Thursday, March 06, 2003

Improving Procurement - at both ends

For the last few months my team have been running a few procurements in parallel. There is no fun to be had with one procurement let alone several. A full OJEC (the European Standard for how you buy things) can take up to a year, longer if you are not well prepared. A short one takes 4-5 months, although that depends largely on how many suppliers respond. First up, we issued an ad in the OJEC journal (which is a public document) asking for "expressions of interest" in our project. If you are interested you respond with a relatively short brief covering a few questions - many related to the state of your company, financials, bank guarantees and so on. At this stage, literally hundreds of companies respond - even more so these days with the economy struggling and government being one of the few continuing spenders. These "hundreds" are evaluated against simple criteria - did they respond to the questions that were asked, did they provide the information in a readable format. Guess how many people usually get excluded at this point? Something like 75-80% on a bad day. Maybe 65% on a good day. That's upwards of 65 companies that have expressed interest in a job but haven't been able to put the initial response together. My sense is that fault lies here at both ends - government hasn't done enough to train the supplier community (especially the smaller ones) in how to do this and the smaller companies haven't figured out how to seek out people who do know how to reply. There's probably a good bit of consultancy there for educating small suppliers on how government procurement works. I appreciate that this would increase the pool of suppliers who could successfully bid, and that would likely lengthen the time it takes to evaluate - but at least we'd have some fresh players in the game. At this point you're left with a few suppliers, maybe 10, maybe 20. These, of course, are the usual suspects. The biggest suppliers rarely score high on this initial sift - points are awarded for each question from +7 to -7 with 0 being "compliant". If you score zero or above, you get through to the next round. Most of the usual suspects come in at zero or plus one, some of the brighter new suppliers score higher - and I guess they have put some real effort in at this stage whereas the old hands know how the system works and know that this bit is merely a chore. These suppliers are invited to a briefing session. We had one of those this week. The idea is that the scope of the project is presented and put in context. Questions can be asked at any time to make sure that everyone knows what it is they are bidding for. It's at this point that things get cloudier still. Few questions are asked, lest a supplier show their hand to their competitors. Worse still, they rarely answer questions - even basic ones on the topic that is being discussed. Perhaps because they're not briefed and see this as just another piece of business that they will win or lose, no matter what goes on. I find this attitude startling - the idea of walking into a client meeting and knowing nothing about the background, the topic or the potential doesn't seem like a good way to win business. But, sadly, this meeting is not part of the evaluation process. And, for another day, another thing that is not part of the evaluation process in a definitively solid way, is their track record on other projects. And you wonder why the usual suspects come through over and over again?

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