PPP Management

Published in Supply Management on 3rd November is a thought provoking article about the government's decision in awarding the first outsourced contracts for the probation service.  The topics of interest are: The wide use of charities to undertake work in this sensitive area. The mixture of charities and private sector companies as partnerships in delivering the services. The sensitive nature of the service being outsourced and the serious ramifications if the outsourced services fail. The shifting nature of the current service and the uncertainty that a split service will face (for the rehabilitation of serious offenders the current government service will remain in place). The adoption of a remuneration clause if the contracts are cancelled. The current coalition government has championed the "big society" and the wider encouragement of SME to bid for government work, the latter enshrined in the government's consultation paper on the forthcoming OJEU 2015

Our charity ride at Easter gets local press coverage both on the front page and an inside article. Readership coverage is circa 80,000

Our guide to incentivising contracts "Incentivisation - Essential Considerations" is available from today.  Please get in touch and we will be delighted to e-mail you a copy.

The on-going woes of Serco were widely reported this week with the company returning to the markets for additional funding.  What has been widely reported as a problem for the business is perhaps overly pessimistic; a quote from the press indicates that there is very good support for the company and encouraging signs ahead, "The fundraising, led by brokers Bank of America Merrill Lynch and JP Morgan Cazenove, was three times oversubscribed , with a mixture of new and existing investors backing the placing." The mixture of new and existing investors demonstrates widespread support from financial institutions and indicates that a return to better days is not far ahead, putting the darker days at the PAC firmly in the past.

Professional Procurement and Project Management are pleased to announce that Building Regulations in Brief (8 th Edition) by Ray Tricker and Samantha Alford was published in April 2014.   The book takes a no-nonsense approach of Building Regulations in Brief cutting through the confusion and explaining the meaning of the regulations; consequently it has become a favourite for anyone involved in the building industry as well as those planning to have work carried out in their home.  This eighth edition is the most comprehensive revision yet as it reflects all the latest amendments to Building Regulations, the Approved Documents and Planning Permission including amendments which only came into effect in April 2014.  It also contains details of the new UK national planning guidance system and UK initiatives to speed up the planning process.  With an updated list of fees for planning consents and guidance on the October 2013 changes to permitted development rights the book provid

Yesterday we commented on a number of stories concerning the oil and gas sector.  Today articles from the Daily Telegraph continue on the sector, with similar themes. The troubles in dispute and the use of sanctions by the international community ( http://www.telegraph.co.uk/finance/financialcrisis/10794425/US-hits-Russias-oil-kingpin-Igor-Sechin-with-first-energy-sanctions.html  ) on the chairman of Rosneft that could result in serious implications for the Russian economy.  The close business relationship between BP and Rosneft could also be affected by the use of sanctions and this is covered in an article highlighting the position of BP's chairman, Bob Dudley, who also sits on the Rosneft board ( http://www.telegraph.co.uk/finance/newsbysector/energy/oilandgas/10794083/BP-committed-to-Rosneft-as-Russian-energy-giants-chief-Igor-Sechin-is-placed-on-US-sanctions-list.html  ) Yesterday's coverage of the positive and significant contribution to the UK economy by North Sea oi

The press is carrying a number of stories covering the oil and gas and energy sectors which makes for interesting reading. A positive article in Supply Management ( http://www.supplymanagement.com/news/2014/oil-and-gas-supply-chain-contributes-ps35-billion-to-uk-economy  ) covers an EY report detailing the benefit to the UK economy of North Sea oil and gas production.  A number of interesting points: 1) Peak production was 1999 for oil and 2000 for gas and by 2012 production was down by a third in both commodities; however, a contribution of £35Bn to the UK economy is not an insignificant amount. 2) This financial amount is clearly of great interest to both UK and Scottish governments with the Independence vote only a few months away, as the economic viability of an independent Scotland has the potential to be a deciding factor in the vote. 3) Only a short mention is given to shale gas.  The exploitation of shale gas, whilst contentious, has much less logistic infrastructure or

Supply Management published an article articulating a view that the UK is slower at delivering public procurement than the EU average. http://www.supplymanagement.com/news/2014/public-sector-tender-delays-starve-economy-of-ps22-billion This is listed on the same page as a link to the following story of procurement in Scotland that has encountered difficulties with transparency. http://www.supplymanagement.com/news/2014/judge-lifts-block-on-ps325-million-scottish-public-sector-telecoms-contract-award It is really important that evaluation criteria and compliant guidelines are completed BEFORE the procurement activity begins. Why? because failure to have the guidelines, scoring criteria and evaluation nailed down will result in a rush to complete before returns are received and opened.

This is a surprising statement by the Auditor General of the NAO.  http://www.supplymanagement.com/news/2014/suppliers-dont-take-advantage-of-lower-commercial-skills-of-public-sector Is it an invitation to bamboozle public bodies and milk them for as much profit as possible or is it a thinly veiled warning that commercial skills are improving and that recourse through audit and the PAC will be used as counter-measures to greedy suppliers.  If it is the latter than perhaps the impact of government sanctions on Serco last year are a timely warning. http://www.supplymanagement.com/news/2014/profits-almost-halve-at-serco-following-difficult-year

Not long ago Thornton's was leaving the high street at a rapid pace as a casualty of the economic down turn.  Today's news is very much welcomed by all those who admire a great brand and a great British success story.   ( http://www.telegraph.co.uk/finance/newsbysector/retailandconsumer/10674212/Thorntons-makes-biggest-manufacturing-investment-for-25-years.html ) Having staved off disaster the company has announced greatly improved financial results as a consequence of changing its business model.  Thorntons have reduced their presence on the high street over the past years, and continue to do so, but focusing on supermarkets and seasonal themes has raised profits. Congratulations and best wishes for continued success.

This article in Supply Management raises some interesting questions ( http://www.supplymanagement.com/news/2014/emphatic-support-among-buyers-for-early-payment-discounts ) and potentially flies in the face of good supplier relationship management. Encouraging discounting in order to shorten payment times raises some serious questions: Has an effective procurement process been undertaken thus far? Are my current terms unreasonable? What type of relationship am I trying to establish? Am I subliminally saying I am a bad payer? If suppliers are that desperate for business that they will negotiate away profit for cashflow are they the type of suppliers I want to be doing business with? There is always a need to get value for money and we should never lose sight of why and what we are buying.  Some activities are prime for competition by cost, others not so.  Is cost always the key driver? and what are we willing to sacrifice by making cost king?

This article in Supply Management ( http://www.supplymanagement.com/news/2014/government-reviews-public-sector-food-procurement ) highlights moves by the British government to source food from within the country. The amount spent on food exceeds £2Bn and clearly any such amount would be subject to competition threshold limits.  Interestingly however there are real positives that would play in to the hands of British suppliers - freshness of produce and the associated carbon miles would be significantly lower for British suppliers. The ability to source locally and the use of effective contract management would mean that the supply chain assurance can be undertaken much more easily and effectively.

It may be a complex procurement with capital assets, inventory and associated technical training worth a value of £4.4Bn but almost 7 years does seen a very long time. BAE Systems has now reached a conclusion with Saudi Arabia over the purchase of 72 Typhoon aircraft.  This news come only a couple of weeks after sales to UAE fell through.  This might seem a series of standard events in any other time but it events both in Europe and the Middle East make for interesting interpretation: 1.  The consortium that builds Typhoon includes Finmeccanica; a company recently embroiled in a corruption scandal that has resulted in the chairman and chief executive being investigated.  The scandal has also meant a lucrative helicopter order being cancelled. 2.  Both Saudi Arabia and UAE are supporting the opposition in the Syrian civil war; a conflict that is bringing Saudi Arabia into conflict with Iran, the Syrian government's main backer.

Our first video; Contract Management.  If you have any comments please post, all welcome.  If you can't see the video on an Apple device the video will be available soon on You Tube.   The You Tube link is now at:   http://www.youtube.com/watch?v=uMRb8OaDNtk

The story covered in Supply Management on 29th January ( http://www.supplymanagement.com/news/2014/aston-martin-aims-to-grow-uk-supply-chain-by-10-per-cent  ) identified Aston Martin's intention to use more British suppliers. Todays coverage of a product recall to Aston martin identifies the fault ( http://www.supplymanagement.com/news/2014/aston-martin-recalls-cars-over-substandard-component-from-chinese-supplier  ) It might have seemed trite to criticise the Prime Minister for his comments at the WEF regarding Britain being the place for manufacturing but this is a perfect example of quality over price.  This argument has been a repeated theme both in the media and this blog over the last couple of months. The impact to a global luxury brand such as Aston Martin using a Chinese product that has failed might have significant impact for a brand that differentiates on quality and luxury rather than price. This comes in the same week as Bombardier in Derby are awarded the £1B

The government plans to encourage more building of new homes by reducing the number of regulations that developers must comply with are estimated to save developers approximately £500 per home.  In his article in the Telegraph on 27 Jan, Matthew Holehouse identified rules on doors and windows, arrangements for toilets, lighting, telephone lines and disabled access as areas that will be culled in the review.   http://www.telegraph.co.uk/news/politics/david-cameron/10598283/Window-and-door-rules-axed-in-drive-to-get-Britain-building-houses.html .  Although the government insist that the changes will help simplify the planning process and will not change planning policy or environmental protections there  are concerns in some quarters that if too many of the regulations are cut there could be negative results.  Whether this be an increase in badly designed homes, or that it will result in the irresponsible dumping of waste which could lead to an environmental disaster. 

An earlier blog today highlighted a leading FTSE100 company commenting on no longer using price only tender evaluations.  Clearly such practices makes for strained relationship with suppliers and when used wholesale across the procurement spectrum drives a culture of transactional behaviour. The first of the link identifies that little has been done to develop supplier relations; this clearly has strong implications for the end user or consumer as well as ethical and health implications. http://www.supplymanagement.com/news/2014/no-increase-in-srm-efforts-following-supply-chain-scandals In a retail environment where cost is very much a deciding factor to the consumer the article, linked below, illustrates further steps to heighten price sensitivity as a key factor. http://www.telegraph.co.uk/finance/newsbysector/retailandconsumer/10617384/Argos-and-Homebase-demand-rebate-from-suppliers.html

The case identified via the link ( http://www.supplymanagement.com/news/2014/scottish-government-loses-ferry-procurement-challenge  ) relates to a procurement activity undertaken by the Scottish Government and the notification to challenge the award notice by an unsuccessful bidder. Of particular note is the use of e-mail to make the challenge notification and the timeframe provided by the Authority to raise a challenge. Result: The challenge stands and further hearings are to follow.

Whilst the following are encouraging more details are needed and quicker role out is essential UK government takes the lead: http://www.supplymanagement.com/news/2013/government-urges-suppliers-to-invoice-electronically European parliament follows on: http://www.supplymanagement.com/news/2014/e-invoicing-gets-the-go-ahead-from-eu For the other developments encouraging SME these measures need to be introduced as soon as possible.

Increasing competition into a market place keeps the suppliers on their toes, drives innovation, price improvement and helps reduce the potential for corruption. As a small business we are very much in accord with the sentiment above.  However, when I read the article ( http://www.supplymanagement.com/news/2014/meps-agree-changes-to-public-sector-procurement-rules  ) I was concerned by: The European Parliament voted with comfortable majorities to support the package of reforms, which aims to cut red tape by reducing paperwork, boost the participation of SMEs by breaking up big contracts into smaller lots and encourage the creation of public sector mutuals to run services. As procurement and project management professionals the red text above is a cause for concern and follows on the heels of the UK government's CPO's comment along similar lines, albeit related to IT projects.  Breaking up larger contracts into smaller contracts has the potential for creating benefits but

   Surprising to see the article in Supply Management commenting on evaluation criteria not being on price alone ( http://www.supplymanagement.com/news/2014/dont-always-go-for-the-cheapest-price-buyers-warned  ). Awarding on price alone raises risk around quality, compatibility, subsequent additional costs, product life etc.  However, there are some services that can be competed on price alone and there is absolutely nothing wrong in competing on price alone when the other issues of service and quality do not play a factor. What are these areas? Utilities are a prime example where the quality of the product is mandated by the regulator and there are no delivery issues that would differentiate competitors. Without stating the obvious the following link provides a wide variety of reasons why other factors are important: https://www.google.co.uk/#q=tender+evaluation+price+alone&start=0 Some of the links from Australia are excellent and all of the articles offer food for

The Prime Minister identifies the skills in the UK and how reshoring can not only help the economy but plays to the skills of UK procurement and manufacturing professionals. http://www.supplymanagement.com/news/2014/cameron-calls-for-uk-to-become-the-re-shore-nation With rising costs in China and the Far East UK becomes more competitive.  Taking the recent Deloitte study that identifies that competitive advantage can be achieved by doing things better not cheaper; does this mean that the UK now has both tenets?

The BBC carries an article that is both encouraging yet disappointing in equal measure. http://www.bbc.co.uk/news/uk-politics-25884915 The article identifies 2 points. 1.  The government's CPO identifies appalling behaviour by IT suppliers. 2. The government limits IT contracts. Never has the phrase "caveat emptor" been more appropriate. Questions and issues abound in equal measure. The Cabinet Office minister Francis Maude said in one case a government department was charged £30,000 for changing the text on a web page. Crothers said a supplier tried to charge £65 for a laptop power cable worth around £20 Who approved the contracts that allowed for such charging? Why were the issues not raised? How many more of these contracts are in the public vaults. If contract sizes are to be limited then this has the potential to a) drive contracts to be competed by stealth; b) disjointed contracts that fail to achieve the outcomes; c) increased bidders costs and therefore overall in

Interesting developments in the Crossrail project highlights a very interesting scenario; due diligence has resulted in a re-think over the delivery methodology for rolling stock. We should applaud Crossrail in taking stock of the situation and reviewing the financing arrangements before completing a PFI arrangement.  Whilst much maligned PFI arrangements must be judged on each situation. What is perhaps puzzling is that in this instance a change in financing arrangements might delay the delivery of rolling stock; are there that many of providers of rolling stock? It might however create problems in the procurement process as it is a fundamental change to the process and may result in the need to re-compete.  In this situation legal advice is absolutely essential.

The story detailed in this Supply Management article ( http://www.supplymanagement.com/news/2014/procurement-failings-at-ni-health-trust-disclosed ) makes for sorry reading for all procurement professionals.  If the government is serious about bringing best practice to the public sector something MUST be done and be seen to be done about this.

The article in the guardian ( http://www.theguardian.com/business/2014/jan/27/oil-price-volatility-undermines-economic-growth-david-king ) identifies potential problems in oil price volatility.  Uncertain behaviours by key players can only be mitigated to a certain extent by the switch to alternative fuel sources (Shale gas). What is very interesting is this article in Supply Management ( http://www.supplymanagement.com/news/2014/airline-launches-new-biofuel-supply-chain-initiative-in-the-uae ) that announces the work by Etihad, fuel companies and technology institutes in developing biofuel to mitigate the risk of fuel supply problems.  Why is this particularly interesting? Because the owners of Etihad are part of the UAE establishment, an establishment who are owners of huge oil resources. 

The article covered in Supply Management entitled Capita fined £56k for its poor performance in court translation hides a number of issues, not only does it identify the poor performance of the service provider to meet the specification standards it contracted against it also identifies problems within the MoJ in its contract management.  It is worthy of noting that it was the MoJ that was responsible for the tagging contracts with Serco and G4S that gained notoriety for all the wrong reasons. 

A very interesting report from MooD International  on Outsourcing gets coverage in Supply Management. http://www.moodinternational.com/news/stateofrelations.html The report identifies relationship development and maintenance as key to the positive or negative perception of the service.  Key to the issue of Outsourcing is understanding the drivers of the decision to Outsource and the maturity of the organisation outsourcing the activity. An interesting point that MooD make is the question of decision making by the service provider; this specific issue is an absolute indicator of the Outsourcer's capability and reasons.  Strict cost adherence and a less than comprehensive understanding of the business will lead to a contract that does not allow for the service provider to deviate from a list of activities. The ability to capitalise on opportunities identified through effective MI (MooD's core business) is an indication of how mature an organisation who has outsourced truly is. In

Today's Independent carries the story of Vodafone re-competing its advertising provision ( http://www.independent.co.uk/news/business/news/vodafone-opens-bidding-for-600m-advertising-contract-9077185.html ) The article has the title: Vodafone opens bidding for £600m advertising contract Perhaps a slightly odd title but it isn't the semantics of language that makes the article interesting.  More interestingly it is the thought "how to judge the submissions?" that is the most thought provoking question the article raises. It re-surfaces the issue of contracting for inputs or outputs.  What are the criteria that the competition will award against - number of pages of advertisements? Seconds of TV commercials? or Increases in Sales?  The first two are input based contracting and are both measureable and directly attributable to the contract.  The last criteria - Increase in Sales - whilst measureable (albeit in percentage terms, market share or revenue are all potential m

A respected journal and an outstanding consulting firm: http://hbr.org/2013/04/three-rules-for-making-a-company-truly-great/ The two tenets of the article are: Do what you do better rather than cheaper and; Increase revenue before initiating cost cutting. Two very interesting "rules" especially when companies are usually run by CFO who see cost reduction as the most effective way of positively impacting the bottom line. The link below is to the site of the Authors. Well worth a vist and read http://thethreerules.com/rules

Europe has been faced with supplier issues in the food chain over horsemeat in beef products.  The same problem, albeit different products has occurred in China. http://www.supplymanagement.com/news/2014/fox-dna-found-in-donkey-meat-products-at-chinese-walmart Whilst many negatives can be taken from such stories, including the original audits of the suppliers and the supply chains in both Europe and China, the positive must surely be about response from the agencies and key supermarkets and the introduction by governments of more stringent procedures. The key point to remember: supplier audits and continuous validation.

Headline "G4S and Serco could pay government £4 million over failures in asylum seeker housing contracts" http://www.supplymanagement.com/news/2014/g4s-and-serco-could-pay-government-ps4-million-over-failures-in-asylum-seeker-housing This appears to be another negative story about G4S and Serco.  However read on..... "negotiations are taking place that could see up to £4 million being paid to the Home Office as a rebate for failure to hit KPI targets" Let's congratulate the Home Office for two things: 1. Setting ambitious targets and making the contractors work for them. 2.  Writing contracts that are sufficient rigour that penalty clauses are effective and that contractors are being held to account. Will the PAC applaud the work of the Home Office? Time will tell. It should not be forgotten that the subject of housing for asylum seekers is a very emotive subject and any contractor that takes on this challenge should be encouraged.  There has bee

We highlighted an excellent, if slightly surprising, story article earlier in the week about the payment times of the UK's Ministry of Defence and how such great performance, if copied across government and the private sector could really help businesses and the U economy. Today's Independent (  http://www.independent.co.uk/news/business/ ) carries 2 stories in very short order detailing developments in the Ministry of Defence's transformation initiatives. The uppermost article (on the Independent's screen)  ( http://www.independent.co.uk/news/business/news/mod-sets-sights-on-serco-and-capita-to-reform-supplies-9051822.html  ) highlights the Secretary of State's intent to build capability within the current defence procurement body, the Defence & Equipment Support organisation, following on from a failed previously initiative. The second article ( http://www.independent.co.uk/news/business/news/mod-in-new-retreat-over-bid-to-enrol-big-business-9047796.htm

The widespread adoption of the VCR coincided with , or some would say resulted in the demise of the cinema.  Many small town cinemas closed and the number of video rental outlets increased.  This interesting article ( http://www.independent.co.uk/news/business/news/cineworld-to-buy-european-cinema-chain-in-500m-deal-9050974.html  ) in the Independent today raises some really interesting questions: 1.  In a world where convenience reigns supreme and a consumer can download a movie on a mobile device or home based entertainment system how come cinemas are big business again? 2.  The tangible form of a movie for personal consumption (i.e. VCR tape or DVD) has reduced significantly and is manifested in the loss of retailers from the high street and much reduced stocking in supermarkets? 3.  In a world where people are perceived to be becoming less tolerant why are we now more willing than in a long time to sit in a cinema next to people constantly eating popcorn and drinking beverage

Political concerns over territorial claims have had a worrying impact on trade and the willingness to trade between countries.  These are no small companies, the countries in question are Japan and China. http://www.telegraph.co.uk/finance/china-business/10560302/Majority-of-Chinese-business-leaders-unwilling-to-trade-with-Japan-amid-tensions.html This national stand off between China and Japan has wider regional ramifications which if escalated could result in other countries taking sides.  A situation no one would want.

Far too often the UK Ministry of Defence is criticised for its procurement practices.  Here is a link  ( http://www.supplymanagement.com/news/2014/defence-minister-hits-back-at-late-payment-claims  )to an article that identifies current levels of payment promptness. An extract of particular interest: "the department paid almost all correctly submitted invoices within 11 days, and more than 90 per cent within five days, during the 2012/13 financial year. Legislation says that it should pay suppliers within 30 days." These figures are incredible and for a government body exceptional.  Private sector companies should take note.  What the government should now do is go that extra mile to ensure that payment terms throughout the country in both public and private sector should be no greater than 30 days. Why? Because this government claims to be a government for business and is relying on the private sector to help pull the country out of recession and establish a positive gro

The last 24 hours has seen a flurry of retailers publish their most recent results and it makes for interesting reading.  If we are to believe the Guardian (  http://www.theguardian.com/business/2014/jan/09/high-street-gloom-retailers-profits-poor-christmas-sales ) then we should expect a slip back into recession; if we take a more measured approach, as provided by the BBC's Robert Peston, then the recent figures illustrate more confidence in the economy but a growing trend for consumers to be more discerning both over product but also over price but also a much greater use of the internet for shopping.  The greater move towards on-line retailing will have significant ramifications for the supply chain. An example of the use of analytics and the spinning of these figures to suit an argument was brought home to me recently when I was enjoying a televised football game over the holiday period.  The game seemed fairly even overall but the commentators claim of one times dominance w

Today's Guardian carries the story of the Nuclear Decommissioning Authority axing the commercial director role ( http://www.theguardian.com/business/2014/jan/09/nuclear-decommissioning-authority-axes-commercial-director-role  ).  The axing of the role follows on from criticism of the body by politicians on the public accounts committee. Lose the role or change the person? usually it is the latter and not the former.  Perhaps if the new structure is more focussed towards the work at Sellafield then this might be a reason, what happens to the other sites? What is really strange is that within the same article is this: "The NDA boss appeared at before the committee alongside Tom Zarges, the boss of the NDA's private sector contractor Nuclear Management Partners (NMP) which has just been controversially reappointed to clean up Sellafield. Clarke insisted that the reappointment was the best way forward even though he admitted NMP had repeatedly failed to meet many of its t

A short article about 3D printing with massive implications. On the positive, costs are significantly reduced and inventory can be massively reduced as parts can be "manufactured" to order. What about airworthiness? Genuine tested parts? http://www.theguardian.com/business/2014/jan/06/fighter-jet-flies-with-3d-printed-parts

Good news for the UK economy, growth in the construction sector but also positive steps in developing the nuclear supply chain. Having been the world leaders in nuclear energy for many years the capability within the UK has dwindled; positive steps like this can help re-establish the UK skills in this sector. http://www.supplymanagement.com/news/2014/nuclear-sector-supply-chain-gets-ps13-million-boost http://www.supplymanagement.com/news/2014/uk-construction-sector-continues-sharp-growth