As a previous government procurement professional, who led many major projects, our first impression of this was simply "Get over it". After all this is what competition is all about and you ('De La Rue') new the rules of the game when you decided to enter this open and transparent procurement process.
However, having worked on many private sector bids, tendering for public sector government business, we are (in our opinion) seeing far to much emphasis being put on price, even though the evaluation criteria for price still typically averages out at 40%.
Professional buyers across government, in my opinion, are not doing enough to address the quality aspects of the bid. Consequently, they are relying far too much on what is put in front of them (in terms of a written submission) and they are not following through with the appropriate due-dillegence.
Over the last couple of years, there appears to be a growing trend, whereby suppliers (who are attempting to penetrate certain sectors) are now submitting bids at a cost, that is quite frankly unsustainable, simply to pick up the max weighted score in order to buy the contract. They know they might not achieve the best quality score, but so long as its reasonable to stand the test of robustness, this for them is a risk worth taking, as government is very much influenced by price even though it states its overall criteria is based on MEAT.
It's all very well government putting in such conditions that address 'abnormally low price tenders' but in our considered view the UK government is now prepared to take a risk on all of this. This is because, the Regulations do not define what constitutes an "abnormally low” offer, nor is there much helpful guidance to date on the point from the ECJ or the courts. Thus it only ever really comes to a head after the award of contract and the successful supplier then starts to expose itself, because it struggles to transition and mobilise itself effectively, due to the unsustainable costs that were put forward in the first place. Consequently, one of two things then typically happen:
(1) the outgoing supplier has to step in to support the transition period and help government save face, as a result of pressure being applied upon them because the out going supplier still has other contracts in place.
(2) the good old change control process kicks in and before we know it, we start to see the costs rise, by which time the public interest is no longer as visible, as it was before the contract was awarded.
I think the procurement buyers and the SRO on this particular project are going to be tested more than ever and this is going to be of great interest going forward. The supplier industry always said that they will one day 'bite back' after the bruising that 'Francis Maude' gave them when centralisation kicked in and started banging the big drum about 'more for less'.
Has that day come?
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