Friday, 21 October 2016

Training Courses: CIPS Introduction to Public Sector Procurement and Applying EU Public Procurement Processes

On behalf of CIPS I am running two courses in November at the de Vere Venues Devonport House Hotel in Greenwich (shown above, during a promotion for the movie Thor: The Dark World - incidentally I was staying there at that time.  It is one of my favourite hotels.  My son tells me the movie is good too).

The courses are Introduction to Public Sector Procurement on Tuesday 8th November 2016, and Applying EU Public Procurement Processes on Wednesday 9th November 2016.

The titles are a bit long but do rather pass the Ronseal test of doing exactly what it says on the tin.

Ideally you should do day 1 before day 2, but it is not totally essential.  I think that the Introduction course is getting rather full but there is more space on the Applying EU processes course.

They are going to run again next year (no doubt updated a little), but not until 17/18 May 2017, in Manchester.

Thursday, 20 October 2016

Local Government Procurement Expo

I shall be talking at LGPE at Olympia (London) on Wednesday 2nd November 2016.  The event is run by BIP Solutions, and I shall be mainly giving a series of talks in the Supplier Training Zone.

The event is free for Public Sector Delegates, and as always there are a bunch of key note speeches that I shall miss because I am doing my sessions.  First up is Malcolm Harrison, Chief Executive of the Crown Commercial Service - which should be interesting.

The ever interesting Eddie Regan will be talking about Procurement post Brexit - which I would love to hear if I wasn't covering a session for him.

Hope to see you there. 

Wednesday, 19 October 2016

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!

Monday, 3 October 2016

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 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