Is greater competition a good thing?

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 there are some very real dangers that need to be considered:

  • Cost transparency
  • Increased supplier base
  • Increased complexity
  • Integration issues
  • Supplier experience

All of the above should be taken into account when deciding on how to structure a procurement activity to ensure that the best results are achieved.  By breaking up big contracts into smaller lots there is the ability to:

  • Reduce cost
  • Encourage new entrants into the marketplace
  • Increase the sector skills base
  • Award more quickly
  • Take a phased approach and deliver benefits more quickly

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