Wednesday, 31 August 2011

CrossRail - fall out from the Bombardier/Siemens decision

The Prime Minister has announced (rather quietly I thought) that there will be no review of the decision to award the Thameslink to Siemens rather than Bombardier.  This is not surprising as the alternatives were going to be extremely unpleasant - at best we could find a valid reason to annul the competition, and restart the process with the award (hopefully) coming to a different company.  At worst the UK gets a hefty fine from the European Union and sued by Siemens.  In the middle the government looks powerless to act.

The fallout continues though, and in the link here it is reported that Alstrom have withdrawn from the process to supply trains to the CrossRail project.  Now if you have not been following these projects, it should be pointed out that CrossRail and ThamesLink are major projects - far larger and more expensive than the Olympics, but with a much lower public profile.  Both should make a major contribution to travel in London and the South East. 

The government has announced that it delay the tend for the trains by a few months (from late 2011 to early 2012)  and will review the procurement process.  The shortlisted companies are Siemens, Bombardier, Hitachi and Ferrocarrilles.  Alstrom have withdrawn from the bidding process.

The question is what can the government achieve?  Although they blame the previous administration for the rules, in reality all that is happening is that the process is following EU procurement rules.  Transport Secretary Philip Hammond says he wants to change the rules so that "UK companies compete on an equal footing with Continental competitors".  Of course that is already happening, or we would be able to lodge a case with the EU for illegal support, non-competitive behaviour, cross subsidies or something similar.  If we have evidence that it is not happening, then what are we doing using the EU legal system to correct the problem.

What the minister means, and most of us would be behind him on this, is that he wants the work to go to a British company.  In practice this means Canadian company Bombardier, rather than German company Siemens.  The withdrawal of Alstrom may be a sign that they perceive the UK government to be "rigging" the process so that Bombardier wins. 

Which then leads us to ackward consequences.  If Bombardier do win, will people think it is a political fix?  Will Bombardier actually have the best bid?  Or will we be paying a higher price for lower quality to keep jobs in Britain?  And will the EU approve it?  Will it actually help Bombardier in the long term if they can only win business that is "sorted" for them?
If Siemens, or one of the other bidders win, what will that mean for the government's rhetoric?

It is politically unpopular, but the government could take the tack of pointing out that we want fair competition across Europe, and the way to do that is not to impose barriers but to ensure other countries follow the due process.  If we give preference to national companies, how can we complain about other countries doing the same?  And where does the balance lie between encouraging business competition and nurturing developing or weak business sectors?  And having given a lead that national governments can ensure business goes to national companies, what will the impact be on UK exports?

The government is encouraging British business to have an input on their submissions on proposed changes to EU procurement legislation, and I encourage companies to have their say.  However realistically the choice for the UK government is to agree to EU procurement policy, and the consequences of that single market, or to withdraw from the EU.  There is a lot of support for withdrawal in both the country and the government (though personally I do not agree) and it is possibly the time to have that debate about the benefits (advantages) and obligations (disadvantages) of being in the European Union.

Monday, 22 August 2011

Basics of Business - Networking

Networking is one of the elements of business that is sometimes taken for granted, but is actually still a source of discussion.  While salespeople, consultants and other snake oil sellers see networking as essential, there are still plenty of people in business who don’t see it as essential.

The arguments against networking are several – that it is time away from the office that should be spent on productive work, that it is expensive, that staff use is as an opportunity to promote themselves rather than the company, that it is entertainment rather than work, that there is no guaranteed benefit, and that it is full of salesmen rather than customers.

 All of these can have some validity  - but if you think that by stopping your staff from networking they will not meet other potential employers, then you are underestimating the work of recruitment consultants.  You are also missing out on a lot of potentially valuable information. 
A couple of anecdotal incidents from the past week or so.  A colleague I met at a networking lunch has just rung me up from the Middle East to tell me about a London based company looking for some training providers. 

Secondly, last week I was at an event where a colleague found out the top management of  a major competitor had resigned en masse to set up their own company.  This is not the sort of information  that  comes out quickly through formal channels, and it means that there are opportunities to take advantage of the distraction of the competition – at a least for a while.  And yes, a potential job vacancy to be considered too.  Without networking it is likely that much of the window of opportunity would have passed by unknown.

If you are going to use networking in your organisation, and I suggest that you should, you should consider a few key points;

-          Set a target number of days for networking – say 2 per month.

             -          Consider what you want out of it - sales leads, market info, ideas, contacts, a new job

-          Ensure information is shared back home - a quick note is enough

-          Practice your Elevator speech - if you have a chance to make a good impression be ready

-          Think about what organisations you want to link into - customers, competitors, suppliers, academia, media

-          Follow up on contacts made – and categorise them with bring forward actions

-          Share – be reciprocal.  People want you to give as well as take

-          Be prepared to cut events that are too full of the wrong sort of people

-          Recognise that events with the right sort of people are limited

-          Recognise that it is a numbers game – there is no guaranteed win on any one event

-          Recognise that it is a long term game - sometimes things take years to lead to business

-          Don’t limit it to your sales people – technical people need networks too

-          Practice networking skills if you are not a natural

-          Don’t be afraid to ask questions such as “who do you use for…?”

-          Be aware of any IP that you want to protect (e.g. who you use for…”

-          Make sure networkers are aware of the need to avoid any activities that could be considered collusion or market fixing (e.g. discussing prices).

-          If you are not getting what you want, then consider other networks rather than stopping networking altogether

-          LinkedIn is great – but it is not an alternative to physical networking.

Friday, 19 August 2011

Changing EU Procurement rules

The government has signalled its displeasure at its inability to award the ThamesLink train contract to Canadian company Bombardier Transportation in order to support the train manufacturing facilities in Derby.  Instead the contract has gone to German company Siemens, who will in return create 300 jobs in Hebben, South Tyneside.  In total some 3000 or so jobs are at risk in Derby, and a campaign to overturn the decision has seen well supported marches, and angry questionning of government minister - see here.

I have pontificated about the decision in other places on the blog, but in principle the decision is right (if unfortunate).  The government really has no choice because of EU procurement legislation, which it has hinted it would like to change - no easy task.  Luckily there is a review of the rules in process (kicking off in earnest next year) and the UK government would like to know our views and gain our support in changing the current legislative framework.

There is a paper about it here.  Some of the proposals seem a little anodyne, but that is understandable - you don't want to go into a difficult negotiation with all guns blazing.   The specific changes suggested include;
- higher limits, quicker processes, measures to exempt 3rd sector organisations from some of the legislation, and to increase (in reality create) opportunities to negotiate with suppliers.

If you have an interest in public procurement in the UK, and Europe, and strongly suggest you have a look and let the Minister for the Cabinet Office, Francis Maude, know what you think, and what you would like to see changed.  This is an opportunity, and we should all take it.  Rather than complain about what the rules are without doing anything about it, let's engage and see if we can get any improvements. 

But don't hold your breath - the chances are the process will be slow, and the changes incremental.

Monday, 15 August 2011

UK Government Spending

My friends at BIP Solutions have just sent round an e-mail highlighting their Tracker Spend Analysis service.
The most interesting part of the e-mail is too look at how much money the government has spent so far this year - see quotoation below

With a total spend so far from January 2011 of £146,003,754,510.17 – it is anyone’s game!  
So who has spent what?
Central Government
Local Government
Emergency Services
Non-Departmental Public Bodies
So year to date we are at £146billion, (or £146 000 billion if you are in the US), and on track for round about £200bn by the end of 2011.  That is a lot of money.  But is only about £2.5k (at the moment) for each person in the UK.  Note that the NHS spends almost twice as much as all the councils put together, and that Quangos (while spending a hefty £3bn) are really only a couple of percent of the total - getting rid of them will not make a big difference.

So, if you are a small business interested in supplying the UK public sector, remember there is a lot of opportunities to target - even if the total spend is due to come down in future.

And if you are not then it is worth trying to understand where the money is going.

Wednesday, 3 August 2011


In an earlier post I mentioned I was reading the book Priceless. For a procurement expert, and as a business owner who has to set pricing it is fascinating insight into the psychology of price.  I think the short version is that although a pricing decision often feels logical, in reality it never is.  (Really.  Never is.)

As an experiment I am now going to try hotlinking to so that for this and other books in future you will be able to purchase them immediately if they take your fancy.