supplier and Spend extract
Local Government Efficiency Review Group Report
Dun-Laoghaire Rathdown County Council Procurement
Guidelines
Shared Services Invoice extract
Food Cost by Prison Analysis by Supplier
Irish Prison Service List of Contracts For The Supply Of
Goods And Service With A Value Over 100,00
2012 procurement workplan
Procurement Plan 2012/13
90
CPU Contract Database

Report - Procurement Type Subheads and Top Suppliers
2011 4002 master 4002 List SAD
Corporate Procurement Plan (2010-2012)
Savings 2012
Contract List
Purchasing organisation
Defence
Defence Force Estimates 2012

Defence Forces Organisation
Purchase Orders over 20,000 for Q1 of 2012
Central Government (Other)

Revised Estimate for Public Services 2012
Accenture - "DAFF Cost Reduction Review 2011 Report"
Circular No. CP1 - "Planning for Procurement of Supplier and
Services - Multi-annual Divisional Plans"
SAP records and procurement expenditure
Extract - DAFM Spend by Old Material Groups AR1
Extract Subitems ( Supplier and Spend actuals)
Department of Public Expenditure and Reform Public Service
Reform 17 November 2011
Department of Public Expenditure and Reform Human
Resource Shared Services Centre Financial Appraisal April
2012
Department of Public Expenditure and Reform Revised
Estimates for Public Services 2012
Central Procurement
Other Date Sources
Chief State Solicitor's Office: "Irish Public Procurement Materials

- April 2012"
2009 Survey of Top 30 Categories of spend
NPS - Expenditure/Purchasing Lines NPS Lot 1 Office Supplies
2011
NPS - Live Contracts and Frameworks 2012
NPS - Organisational Chart
NPS - List of Supplier and Buyer Education Events Aug 2009 to
Nov 2011
Key Responsibilities of NPS Staff
"Strategy Statement National Procurement Service 2010-2012"
Draft Memorandum for the Government Public service Reform
Plan - Public Procurement ( Framework Agreements) 3/5/2012
List - Stationary Contacts by Department and Associated State
Agencies
List - Top 30 Supplier Contacts by Department and Associated
State Agencies
PAC NPS Briefing 16.02.12
NPS Lifetime Contract Values 2012
NPS Supplier Survey 2011
NPS Buyer Survey 2011
Consip Spa spearheads efforts towards high performance in
government procurement, Accenture
91
High Performance through Procurement in Public Services,

Accenture
High Performance through Procurement in Public Services,
Accenture
Scotland Public Service Procurement Report
Scotland - Procurement Reform Delivery Plan
Strategy for the implementation of eprocurement in the Irish
Public Service
Table A.2.1: Key Data Sources
92
3 List of Interviewed/Surveyed Stakeholders

Interviews and/or surveys were conducted with the following stakeholder groups:
Sector
Central
Procurement
Health
Local
Government
Education
Central
Government
Departments of
Justice and
Defence
Organisation
Stakeholder Type
NPS
Procurement
NPPPU
Customer/Procurement
NPPPU
Procurement
Health
Procurement
HSPG
Procurement
County/City/Town
Councils
VEC
Procurement
Dept. of Education and

Skills
Universities
Customer
Universities/Institute's
Procurement
Secondary Schools
Primary Schools
Community Schools
Attorney General's
Office
CSSO
Customer
Revenue Commisioners
Dept. of Social
Protection
Dept. of Transport
Customer
Dept. of Agriculture
Procurement
Enterprise Ireland
SEAI
Customer
CMOD
Dept. of Public Exp. &

Reform
Dept. of Justice and
Equality
Customer
An Garda Siochana
Procurement
An Garda Siochana
Irish Prison Services
Procurement
Procurement
Procurement
Customer
Customer
93
Suppliers/External
Bodies
Dept. of Defence
Procurement
GS1
Supplier
IBEC
Business Representative Body
Codex
Supplier
IMSTA
Supplier Representative Body
Swords Medical
Supplier
Table A.3.1: List of Interviewees
94
4 Capability Assessment Framework for Analysis

The assessment of the level of capability for central procurement and each of the key buying
Organisations across the Irish Public Service was completed using Accentures High
Performance Procurement Model, as depicted in the Table below.
Dimension
Areas of focus
1. Procurement
Strategy
What your objectives are and how you plan to deliver them
What policies and procedures you have to support your delivery
How you align and plan with sectors
What metrics you are measured on
How you measure spend, savings and compliance
2. Sourcing and
Category
Management
What visibility of spend you have

How you identify opportunities and prioritise
How you develop and manage category strategies
What industry and category expertise you have
What methodology you use for sourcing, contracting and implementing
How you measure and manage demand and project delivery
3. Requisition to Pay
How you manage P2P master data across sectors

What guidelines and support is provided to end users
How you manage compliance and non-compliance
4. Supplier
Relationship
Management
How you manage the supplier database

How you manage the contract database
How are suppliers tiered, segmented and categorised
How you rate, measure and manage supplier and contract performance
across categories and sectors
How you evaluate and manage supply chain risk
How you manage supplier education
5. Workforce and
Organisation
Are there standard roles and responsibilities across State, sector and dept
procurement
Is there a capability assessment and personal development plan in place
Are staff managed by objectives
Is capacity sized and optimised against spend
Are there gaps in the organisations capability
6. Process and
Technology
What standard processes are in place for RFI, RFT, Supplier Addition,
Requisition and P/O, One Time Vendor
What IT Procurement Strategy is in place to manage the end to end
process and provide visibility and control of spend
What are the delegation of authorities, authority to contract, approval limits
What tools are in place for sourcing, contracting, supplier performance,
buying, e-procurement, receipting and payment
Table A.4.1: Accenture High Performance Procurement Model
95
5 Organisational Data
TOTAL
Health
Local
Government
Education
Justice &
Defence
Central
Government
Central
Procurement
TOTAL
148
108
72
94
66
47
535
Table A.5.1: Estimated Headcount by Sector
96
6 Supplier Data
Department
Sub Sector
Health
HSE
Education
All
Local Government
Not applicable
9,000
Justice
Defence
4,400
Garda
4,200
Prisons
2,300
Courts
1,100
Central Government
Suppliers
75,000
100,000
National Museum
900
Property Registration
300
Dept. of Arts, Heritage and

the Gaelteacht
Departments (other)
2,300
12,500
Table A.6.1: Estimated Number of Suppliers by Sector
97
Referenced Materials
"Defence Force Estimates 2012"

"Interim Report to The Minister of the Environment, Community and Local Government
and the LGER IG March 2012"
"Strategy Statement National Procurement Service 2010-2012"
Accenture - "DAFF Cost Reduction Review 2011 Report"
Agriculture: Circular No. CP1 - "Planning for Procurement of Supplier and Services Multi-annual Divisional Plans"
Agriculture: SAP records and procurement expenditure
Chief State Solicitor's Office: "Irish Public Procurement Materials - April 2012"
Delegated Instruments Annex 5 Summary of Measures by Contracting Authorities to
Facilitate the Participation of SMEs in the Public Procurement (D/F Circ 10/10)
Delegation Instruments Annex 1 Control And Monitoring Of Expenditure
Delegation Instruments Annex 2 Accounting Procedures
Delegation Instruments Annex 3 Procurement Procedures for Works, Supplies and
Services
Delegation Instruments Annex 4 Value for Money
Delegation Instruments Annex 6 procurement Information
Department of Public Expenditure and Reform - "Public Service Reform 17 November
2011"
Department of Public Expenditure and Reform - "Human Resource Shared Services
Centre Financial Appraisal April 2012"
Department of Public Expenditure and Reform - "Revised Estimates for Public Services
2012"
Draft Memorandum for the Government Public service Reform Plan - Public
Procurement ( Framework Agreements) 3/5/2012
Dn-Laoghaire Rathdown County Council Procurement Guidelines
Dn-Laoghaire Rathdown Procurement Review of Council Expenditure in 2010
Food Cost by Prison - Analysis by Supplier
Free Education Scheme - Income and Expenditure Sample for schools
HSE: "2011/2012 Outstanding PSR's"
HSE: "April 2012 PSR Report"
HSE: "PSR Received March 2012"
HSE: Procurement CTCRM BS - Key Result Areas
HSE: Procurement CTCRM BS - Logistics and Inventory Management
HSE: Procurement CTCRM BS - Portfolio Medical, Surgical and Pharma
HSE: Procurement CTCRM BS - Portfolio Medical, Surgical and Pharma
Dashboard Analysis of National Invoices 2011
Overview HSE Procurement Staff JS110612
98
Irish Prison Service - List of Contracts For The Supply Of Goods And Service With A
Value Over 100,00
IVEA - "Initiatives January - December 2011: Report and Evaluation"
Key Responsibilities of NPS Staff
List - Stationary Contacts by Department and Associated State Agencies
List - Top 30 Supplier Contacts by Department and Associated State Agencies
Local Government Efficiency Review Implementation Group Report to the Minister for
the Environment, Community and Local Government - March 2012
NPS - Expenditure/Purchasing Lines NPS Lot 1 Office Supplies 2011
NPS - Live Contracts and Frameworks 2012
NPS - Organisational Chart
NPS - List of Supplier and Buyer Education Events Aug 2009 to Nov 2011
The National Public procurement Service - "Cost Savings for Schools" Oct 2011
Top 30 Spend in 2008 - Sectoral Breakdown - Status at 19 January 2010
Top 30 Spend in 2009 - Sectoral Breakdown
Report - Procurement Type subheads and top suppliers 2011
99
8 Acronyms
Acronym
Definition
ACCS
Association of Community & Comprehensive Schools
CCMA
City and County Managers Association
CMOD
Centre for Management and Organisation Development
CPO
Chief Procurement Officer
CPSMA
Catholic Primary School Managers Association
CSSO
Chief State Solicitors Office
DAFM
Department of Agriculture, Food & the Marine
D/PER
Department of Public Expenditure and Reform
ERP
Enterprise Resource Planning
FTE
Full Time Equivalent Resources
HPP
High Performance Procurement Model
HPSG
Hospital Procurement Services Group
HSE
Health Service Executive
IBEC
Irish Business and Employers Confederation
ICT
Information and Communication Technology
IMSTA
The Irish Medical & Surgical Trade Association
IVEA
Irish Vocational Education Association
JMB
Joint Managerial Board for 400 Voluntary Secondary Schools in Ireland
LGMA
Local Government Management Agency
LGER
Local Government Efficiency Review
NLAPG
National Local Authority Procurement Group
NPPPU
National Public Procurement Policy Unit
NPS
National Procurement Service
OPW
Office of Public Works
P2P
Procure to Pay
PEPPOL
Pan-European Public Procurement On-Line
PMO
Project Management Office
RFI
Request for Information
RFP
Request for Proposal
RFQ
Request for Quotation
RFT
Request for Tender
SEAI
Sustainable Energy Authority Ireland
SME
Small Medium Enterprise
100
UNSPSC
United Nations Standard Products and Services Code
VEC
Vocational Education Committee
VFM
Value for Money

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1

Capacity and Capability Review of Central Procurement Function

Executive Summary ..............................................................................................................6

3 Procurement Spend Analysis Findings ...................................................................................18

Capability and Capacity Assessment Findings ....................................................................25

5.10 Savings Definition and Measurement .........................................................................77

Implementation Roadmap ...................................................................................................82

Data Sources ..............................................................................................................89

List of Interviewed/Surveyed Stakeholders ..................................................................92

Capability Assessment Framework for Analysis .......................................................94

Supplier Data ..............................................................................................................96

Referenced Materials ..................................................................................................97

1.1 Approach to the Review

Figure 1.0: Data Sources Used to Support Evidence-Based Approach

1.2 Spend Analysis Findings

Figure 1.1: State Spend Breakdown (2011)

Analysis of this spend shows that:

Figure 1.2: Breakdown of Estimated Savings (Annual)

1.3 Capability and Capacity Assessment Findings

Lack of integrated procurement strategy and structured planning

Lack of visibility and categorisation of spend, inconsistent

Supplier led model, fragmented contract management and lack of

Lack of compliance management process to monitor contract

Accountability is fragmented across central procurement - single

e-Tenders platform in place but lack of integration to analytics

Procurement information is fragmented across multiple financial accounting systems

There are inconsistent approaches to spend portfolio and category management

1.4 Recommended Strategy

Strategy and policy

1.5 Recommended Procurement Operating Model

Establish Chief Procurement Officer Role and National Procurement Office

Establish Organisational Alignment

Enable Savings Delivery & Compliance

Implement centralised Spend Analytics technology and capability to capture, cleanse

Category management approach

Policy Framework and Procurement Reform Plan

2.4 Review Approach

Figure 2.1: Capability Assessment Approach

The review was carried out in the following three phases:

Total State spend that should be managed centrally or within sectors

2.5 Structure of Document

3 Procurement Spend Analysis Findings

The approach taken to gather and analyse spend data

3.1 Spend Analysis Approach

A total of 73 stakeholders and 24 systems were examined in an effort to gather

3.2 Spend Analysis Challenges

3.3 State Spend Profile

Figure 3.1: Breakdown of State Spend (2011)

3.3.1 Procurement Spend by Sector

Figure 3.2: Breakdown of Procurement Addressable Spend by Sector ( million)

3.3.2 Spend by Category

Table 3.1: Breakdown of 2011 State Spend (in million)

3.3.3 Unclassified Spend

Figure 3.3: Classified/Unclassified Procurement Spend ( billion)

3.3.4 Spend by Supplier

Figure 3.4: Total # of Suppliers by Sector

As there is no central management of supplier data or vendor classification it is not

3.3.5 State Contracts

4 Capability and Capacity Assessment Findings

Procurement information is fragmented across multiple financial accounting systems

3. Procurement lacks a holistic approach to managing categories of spend, suppliers

There are inconsistent approaches to spend portfolio and category management

4.2 Capability Assessment Approach

4.3 Procurement Organisation