Getting what you pay for
Here's a really good article that is as applicable to every procurement activity published by the NAO!
http://www.nao.org.uk/report/memorandum-managing-governments-suppliers/
This is very much worth a read. There are three great points to take on board:
1. Scrutiny and ensuring competitiveness.
2. Suppliers rights to making a fair profit.
3. Compliance to standards and control.
I've commented before on the need for due diligence and making sure that the buyer gets what they want. Part of the activity in getting what you want is getting it at the right price. Many years ago government used a Public Sector Comparator as a benchline. This has changed over the years and is now effectively an "As-is" cost.
The Olympics saw the problems with G4S, with the military stepping in to the breach to provide the service, clearly cost (and by default, profit) was the competitive driver. Cost drivers limit profit and thereby make margins difficult. As such suppliers are loathe to spend money before they have. This article recognises the requirement for private sector companies to make a profit - a reasonable profit. This is also linked to competitiveness in Point 1 above.
So, you've spent the money on a service you've stipulated. Now ensure that you have received the service or goods that you've stipulated and paid for. Contract management is essential; cost, quality and time adherence must be stipulated in the contract. Now these standards are in the contract make sure there are the right remedies and processes in place.
A very good article - thank you NAO! Now let's see the government departments making full use of this excellent advice.
http://www.nao.org.uk/report/memorandum-managing-governments-suppliers/
This is very much worth a read. There are three great points to take on board:
1. Scrutiny and ensuring competitiveness.
2. Suppliers rights to making a fair profit.
3. Compliance to standards and control.
I've commented before on the need for due diligence and making sure that the buyer gets what they want. Part of the activity in getting what you want is getting it at the right price. Many years ago government used a Public Sector Comparator as a benchline. This has changed over the years and is now effectively an "As-is" cost.
The Olympics saw the problems with G4S, with the military stepping in to the breach to provide the service, clearly cost (and by default, profit) was the competitive driver. Cost drivers limit profit and thereby make margins difficult. As such suppliers are loathe to spend money before they have. This article recognises the requirement for private sector companies to make a profit - a reasonable profit. This is also linked to competitiveness in Point 1 above.
So, you've spent the money on a service you've stipulated. Now ensure that you have received the service or goods that you've stipulated and paid for. Contract management is essential; cost, quality and time adherence must be stipulated in the contract. Now these standards are in the contract make sure there are the right remedies and processes in place.
A very good article - thank you NAO! Now let's see the government departments making full use of this excellent advice.
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