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Read this guidance to comply with the Commercial Spend Controls process within your organisation.

The Commercial Spend Controls process is operated by the Cabinet Office Central Commercial Teams which are part of the Government Commercial Function.

Scope of the Commercial Spend Controls

Cabinet Office Commercial Spend Controls apply to all commercial activity with a value of 20m or more, excluding VAT. Some organisations have a higher spend threshold for commercial controls. To confirm the threshold for your organisation contact the Commercial Controls & Assurance Team at commercialassurance@cabinetoffice.gov.uk

The Cabinet Office Commercial Spend Controls apply, as a minimum, at Outline Business Case (typically prior to formally engaging the market) and at Full Business Case (usually contract award recommendation stage, prior to any notification to bidders).

Commercial Spend Controls apply to:

• New or replacement contracts or call offs from frameworks and DPS with a value (including concession contracts) >20m
• Contract changes or extensions with a value >20m
• Framework agreements and DPS with a ceiling value >20m
• Contracts with a grant element with a value >20m including both fees and grant funding channelled through the contract where the grants are administered by and through the procured supplier.

The Cabinet Office Commercial Spend Controls are delivered by the Commercial Controls & Assurance Team. Note that where a particularly significant concern is identified through pipeline review (see below) for cases in the 10m to 20m range, these may require further review by the Commercial Controls & Assurance Team.

Prior Information Notices

Organisations are encouraged to engage the market when developing their commercial strategy. The Commercial Spend Controls process is not intended to interfere with this activity. Any market engagement, however, must not be conducted in such a way that any spend control determination is rendered moot.

Commercial Spend Controls operate on the following principles:

• Youdo notneed to seek approval from the Cabinet Office to issue a Prior Information Notice where this involves sounding out supply markets regarding your organisations requirements, how the services will be delivered, or to gather intelligence on delivery models, terms and conditions, performance standards etc. in developing the strategy that will inform your Outline Business Case, for example.
• Youdoneed to seek approval from Cabinet Office prior to issuing a PIN when your organisation intends to warm up the market to an imminent procurement, before an Outline Business Case has been reviewed by the Cabinet Office.

Organisations are encouraged to share Prior Information Notices with their relevant Commercial Business Partner or Commercial Assurance Lead in the Commercial Controls & Assurance Team who will provide guidance on whether the commitment to the market is too prescriptive and does not allow subsequent options analysis. As a rule of thumb, organisations should avoid market engagement that would be reputationally damaging if the organisation did not proceed with the strategy presented.

Assurance against standards

The Commercial Spend Controls function assures cases against the Commercial Functional Standard and other functional policies and best practice including Sourcing Playbook, Construction Playbook and Procurement Policy Notes.

The Commercial Spend Controls assurance methodology distils analysis into six tests:

1. Commercial policies - test the extent to which the case takes account of relevant Government commercial policies including those relating to SMEs, Social Value, Prompt Payment and Modern Slavery.
2. Commercial options and maximising competition - tests the robustness of options analysis and chosen route to market, considering how competition has been maximised.
3. Markets & Suppliers - tests the extent of market engagement and supplier/market health, including how supply market risks and issues have been factored into the procurement.
4. Risk allocation, pricing and value for money - tests how value for money will be realised, that risk is allocated to the party best able to manage it and that the approach to pricing is appropriate.
5. Contract, management and delivery - tests if the contract will be fit for purpose, appropriate performance mechanisms will be included and there is a robust approach to contract management, including transition and exit.
6. Process and planning - tests the extent and effectiveness of commercial planning, assurance and compliance with process.

The Commercial Spend Controls Process

Each organisation has a Cabinet Office Commercial Business Partner who can support and advise you on the Commercial Spend Controls process. Email commercialassurance@cabinetoffice.gov.uk to find out who your Commercial Business Partner is.

Pipeline Assurance

Your organisation must record all future commercial spend activity costing 10 million or more (excluding VAT) on a commercial pipeline managed through the Commercial Assurance Management System. You should add new commercial activities in scope, which is due to be procured within the next 18-24 months to the pipeline as soon as possible.

You should also include any material changes to services which result in contract variations of 10 million or more in your pipeline. This includes new activities, extensions and contractual changes.

You can access guidance to developing a commercial pipeline, including details of the minimum viable product.

Once your organisation submits a comprehensive commercial pipeline to the Commercial Controls & Assurance Team, you will be able to start the pipeline assurance process, which enables lower risk and value cases to go through light touch assurance. This will follow three steps:

Step 1: Submit a commercial pipeline and risk assessment

You must submit a compliant commercial pipeline to the relevant Commercial Business Partner via the online system Commercial Assurance Management System and complete a set of risk assessment questions for each line item. This will aid the Commercial Controls & Assurance Team to determine a high, medium or low risk rating.

• Low risk, non-contentious activities that are below the organisations spending thresholds (such as Delegated Authority Limit for a Department).
• Medium risk activities where there are limited supply markets or financial concerns for suppliers; where there are legal risks; or where a low risk activity is above the organisations spend threshold.
• High risk, complex activities such as a first generation outsource or transformation of scope; where previous procurements have failed or there are market concerns; where there are reputational concerns; or where there are a number of areas of lower risk that aggregate to cause concern.

Step 2: Triage and validate pipeline assurance outcome

Items on the pipeline with a medium risk rating will be subject to a further triage process coordinated by the Commercial Business Partner. You will be required to provide details to a set of questions aligned to the six tests.

Based on the outcome from the risk assessment and further review where applicable, each item on the pipeline will be assigned one of three assurance statuses:

• Assure - the pipeline item is judged sufficiently low risk to justify approval as part of the Pipeline Assurance Review.
• Control - the proposed commercial activity is high value, novel, repercussive or contentious, either in its requirement or commercial methodology, or has a history of failed procurement and justifies a detailed review by the Commercial Controls & Assurance Team and requires further Control submission and approval either by the Commercial Controls & Assurance Team Director or Deputy Director or the Cabinet Office Minister of State and the Chief Operating Officer for the Civil Service.
• Pending - your organisation has not fully defined the activity. You need more information to assess the activity, or you are still in the process of securing funding.

Items on the pipeline between the 10m and 20m threshold (excluding VAT) may, by exception, require further review. This will be determined as part of the Pip

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