A massive procurement process by the Office for Government Commerce has descended into farce. The process was labyrinthine, badly designed and at times completely unfit for purpose. By missing out entire categories of buying (e.g. bespoke) it is likely to result in poorer, rather than better, procurement by the public sector. Any queries by people struggling to complete the process were met by intransigent 'computer says no' replies.
Majority of budget spent on procurement
Not that the OGC has a monopoly on piss poor procurement. A recent telco pitched out a large project and got 40 people to pitch! A rough calculation shows that two thirds of the actual budget was spent by suppliers before the winner was chosen. This is morally repugnant. Overall, everyone loses, as it limits the ability of small, innovative companies to grow.
Another frequent request is for the company to develop a section of the course as part of the pitch. OK, that's fine, but if I go into a bank for a loan, I don't ask for a free fiver, just to see what the product's like. Demos are not cheap to develop.
Having spent 25 years responding to tenders, I've 10 pleas for a sense of proportion in procurement:
1. Go for a two year approved supplier list, but make sure you have a range of companies to cope with innovation. This means choosing on competence and not just price.
2. Don't ask for proposals or tenders unless you have a secured budget and the project is assured.
3. Distinguish between Requests for Information (RFI), Requests for Quotations (RFQ), Requests for Proposals (RFP) and Requests for Tender (RFT)
4. Don't ask for demos/prototypes if total project cost is less than 30k.
5. Make sure total cost of procurement to vendors (in total) is less than 10% of the project cost.
6. Make sure total cost of procurement to buyer is less than 5% of the project cost.
7. Be fair on penalty clauses. There must be a quid pro quo approach where both sides are held responsible for delays, quality issues and so on, according to actual causes.
8. Have a clear set of written requirements. These should outweigh all the appendix stuff on environmental policy etc.
9. Keep open communication channel with vendors - they may have some excellent suggestions on improving your procurement process.
10. Keep the process as short as possible, but be reasonable. Don't lose momentum and treat suppliers with respect, as partners. Help them and they'll help you.
Procurement is now a strategic role in large organisations, with a drift towards partnership procurement. Supplier Relationship Management (SRM) is becoming more common as is more adventurous outsourcing and low cost country sourcing.