The demise of the British Chemical Industry?

 I do hope not, but it is worrying.

Special report from Ed Conway of Sky

https://www.youtube.com/watch?v=PQ3hT8tqZgo

Thoughts on the new UK Green Paper on Public Procurement

 A few passing thoughts on the new Green paper (which I will try to add to as it sinks in).

The Paper is here.

First, the ability to limit contracts below threshold to SMEs is a consequence of being outside the EU procurement directive, and reflects the fact that the WTO GPA (World Trade Organisation Government Procurement Agreement) only applies above the relevant threshold.  (note that thresholds will remain).

Is this a good idea?  Well it depends on whether it is used.  Central Government already has a target of 1/3 spend with SMEs, (a target that is fudged, but that is another issue) and this should help.  I suspect that it will be of use for Local Authorities who strongly prefer to spend their money locally, and it will help to overcome the advantage the "big players" have by using strong bid writing teams.  I do suspect though that the SMEs will end up being the bigger firms (near the 250 person limit) rather than micro-businesses (fewer than 10 employees).

• Allowing buyers to include wider social benefits of the supplier, such as economic, social and environmental factors, when assessing who to award a contract to, while also still considering value for money

Again, I suspect Local Authorities will love this and look for it to be a charter to award contracts to local business - regardless of other constraints.  Could be good, could lead to local buying leading to poor value for money.

• Giving buyers the power to properly take account of a bidder’s past performance, allowing them to exclude suppliers who have failed to deliver in the past

This builds on the existing discretionary exclusion, and could be a good "whip" to complement the "Carrots" of further contracts.  We do need to address the way that the make money is to win the contract, regardless of whether you do a good or poor job.  It creates an incentive to invest in bid writing not delivery.

• A new unit to oversee public procurement with powers to improve commercial skills of public sector contractors

OK, UK Government - you know where I am.  Happy and willing to run help improve commercial skills.  It is my job.  Give me a call.  

Flippancy aside this has long been an unmet need, and the new regulations will make it urgent.

• A single digital platform for registering contracts, improving transparency and making life significantly simpler for business

This makes sense and I could not understand the previous desire to have 2 platforms.  Though I do wonder how it will fit in with the developed procurement powers in Scotland, Wales and Northern Ireland who all have their own platforms and rules.

We propose enshrining in law, the principles of public procurement: value for money, the public good, transparency, integrity, efficiency, fair treatment of suppliers and non-discrimination.

This is actually more principles than we have at the moment, but I don't see anything to object to here with the possible exception of the "public good" - who determines that?  How do we measure it objectively?

 We propose establishing a single digital platform for supplier registration that ensures they only have to submit their data once to qualify for any public sector procurement.

This is a good idea, and was the basis of the ESPD (European Single Procurement Document) that the government previously and ostentatiously refused to apply in England (preferring to stick to the Selection Questionnaire SQ) though Scotland and Wales used it.

We propose legislating for a new Dynamic Purchasing System (DPS+)

Colour me not convinced.

New UK Government Green paper on Public Procurement after Brexit

 The paper is here.

Not had time to comment here, but there is already good relevant commentary to read alongside from Prof. Sue Arrowsmith (whose views informed the Green Paper) and Prof Albert Sanchez-Graellis.

No doubt there will be tweaks on the way to legislation, but it is useful to be able to know what the government is thinking and therefore what we will all have to do in the future.

I shall develop some training materials if people think that it is worthwhile, and there is sufficient demand for training courses.

In the meantime, Merry Christmas and a Happy New Year to all.

IChemE - Restarting Supply Chains - 5th August 2020

Whatever we think about the current pandemic  - whether concerns are overblown, whether it will be over soon, or whether it is serious and we are stuck with it for months - it is clear that there has been major disruption to supply chains.   We can hope that everything will very quickly get back to normal - but there is an element of wishful thinking there.

You might think that this is a great chance to restructure your supply chains - or that things will quickly revert to exactly what they were before.

With IChemE we are running an online seminar that helps to cover all of these topics, and will help you to think through your options and choices.  And we hope to cover the possible disruptions caused by the UK leaving the EU REACH regime a bit too.

As with any disruption, you can wish and hope - or you can plan and organise.  We hope to help you with your planning.

There is a guest speaker that we are not quite able to announce - watch this space.

Full details and booking arrangements are here.

EU Procurement and Blue Passports

For once Public Procurement is big news.  The big news is that a French/Dutch company with facilities in the UK has won the contract to print the new Blue British passports over a British company with some assets in Malta.

My TLDR verdict: Delarue should have written a better bid.  (particularly if they are actually £120m more expensive has been indicated)

Procurex South - now onto Procurex North in Manchester 24th April 2018

Had a really good time at Procurex South.  Thanks to Twitter posters for the photos. Lots of questions from delegates, which I hope I managed to answer.  Good buzz around the place.  Got to get away from the stand to hear very interesting bit from Professor Sue Arrowsmith on Public Procurement implications of Brexit.  Her paper for the European Parliament last year is still the state of the art.  Current situation is wait and see but don't expect major changes in the near future.

And so onto Procurex North in Manchester on 24th April 2018 - full details here.  I am again running the Winning Tenders training zone.  Hopefully with new insights, or at least new jokes.

Hope to see you there.

Procurex South 15th March 2018 - London Olympia

So, this is only a week away and I am looking forward to this.  My sessions are in the Winning Tenders Training Zone in the afternoon, so I hope to get to see some of the keynote speakers in the morning, in particular Professor Sue Arrowsmith who will be talking about Brexit and Public Procurement, and Malcolm Harrison who is currently CEO of the Crown Commercial Service, but in the summer will take over the role of CEO of CIPS.  And of course the brilliant Eddie Regan.

That's pretty top notch stuff.  Well, maybe not me.

Vote, vote, vote!

Not a Procurement related post, and not deliberately political - but there is a General Election on June 8th 2017 and I really do think that we all have an obligation to vote.

Normally people say "I live in a safe seat, so there is no point" or some other idea.  However whichever side wins I bet this election will be portrayed as a referendum on the Brexit Referendum, and therefore the total number of votes cast will be a metric.  Whatever your party, and whether you are Leaver or Remainer, this time (more than usual) all votes will count.

So even if "there is no point" this time there is a point - and the more of the country that votes the more confident we can be that the government reflects the mood of the country.  Or doesn't.  Whichever. 

Power, Corruption and Lies Part 2: DIT and Cultural Fit as an evaluation criteria

I don't want to be seen as regularly knocking the government, but another case has arisen that I think needs greater public scrutiny.

The Department for International Trade has advertised a low value tender (therefore not subject to the full weight of OJEU) that has as one of the award criteria 15% of marks for Cultural Fit - the others are Technical Competence 65% and Price 20%.

So we can see that Cultural fit is almost as important as price.  And we know that in practice the intangible element of culture can have a big impact on how a contract is actually carried out, so there is nothing wrong in principle with the idea.  But the question is of course, how are we defining Cultural Fit?  This could easily be a discriminatory question which would not be allowed ("you are from the North and don't fit into our Southern culture...")

In this case it is determined as;

Be focussed enough to stick to the task at hand and not be side-tracked in a vast and quick-moving field Be committed and hard-working, to deliver under time pressures Be enthused by the prospect of working at the frontline in such an exciting and dynamic area Be committed to the best possible outcome for the United Kingdom following its departure from the European Union

Let's look at these.

Stick to the task - fair enough but rather a given I would have thought.
Be committed - as above. 
Be enthused - as above.   Can you imagine anyone bidding for this who was not enthused by the task?  They would simply not bid.  Likewise if they were not focussed, hard-working etc. then I cannot imagine they would admit that in their tender proposal.  I also find it hard to imagine how we might score these criteria.  Particularly as part of the process is a formal presentation - which is inevitably more subjective than a written proposal, and therefore potentially more open to challenge as not treating bidders equally.

The final point however is of course the real problem.  Be committed to the best possible outcome for the UK...  this sounds suspiciously like a political Brexit loyalty clause.  And therefore it stinks.  What if I believe the best possible post Brexit is to rejoin the EU forthwith?  Am I now excluded from winning?  This is a political vetting clause, and in no way fits with the requirement for non-discrimination.

I expect to see more of these "political loyalty" tests if this one is successful.  Why are they corruption?  Because it amounts to hiring suppliers that the minister likes, and fits his/her views rather than the best one for the job.  Which is classical government corruption.  No money needs to change hands - the minister benefits politically, and the UK taxpayer is not guaranteed best value for money.

A more elegant analysis of why this is illegal comes from Dr. Sanchez-Graellis of Bristol of University on his always interesting blog (well interesting to me) www.howtocrackanut.com.

Deloitte and Public Procurement

Having had a very busy couple of months I find that I am still angry about Deloitte deciding not to bid for UK government contracts for 6 (or 18) months as a result of one of their staff leaking comments on UK government preparations for Brexit.

Let me just go over this again, now it has simmered gently.  Deloitte are a private company and are compelled to do what they think will create value for their shareholders.  They clearly think that NOT doing UK government contracts for 6 months will create value.  That MUST mean they think that there is more value coming as a result of this decision.

The awarding of UK government contracts is supposed to be an impartial process with contracts awarded to the best bidder.  If Deloitte believe that they will benefit from this approach they must believe that the process is open to external influence, otherwise whether they annoyed politicians or not would not matter.

Deloitte is a leading company that has won much government work in fair competition against others.  If they are not bidding then contracts are likely to go to organisations that are not as good as Deloitte would have been.  Potentially at higher prices.  The UK suffers because of Deloitte's decision not to bid.  And they have taken that decision to curry favour with politicians.

This is corruption just as much as if they were stuffing notes into brown envelopes.

I don't Deloitte.  I do blame our politicians.

In order to work effectively (whether in the EU, or not) public procurement must be open and fair, and be seen to be open and fair, with contracts going to the best bidder not people with the best contacts or relationships.  This business  damages all parties, and particularly taxpayers. 

If find myself getting more appalled not less.  Your mileage my vary.

Marmite and Brexit

So the great "Marmite dispute" between Unilever and Tesco is over, but what did we learn?

There is a "Remain" analysis here at the Independent , an over from the FT here, and a Brexit analysis here at the Sun.

There is an interesting analysis that shows both sides suffered reputational damage (Marketing Week), but that of course is what promotional budgets are there for.

What we can be clear about is that this negotiation will be going on between Unilever and ASDA (and Morrisons etc.) and between P&G and Tesco (and ASDA, Morrisons etc.).  In fact they go on all the time.  This particular spat was very nicely timed for me because I had just been discussing with delegates a hypothetical similar battle between Tesco and Coca-Cola.

Unilever will be trying to maintain their profit margin, which is about 10%.  Tesco will be doing the same on a profit margin of about 1.7% (which is way down from the 5% or so it was earlier in the decade).  So on the face if it Unilever has lots of room to deal with material cost rises caused by the falling pound/euro exchange rate.  But why should it?  It's stock price will be in part based on the strong margins, so accepting lower margins would be a doubly whammy. 

Tesco of course in this cannot afford to absorb 15% price rises, and gets to look like the good guy looking after customer interests.

This negotiation between the 2 will go on all the time - it is just rather public this time, though interestingly the resolution is not as public as the spat.

Over time prices will rise - the weak pound means that imported raw materials will increase in costs, and products Unilever makes overseas will cost more when imported (they have no reason to reduce their internal transfer price and reduce profits elsewhere).  The public will pay more. 

Another factor is that the big discount competitors (Aldi, Lidl, Netto) are European and so their own brand products (if made in the EU) will also cost more in sterling.  Despite the competition, all the supermarkets have an interest in prices going up, none can afford to absorb the exchange rate impact, and none of their suppliers will do so either.  The size and speed of the drop means that currency hedging will only have limited some of the impact, and only for a limited time.

So what is the impact?  Sterling has fallen about 15%, but in any manufactured goods the cost of materials is only part of the total cost (maybe half or two thirds) so if products are made in the UK we might expect prices to go up 7.5% or 10%, and if imported 15%. 

In addition petrol and diesel prices should rise because oil is priced in dollars. Luckily (in a way) most of the pump price is tax and so the increase will not be 15% or anything like that.

Overall some commentators who know supermarkets are saying prices will on average rise by about 5%, which is low compared to the drop in sterling.  Efficiencies, competition, UK costs and other factors will keep it low.  Inflation will rise - for a year.  Assuming that there no further drops in sterling then this will be a spike in inflation unrelated to consumption and demand, which is why the Bank of England seem rather relaxed about it.

What does it mean for Buyers?  It means overseas products will be more expensive.  And that I wish I had bought my Euros for next month's holiday in France a month ago rather than waiting.  And bizarrely, I might be taking my own wine to France!

New Selection Questionnaire (SQ) to replace PQQ

So in England & Wales the Pooh sticks have finally emerged under the bridge, and we have guidance on replacing the traditional public sector Pre-Qualification Questionnaire (PQQ) with something that is compliant with the European Single Procurement Document (ESPD).

Note that in Scotland the ESPD has been in use for months, and guess what - is not the same as the new SQ form for use in England (and at least in part in Northern Ireland and Wales).

Guidance is available at www.gov.uk in Procurement Policy Note 8/16, replacing PPN 03/15.

So what are the changes?
Well in brief it is in 3 parts, and you cannot change the first 2 at all - and the 3rd must be "proportionate".  Suppliers can re-submit previously completed SQs as they will have all the same information - they can also do  this by submitting a ESPD and referring to that.
There is clarity that you should use a PQQ for works projects above the OJEU threshold for supply of goods, and below the OJEU threshold for Works (it was not clear before) - and that for this you should use PAS91.

Few more odds and ends too.
Generally I think it could have been a bit simpler, but is a step forward.  Of course not being the same as Scotland is a step back.

In terms of Brexit, leaving aside the ESPD compliance I don't think it will have any impact.  Happy for others to clarify if it does

CIPS and Brexit

CIPS have issued their first guidance on Procurement and Brexit.

TLDR version is don't panic, but do use the standard risk processes to start looking at risks in the immediate, near and further future.

Obviously exchange rates are one of the large initial risks.  After that it is sensible to look at your contracts and supply arrangements and then prioritise where you want to focus your attention.  You may even be able to get a better deal.  You never know.

Brexit and Public Procurement

So now the United Kingdom of Great Britain and Northern Ireland has voted to leave the European Union, what will change in our Public Procurement?

In the short term, nothing much.  What do I mean by the short term?  Well at least two years, which is how long it will take Article 50 to be applied to allow us to leave.  Bearing in mind the politics, than probably means at least 2 and a half years so 2019.  Some commentators are saying 2020 would be more realistic, but who knows? 

What will happen then?  A lot will depend on what happens in the intervening time.  Will the UK stay together or break up?  Which could lead to quite different procurement regimes in the 4 major countries (which are at the moment only a bit different).

It is likely that whatever else happens England (largest country in the UK) will be pulling out of the EU procurement rules, so what will happen in England?

Well again, possibly not a lot for a while.  The UK is a signatory to the World Trade Organisation Government Procurement Agreement which underpins much of the EU procurement regulations.  Given that outside of the EU we will probably use the WTO in redeveloping our trading relationships with other countries, it is fairly unlikely that we shall pull out of that agreement (at least not quickly).

The WTO GPA sets in place a series of rules for procurement above a certain value or threshold, which is the same as the one in the EU regulations.  So thresholds and processes will remain in place, but might be amended.

There would be no ability to appeal to the European Court of Justice as EU procurement directives would not apply (unless that is part of our settlement in leaving).

Could we have a Buy British or Buy English campaign?  Probably not because it would clash with the WTO GPA, and anyhow could have negative consequences on Value for Money (if the foreign providers do not provide better VfM we would not contract with them).

Things like the European Single Procurement Document (ESPD) that came in in April 2016 but still has not actually surfaced, may change some time in the future.

So lots or uncertainty, but given that we need rules for public procurement to avoid corruption and to obtain value for Money, and that we are already signed up to rules for this, and that changing public procurement policy is unlikely to be top of the agenda for a post Brexit country, I think we shall only be seeing small changes for the next 5 years or so.  After that, who knows?  As they say, a week is a long time in politics - let alone 5 years.  In the meantime PCR 2015 stays in place.

So there is still a point in going to EU Procurement training (well, I would say that wouldn't I?)  as nothing is going to change for a few years.  After that, then I am sure we will have new public procurement training to clarify the new rules as and when they emerge.

For me, the Referendum is over...

I've voted.  Postal vote means an early vote.
I was always quite clear on my position, and I can't imagine it changing any time before the referendum.
Whichever way you vote, I hope that you do.

But for me, now I just have to wait for the result.

Brexit and Public Procurement

I've been meaning to mention the impact of possible Brexit on Public Procurement, but just haven't had the time.  And it looks like Pinsent Masons have covered most of what I wanted to say - here linked on the excellent Spend Matters blog.

In short, if we stay nothing changes.  If we leave, nothing changes - at least not for quite a while.  And even then it might not.  We are signed up to the WTO Government Procurement Agreement, which is the basis of quite a lot of the EU Procurement directive, and therefore our procurement regulations.  Deciding what whether we would leave that agreement, and if so what we would change will probably not be top the the government's agenda post Brexit.

As Pinsent Masons have pointed out, rather than reducing bureaucracy the Government seems quite keen on adding things on top of the directive (with good intentions) so we might end up with more regulation rather than less.

Any how over the next 5 years, I would not expect to see a lot of change.  After that?  Who knows.