The high cost of poorly managed public procurement tenders

Posted 3 October 2012 | | 0 Comments

What a mess! £40 milllion of tax payers' money is now going to be wasted on compensating the four bidders for the West Coast main line franchise bidding process, now that the contract award to FirstGroup has been scrapped. And that's before one considers the procurement cost of re-running the tender process at the Dept of Transport and the reputational damage inflicted on the UK government and civil service. And that's assuming that Virgin Trains (who are the incumbent) don't pursue their court case. It is certainly a huge embarassment to the government.

We understand that three civil servants have been suspended as a direct consequence of the debacle. Of course if it is found (and there has been no hint of this so far in the media reports) that there has been any degree of bribery or fraud involved then it won't just be their jobs on the line.

This story demonstrates how crucial it is that procurement staff have the right level of training and management support/monitoring to mitigate the risk of the whole contract award process being halted. Given the high value and risk involved in the train franchise system, it is unbelievable that major issues have been discovered post award. The EU procurement regulations and processes are well defined and should have been well understood and consistently applied. I wonder whether the errors would actually have come to light had Virgin Trains not legally challenged the contract award decision.

We'll watch what comes to light with great interest.

by M Roper | 3 October 2012

Schools ripped off in procurement scam

Posted 24 September 2012 | | 0 Comments

The BBC news website has this week run a story, which will also appear on Panorama, telling of the shocking story of how many unsuspecting schools have fallen foul of a leasing scam involving photocopiers and ICT equipment. Several schools have millions of pounds worth of debt - some of which the banks have thankfully written off as a gesture of goodwill - and have been left without much of the kit they had been promised when the two organisations in charge of the leading arrangement went bust.

Sadly, whilst this story is very distressing (given that ultimately it's the children who will suffer when budgets are cut), we are not completely surprised - experience of working with a large number of schools and colleges has shown that many are not managing their procurement functions effectively. We believe that there is a heightened risk now that large numbers of schools have become Academies, as they no longer work with local authorities' procurement teams and have are left to fend for themselves in an area where they may lack the skills and the economies of scale. Whilst we certainly don't believe that local authority procurement is necessarily in great shape, at least the old system had a degree of rigour and the opportunity for schools to join together and reduce costs. Schools need a procurement strategy in place to ensure that all stakeholders at the school, including Governors, Head Teachers, their staff and pupils' parents are clear about how procurement is being managed.

The Buying Support Agency has established strong links with the education sector to help ensure that when schools become Academies they are protected from scams like the one mentioned above. We have specialist procurement auditing and advisory skills which can be utilised to ensure that school bursar's have peace of mind that contracts are being placed in a way which maximises buying power and value for money yet reduces the supply chain risks.

by M Roper | 24 September 2012