Introduction
Gareth Rhys Williams held the post of Chief Commercial Officer (GCCO) for the UK government for eight years. He stepped down earlier this year, and is now chair of National Highways, the organisation that manages, maintains and improve England’s motorways and major A roads. As GCCO, he held what is arguably the most important and highest profile ‘procurement’ role in the UK, but when he moved on, there was remarkably little reporting or analysis.
That seemed a shame, so I asked Rhys Williams if he would participate in this interview, in order to give him a chance to record his achievements and reflect on eight fascinating and challenging years. He said yes, so in October we sat down in a meeting room in the National Highways London office (the head office is in Birmingham) for a lengthy chat.
Developing skills and people
So did he expect to stay in the role for so long, I asked. ‘I signed up for three years. I thought it would take more than three, but didn’t expect to stay for eight! Then things kept turning up. We had Brexit, then Covid, and then I really wanted to get the Procurement Act done. We were within touching distance for some time, I had a brilliant team working on it, but it was a difficult political environment and I wanted to stay and see that through’. (We have seen quite a turnover of “Procurement Ministers” during the last few years).
‘The Act was five years’ work, and as soon as it was all done, and the bill got through two days before the end of the session, I said I’d be leaving’. We will come back to the Act, but in terms of his major achievements, Rhys Williams puts the work he has led on people, skills and training high on the list. ‘The Government Commercial College trains 56,000 people. In terms of online training hours, we think it is second only to the Open University in the UK for education delivered. And around 25,000 civil servants and 16,000 from the wider public sector have been accredited at foundation level on contract management’.
I worked with National Audit Office way back in 2007 and produced some of the first guidance on contract management, and it has been an area of weakness for government. Rhys Williams used to work on the supply side, and he says ‘there is nothing worse than turning up for a review meeting as a supplier and getting nothing back from the other side, just a blank. I think we’ve driven real capability improvements in that area’.
To support the upskilling agenda, around 5,000 people have now been through the Commercial Function assessment and development centre (the ‘ADC’), which are linked to the training programmes. That started with top management but has now worked through to mid-level commercial staff. New management-level hopefuls also go through a similar approach during the recruitment process. Rhys Williams explains the reaction and some of the initial pushback like this.
‘We were initially told by the head-hunter’s; you can’t do that, it’s hard enough to get good people to join the civil service already, but we’ve proved that was wrong. We need to be able to say to the market, and to the public sector; look, we spend £300 billion a year, a third of tax take, we’ve got to be good at this, we’re professionals, we’re going to do this properly. Our vison is that ‘The Government Commercial Function is going to be the best in the UK’, and that all depends on having the best, qualified, people. We need to be tough on ourselves, and the ADC assessment has helped us get better and better people in the Function’.
Those who scored A in the assessment are deemed ready for promotion, a B gets you onto a training course to help you move forward, and a C means – well, maybe commercial / procurement is not the career for you! Now the cost of all this training (some £6K per course per person) and assessment is significant. But Rhys Williams has certainly been successful in selling the benefits of investing in people. ‘Because we have better metrics, I can talk to senior management and Ministers and point out that if we can show improvement on that £300 billion, it’s well worth the money.
The Procurement Act has itself generated a huge amount of training and education effort. For example, there have been 62,685 views of the Procurement Act ‘knowledge drops’, Rhys Williams says. 23,000 people have been through the e-learning tool. He is also a ‘great believer in league tables – departments can see who has recruited to their target numbers, what others are spending on training, who is saving what, who has done the various training courses, and those nudges all contribute to continuous improvement’.
Organisation and structure
In his previous business career, Rhys Williams ran functions that cut across different divisions in large private sector organisations. But ‘Government wasn’t used to that functional language and approach’. However, Rhys Williams introduced a new organisational model and structure, (the Government Commercial Organisation and Function) which has led to senior commercial people being paid for by Rhys Williams but with their objectives set and managed in each Department.
‘The people sit in their Departmental buildings, day-to-day tasks are entirely set by their Department. I’m there to help with the bigger vendors, more strategic commercial issues, and supply the right people. It’s an inverted triangle, not a hierarchical model’. But setting this up wasn’t easy – ‘changing and harmonising employment contracts for senior staff was a nightmare’!
But the change was delivered successfully and ‘it’s good that the commercial function has now really established itself. It’s joined-up, second only to finance I would say in profile, we’ve developed consistent methods, training, recruitment approaches, internal benchmarking, getting better and avoiding making the same mistakes. There are 180 public entities co-operating in the development and sharing of commercial operating standards – how we do the work – so everyone learns from each other’.
Historically, public bodies beyond Whitehall have not always been positive about the Cabinet Office (I’ve heard it described as the ‘darkest pit of hell’, which may be going a little too far) or the procurement guidance or policies emanating from it. Remember for instance that half the local authorities at any moment in time are of a different political persuasion to the ruling party in Westminster. Indeed, even other central government departments have not always welcomed procurement initiatives or organisations centred in Cabinet Office or Treasury!
So this functional development could have all gone horribly wrong, and I wasn’t sure when the programme kicked off that Rhys Williams would get the buy-in from the different Departments. His personal style and approach, which appears collegiate, collaborative and unthreatening, has been vital in achieving that and it is a notable success story.
The top 1,500 commercial staff are centrally employed, and deployed (‘rented’) to the Departments, which means they can move more easily between organisations, working to the same methodologies – ‘that really helped during Covid in terms of moving people to where they were needed’. Other functions struggled with that and ‘that networked model really works well’.
Central leadership, and a ‘meaningful bonus’ also provides some motivation to act in a collaborative manner, it does also mean that ‘at least once a year they have to talk to me’, he says, ‘but we don’t tell the Departments what to buy’. As he says, ‘we shouldn’t be judgemental about what they buy, but how you do it is interesting to us. Have you thought about the market, are you clear about your requirements, have you looked at what other Departments are doing and thought as a group about the supply chain, and so on. These are fair questions for a commercial assurance team to ask. There can also be a co-ordination role where multiple organisations are buying similar products or services’.
The major issue with this structure is it now looks like there are a lot of people sitting in the centre, albeit costs are recharged. That’s not just true of the commercial function – the same applies to the Fast Stream graduate recruitment programme, for instance, where the headcount sits in Cabinet Office. So if there is a headcount cap in Cabinet Office, ‘it can get in the way of what would seem common sense in the private sector. If the MOD needs more buyers, for valid geo-political reasons, and is prepared to pay for that, we should be able to make that happen. But if the Cabinet Office Minister, or CFO, says no, currently there is a problem’. That wouldn’t happen in the corporate world, Rhys Williams points out.
But successes have outweighed any downsides. ‘Pre Covid, we’d started best practice workshops, just two or three a year, and they attracted around 50 people. Now, they are practitioner-to -practitioner, led by different people from all around the network, and we get 500 people participating weekly. We have 28 metrics that measure commercial operating performance, and I suggest that an organisation identifies the five they most want to improve on, then make sure they send their people to those workshops at least. All the metrics have improved in recent years - savings, retention, training levels, contract delivery – I’d like to think this is not an accident. It’s about getting the right people, systems and methods in place. We’re in a very different place to where we started’.
I do believe Rhys Williams has played this restructuring initiative well. He has stressed that ‘this is not centralisation – it is a hub and spoke model, facilitated by the centre’. He calls it a ‘we the people’ set-up. You work for your own organisation and also be a member of a cross-government professional function. ‘You work for the MOD perhaps, but you also work for the function and you can contribute more widely to everyone’s overall continuous improvement’.
His approach also contrasts somewhat with what I saw up-close under the previous regime with Minister Francis Maude and his GCCO, Bill Crothers. Rhys Williams is a much more collaborative, sympathetic character, whilst Maude and Crothers tended to be more directing, which was great when they were right, but not so good when they weren’t. And the Maude track record was very mixed in terms of actual results (that is my view, not that of Rhys Williams, I should say).
Vendor management, commercial tools and techniques
Another indisputable success during the Rhys Williams period has been the various published ‘playbooks’ that focus on the more difficult sectors and challenges, such as construction and outsourcing (now renamed ‘sourcing’, as it includes insourcing issues). He is particularly pleased that the supplier side has contributed so fully to the material, and multiple industry CEOs endorsed the construction playbook, for instance. In fact ‘the industry group asked if they could use our playbook for private sector to private sector contracts!’
KPIs for major contracts are now published, another major innovation and step forward. ‘14,000 KPIs are published and 83% are now met. It’s important that the public and media can see this, and we can see how contracts and vendors are progressing. It’s good to see the successes but even more so to see where things aren’t going so well’.
So this is also a tool to drive more competition – ‘other suppliers can maybe see where a rival is struggling and think about positioning themselves to win that contract when it next comes to market’.
Now that is an interesting aspect of transparency that I confess hadn’t occurred to me. KPIs also ‘force the internal client to think about what they really want and need from the contract and the supplier’. Rhys Williams is not impressed with what we used to see too often in contracts - a vague statement around the parties agreeing in good faith to develop KPIs at some stage. ‘What sort of rubbish is that! No, you have to nominate and publish your KPIs and someone will spot if it’s a nonsense KPI’.
Guidance for Ministers now in place includes advice on how to specify KPIs and this is key ‘to hold the vendor to account. The number of challenges and disputes has fallen, and the commercial function is delivering £3.5-4.5 billion in savings per year’, Rhys Williams claims. (We didn’t get into a discussion on savings methodologies, I should say).
But perhaps unlike some predecessors, Rhys Williams is far from being a ‘beat up the vendors’ person. His earlier career including in the automotive industry has informed this view, as he saw the downsides of trying to ‘grind your suppliers into the ground’. He is proud that the public sector vendor base has become more profitable under his watch, with fewer company collapses. He spent time talking to investors, emphasising that ‘we’re not here to drive margins down. Suppliers should want to win government contracts, and we want our suppliers to make a fair profit, to be appropriately profitable. We want vendors to be sustainable, to invest.’ He also takes some credit for educating Treasury that if you push all the risk onto suppliers and they go bust, the consequences for us as customers are often severe’!
We digressed somewhat onto his new role and my thoughts on the UK’s record on major capital programmes. HS2 is of course the biggest disaster of recent years, and one issue has been a lack of clarity from the beginning about the exact purpose of the new lines; was it capacity or speed and reducing journey times? A ridiculous percentage of the cost has arisen because of that desire for speed for instance – the last few minutes off the London to Birmingham journey time has cost many billions. But now the claim is it was always about route capacity, really.
Rhys Williams feels letting contracts before the design is mature is a typical cause of overspend. ‘Actually, Highways has a fantastic record on delivery to time and cost’, Rhys Williams says. ‘Nick (the CEO) has a strong team who work out what the contract is about before the process starts. They rarely get stalled because something unexpected comes up – ground conditions for example. Time spent up front pays off, but we tend to rush into things in this country’. In his private sector career he saw how efficiently shipyards in South Korea work – ‘but they spent three time longer on design, planning the materials flow and so on than we did’.
Coming back to the playbooks, he is keen that they capture learnings from unsuccessful projects as well as the better examples. ‘We tested the playbooks against issues that have come up in projects. Everything, including the training, is reviewed annually to keep it current, so it doesn’t get stale’. Presumably there is a lot of HS2 learning going into the system for the next iterations!
Sustainability
We moved on to ‘sustainability’ issues next. Rhys Williams highlights four issues where progress has been made in terms of these wider questions – ‘modern slavery, prompt payments, social value and climate’.
The UK government was the first in the world to stipulate that suppliers bidding for major government contracts must have a company-wide net zero policy and plan, available on their website. ‘There are around 3,000 companies that have done that now, and something like £300 billion of contracts let to firms with these statements. I think that has genuinely changed things and lots of other governments have been interested in what we’ve done’.
95% of companies have welcomed this, as it levels the playing field for everyone. But could we have gone further, perhaps introduce it for smaller contracts? Or interrogate the plans a little harder, look at the actual trajectory towards the target?
Rhys Williams talks about how existing data collected by BEIS (Department for Business, Energy and Industrial Strategy) now DBT, has been used to report on prompt payment performance of suppliers. That has worked well particularly for smaller firms, really improving the way they get paid. Turning to net zero, scope 1 and scope 2 emissions data is reasonably available via BEIS too but scope 3 is more difficult. So this makes it hard to analyse company performance against the target, Rhys Williams says, and the threshold has been set at £5m contracts deliberately to keep the admin burden away from smaller companies.
He would like to go further but “we need better and standard global definitions to move forward on that, so we might eventually get emissions data reported as we do with calories on food packaging, but that needs global agreement’. This isn’t something the commercial function or indeed the UK government can simply resolve itself. But Rhys Williams says, ‘I do think we could eventually see carbon tariffs or similar, and what we have done helps firms prepare for this. We do also have to be careful that we don’t create barriers to entry for smaller firms’.
Then there are the social value requirements that often form part of supplier selection for individual contracts. Rhys Willaims thinks use of these criteria ‘is brilliant’. ‘The public sector has a reputation for buying the cheapest product that meets the spec. Using measurable social value criteria helps to differentiate between vendors and proposals, helps get us away from the stereotype of price being the only quantitative, and hence determining factor’.
Again though there is a danger this could rebound on smaller firms. ‘When metrics proliferate it can accidentally make it harder for SMEs to compete. Large suppliers will naturally be doing more social value-type activities just because of their size and because they want to be seen as doing the right things, so we have to be careful in how we assess this’. Making social value linked to the specific contract helps avoid this, and the new NPPS (National Procurement Policy Statement) should help define the categories of social value that the ‘Government of the day’ has prioritised.
Rhys Williams also believes the Procurement Act will help contracting authorities incorporate these issues in more creative ways. ‘You can design your own process under the new regulations, and as long as you follow the process you have written down, that should be fine. That includes how you want to get social value delivered. The central team will be producing templates so everyone won’t be starting from scratch, but they won’t be prescriptive. We don’t want everyone re-inventing the wheel, but you don’t have to use them as slavishly as the current procedures, and we expect people to amend and develop the templates’.
Another procurement tool that has become somewhat controversial is the use or over-use of frameworks. ‘There’s nothing wrong with frameworks, particularly if they are dynamic’ Rhys Williams says (the Act opens up options for more flexible frameworks). AI could be useful here, he thinks, as ‘there are too many frameworks, we need to identify the best ones, encourage buyers to use those. Single supplier frameworks are generally not good, and we’re banning ‘pay to play’ arrangements’. That’s certainly a positive development.
Rhys Williams is happy generally with where the Act ended up. ‘I think it has been universally welcomed. We had one of the highest ever number of consultation responses, a lot of thought went into it. I might have gone for more transparency, but there is a burden there. And once everything is working and systems are integrated it will be easy to review things like the levels where transparency requirements kick in if that’s needed’.
Covid
Rhys-Williams has been very open throughout the session, but understandably there is a little more caution when we touch on the pandemic issues. The Covid-19 Inquiry moves on to procurement matters early next year, and no doubt he will have something to say publicly then.
We talked about the PPE stock issues pre-pandemic, which have been well documented – it was undoubtedly hard to know exactly what was going to be needed. ‘In an instance where we had demand that went from one to twenty, of goods we had no stock of, where the supply markets were overwhelmed, that’s going to drive prices hugely higher, and make value for money a difficult thing to protect, certainly compared to pre-pandemic pricing’. But of course there is a cost of holding high levels of stock, potentially for decades. Other new requirements outside PPE were met and Rhys Williams believes the procurement team ‘did an amazing job’. The common methods of working in the commercial function really helped here.
Prices for PPE were inevitably higher, and there wasn’t time to run conventional ‘formal’ procurements. We discuss the ‘VIP lane’ which proved contentious. Rhys Williams says, quite rightly, that there had to be something in place to handle the inevitable situation where potential suppliers contacted Ministers or senior people personally. ‘If a potential supplier is calling the Minister and saying, what’s going on with my proposal, I can sell this PPE to another country you know, then the Minister is going to call the procurement team and someone has to have an answer’!
That is absolutely true and as I’ve said before, we did need some sort of “triage” system to analyse the offers being made. My feeling now is that calling it the ‘VIP lane’ was a big part of the problem. Call it the ‘key stakeholder team’ and all might have been well. Rhys Williams agrees, but says he regrets one aspect of that process. ‘If all the information about the contracts had been published at the right time, I think that would have taken a lot of the heat out of the situation. But it wasn’t, so people assumed something dodgy was going on, even though it wasn’t. The publishing problem was mainly caused by the workload, not any intent to hide anything’.
Different IT systems were being used, and there was a higher publishing load than usual because goods were bought under the ‘regulation 32’ emergency procedures. ‘Putting together the right information was hard. This was a burden on top of the day jobs, then when you start getting challenged, the lawyers get involved…’ all of which injected regrettable delays. The new Act simplifies transparency, and Rhys Williams is a believer that ‘we should publish more information. Quite right, this is taxpayers’ money. But during Covid, we just ran out of people’.
I can sympathise with the staff involved. The team was working flat out on sourcing, and I can well imagine that stopping your life-and-death job to write and publish lots of contract award notices would not have seemed like the best use of time. But unfortunately it led to the perception that there was something to hide in terms of PPE contracts.
I’ve noted in previous articles that the early forecast of PPE needs was another big driver of what turned out to be the over-buying of PPE, but Rhys Williams points out that ‘they were using “reasonable worst-case” forecasts’. And no-one knew how long deliveries were going to take, no-one knew how long the pandemic would last or how many patients there would be, and no-one wanted to run out of stock and be guilty of over-caution, whilst people were dying in their thousands.
He makes another interesting point. ‘I believed the assumption was that 20% of what was ordered would never be delivered and a further 20% would not meet the quality requirements. In fact, the actual numbers were much lower than that in both cases, so our success in that actually meant we had more stock than expected’. There is also some confusion with people thinking stock was ‘dodgy’ when in fact most write-downs were purely because goods were surplus and their allowable accounting carrying value had reduced.
He does feel that there are other lessons though. ‘We did not know what our usage rates really were and how much PPE stock we had in the system. We need better systems. And I think the Department of Health could have been blunter about saying what we were doing about the suppliers who have let us down. There’s been a lot of work done pursuing people but it hasn’t always been publicised.’
Rhys Williams personally played a major role in the ‘ventilator challenge’, which was ‘an amazing project’ and generally perceived as a success by NAO and others. And Rhys Williams thinks some of the criticism on PPE volumes is unfair. ‘One of our Ministers said that criticising the NHS for ending the pandemic with too much PPE is a bit like criticising the MOD for ending World War Two with too many Spitfires’!
There are lessons to be learnt of course from the pandemic in procurement terms, but these aren’t simple issues. Perhaps there should always have been a ‘China buying team’ dedicated to that supply market? But ‘even buyers who knew the market and had strong contracts found that suppliers just cancelled the contracts when Covid hit’ and buyers or middlemen offered them three times (or more) the price.
We could build more domestic capacity, but that is expensive, and those suppliers will be uncompetitive given the scale of production in China and elsewhere once the market returns to normal. And if demand leaps again, that capacity won’t satisfy the requirement anyway. ‘Understanding your supply chain is good, but it doesn’t guarantee you supply,’ Rhys Williams remarks. That’s actually a perceptive and thought-provoking phrase to imprint on any young procurement person.
We touched on other contentious PPE issues. Maybe we could have been quicker to cancel contracts once it became clear that we had over-ordered, even if that meant paying fees. But imagine the headlines if we had done that, then had a Covid recurrence and saw further shortages. Or we could have bought product with a longer shelf life, to avoid the waste issues we’ve seen with surplus out-of-date stock being burnt or buried. But that would have pushed up the initial purchase price even further. Nothing is simple, and Rhys Williams tells me ‘you should go and read the equivalent NAO-type reports from other countries and see what they did’. (I assume he means the UK wasn’t an outlier!)
Wrapping up
After a couple of hours of interesting debate, we came to the final questions. So, I asked, have you enjoyed the role, given you stayed on longer than you first expected?
‘It’s been brilliant. But it is the right time to go. My successor can build on what we’ve done, take things to the next level, I’ve had the pleasure of working with fantastic people and I’ll miss everybody – my wife came to my leaving do, 250 people, and said ‘I get it now, they’re quite a bunch’! His enthusiasm for the team appears very genuine, and he is always careful to allocate credit to them throughout our session.
As we approached the end of the discussion, Rhys Williams asked me what I think he and the team should have done ‘that we haven’t done over the last few years’? A great question, and one for which I was not well prepared. I mentioned the issues on major programmes again, including HS2 and also MOD programmes.
‘That’s an acquisition issue… of course we should buy more standard products if we can; the people who know what they want in the military should say ‘this is what we want, we are prepared to pay this much, what can you give us for that money’. That will drive up on-time delivery and savings which can be used for the innovative stuff that is really blue sky’. Changing the specification once a project is underway is a bad idea, we both agree.
I also mentioned the long struggle to embed private-sector category management thinking into the public sector. “The Romans did it, you know’ he says. (I need to research that!) Could more have been done there? Rhys Williams pushes back on this somewhat. ‘CCS is moving towards this, but aggregation isn’t easy and there are restraints. And we’re not going to get standardisation across 450,000 civil servants’. There is more to CatMan than aggregation and standardisation, I say, and Rhys Williams agrees that it has a place. And cross-government volume deals have real potential, particularly at a vendor level, he says.
My argument is simply that there should be strategic thinking going on around how key categories are sourced and managed, not just ‘this framework has expired, we better let a new one’. I mentioned social care as a sector that desperately needs some serious thinking – we got into that to some extent but that is probably a topic for another two-hour discussion, and by now my note-taking arm is getting sore so it’s time to wrap up.
Finally, I did say that I sometimes felt I would have liked him to take more of a wider and more visible leadership role for the procurement profession, particularly given that CIPS abandoning its Presidential role left something of a vacuum.
‘Partly that’s not my style. But also it was the team who should get the plaudits, not me. Also, my role is not to sign contracts – my role is shaping the market, talking to the vendor base, even helping them restructure at times, making sure they can deliver, and most of that has of necessity been done quietly. That is not best served by me shouting about what I’ve done this month, and anyway civil servants rightly don’t have right of reply to media stories’.
I don’t think that is false modesty. I don’t see the arrogance in him often noticeable in those who hold such big jobs, and I suspect the other truth is that he also doesn’t particularly seek out being (literally) on stage or the centre of attention in a public sense.
The search is now on for his successor. I originally thought that the ideal candidate would combine a professional procurement background with some general management experience. But I’m not so sure now. ‘It’s not really a procurement job’, Rhys Williams says. ‘In fact, a serious procurement professional might find it frustrating, because I really didn’t spend much time ‘doing procurement’, it’s a lot more about generating the environment for the real professionals to be successful in’.
And I think he has shown that you can be successful in the GCCO role without having served at the procurement coalface for 20 years first. Those other skills he has demonstrated around people (staff and stakeholder management), organisational strategy and design, collaboration and performance management are probably more important than your understanding of Kraljic. But he is clear that it is a great job and there is something to aspire to there. ‘£4 billion a year in savings – that’s the target; that’s four fully equipped teaching hospitals a year!’
So thanks to Gareth Rhys Williams for an interesting and enjoyable session, and I would judge that he has certainly made a positive impact on the commercial function in government over the last eight years. He will probably take on another non-exec or chair role alongside his Highways responsibility and I’m sure there will be something interesting in store for him. I did suggest though that (unlike his predecessor) he should stay away from dodgy Australians offering interesting supply chain finance propositions …
Peter Smith
November 2024