Monday 11 April 2011

Competitive Tendering Is Plundering Your Pocket

Since it's that time of year, I'd like to explain something about the council tax bill which landed on your doormat recently.

You see, I have been trawling through a public sector 'competitive tendering' opportunity today. I place the description in inverted commas because there is nothing very competitive about its 200 bloody pages.

To illustrate, I'll go back around a decade to when such things really did pit suppliers against each other in a cut-throat mechanism which drove down costs to provide value for the taxpayer buck. It was a time when large operators were capable of being usurped by a one-man-band offering a quality service at a homemade price. The more providers, the lower you had to pitch to be sure of getting the work.

Those days are long gone.

About five or six years ago, in our experience, the regulatory burden began increasing at an alarming rate. Health and safety was ramped up to quite absurd levels and quality thresholds were set which were impossible for small outfits in our industry to comply with. For example, a company like ours - with a tad more financial breathing space by virtue of our larger size - were able to implement all of the ridiculous (and not even mildly more protective) demands placed on the vehicles which would be acceptable to the authorities concerned. The little guy had no chance - unlike us - of throwing a load of cash at new, or adapted, vehicles to cope with the latest over-weening directive imagined by local authorities, none of which would have any effect on overall safety or provision of service.

We thrived as a result, while dozens of our competitors threw the towel in and went and did something else instead (that's if they did anything but sell their rig and roll up to the local social security office, of course). Happy days for Puddlecote Inc, but we were - as economics dictates - charging far more to the authority.

With competitors shorn from the market, and our costs increased by compulsory demands from the provider, we got paid more ... for doing the same job. We also did a lot more of those jobs, at a higher price, than before. Our proportion of the market increased, and the prices we charged for the larger percentage of that market, were necessarily higher solely due to the actions of the tenderer.

In just a couple of years, the reponses to competitive tendering exercises had been more than halved, with the pool of approved suppliers slashed by bureaucratic ideology.

The latest opportunities, received last week, are prefaced by a preamble which states that they are looking to make 20% savings in light of instructions given to them by their 'leader'. You'd be forgiven for thinking that he had told them to massively ramp up costs.

Reading through the documents today was a jaw-dropping insight into the dream world of public sector morons.

Method statements, framework agreements, key performance indicators, robust performance management systems, equality and diversity policies, performance evaluations, environmental advancement, partnership milestones, sustainable procurement narratives, race and gender statements, service quality monitoring, volume forecasting, operational delivery reviews, governance structure audits, outcomes recording methods, business continuity plans, and contingency planning systems.

All of the above must be installed before we are even allowed to see the work we may be able to bid for, if approved. And, of course, there is no guarantee - by their own admission - that it will be of any quality.

As far as we are able to ascertain from those fellow operators we are friendly with, the competition has just been halved once again. Like before, we are large enough to gamble on all this, but others have fallen by the regulatory wayside.

Of course, once again costs have no way to go but up, and with less competition, we are likely to get more of the proportion of work available. The taxpayer gets shafted while the public sector office fills its boots with council tax cash.

And the end result? Well, they can say that greedy private sector businesses are ripping off the taxpayer and that competitive tendering - introduced by Thatcher IIRC - just doesn't work.

Clever, huh?

Remember, our industry is just one small part of public sector outsourcing. Every supplier, in every field, is being put through this. Raising costs, and punishing your bank account with every monthly council tax instalment as a result.

It can't be avoided, either. You see, the whole process is run according to the Public Contracts Regulations 2006, which - as I'm sure will not in the least surprise you - is the UK enactment of European Directive 2004/18/EC.

Competitive tendering is supposed to act against monopolies and cartels, yet EU legislation is actively encouraging them in every town hall up and down the UK.

Seriously. We need a referendum, and quick.


Simon Cooke said...

Welcome to my life - trying to bid as a newly created business is a nightmare even when you know your way round the system as well as I do. And don't get me started on "framework" agreements - how anti-competitive can you get! We were barred from bidding for a contract more or less written with us in mind because we weren't part of the Authorities Market Research Framework. And the work wasn;t even market research!

Anonymous said...

Here is today's public sector lunacy - a 3 month tendering process ended with my organisation rejecting a company because it already had contracts in other areas, a bog standard limit, the same as it has always been. Except this time they forgot to put it in the initial tendering pack. Cue lengthy legal process resulting in organisation scrapping the entire tendering process and starting from scratch. Millions wasted.

Anonymous said...

Yes, but all these nightmarish Orwellian list of requirements does create employment, retention, hiring and contractor opportunities for those already inside government and for when they get out and need to make some money on the side. Self-obvious, the abundance of requirements creates a quagmire of jobs inside government itself. But in addition to the government jobs, it also creates excellent opportunity for ex-bureaucrats, upon early retirement with hefty pensions, in order to supplement their large pension plans, they can do contracting work for small to medium sized businesses, as experts able to navigate the confusing set of bureaucratic requirements and write up all the various reports and plans necessary to comply. Of course they only need to filch a few well written plans already on file with government, then with word-replacement on their computers, re-write generic acceptable plans to suit whatever business person contracts with them to have it done and charge a pretty penny for their work. Bureaucracy as such is a growing business in and of itself, that rewards the incompetents who hatch all these requirements in the first place.

Anonymous said...

Thes simularities between the EU and the former soviet union are strikingly similar.
The state is everywhere.
This is one of the reasons EU nations are in debt.
One of the reasons the private sector is shrinking.
It discourages ,no, it punishes initiative.
Trouble is in the end it becomes an unsestainable economy which like the former soviet union will collapse.
Quite soon to I think.

Dick Puddlecote said...

Simon: Another flaw in the system. Our company has also had a tender "written with us in mind" a few years ago because competitors had been strangled out of the process. The whole thing just isn't fit for purpose anymore whichever way you cut it.

Anon @ 22:02: I can quite believe it. Savings don't seem to be the goal anymore, merely political ideology.

Anon @ 22:15: Who do you think wrote our H&S policy for a nice fee? There's no way we'd have found the time for 300 pages of BS and flowcharts to cover the excesses of local authority risk aversion. We now have a stated policy to cope with anthrax, though, amongst other irrelevant nonsense. Marvellous.

Anon @ 22:46: We can but hope.

banned said...

My industry in general and my employer in particular have no time for "Method statements, framework agreements, key performance indicators..." bollox. The local authority are welcome to use our services but, should they demand to see our "equality and diversity policies, performance evaluations, environmental advancement, partnership milestones" they can Royally get stuffed.

I have not discussed this with our competitors but have no doubt that their response would be the same.

Gordon the Fence Post Tortoise said...

There seems to be an assumption here that this is all enshrined in some legislation somewhere and that the key is to get somebody who "knows the ropes"

Well, there is some truth in that, but I would say that a vast swathe of all this is made up, "gold plating", invention... and of the stuff that has some basis in statute, the perpetrators are wholly unaware of the exact extent of their powers of enforcement under the actual relevant law.

They rely on bullying and non co-operation. It's our game - you play by our (imaginary, made up) rules and if you don't we won't play with you. There's an epidemic.

I'm well into an episode of hectoring, dishonest obstructiveness with a national government body who are now being dragged to Judicial Review (and in front of the Information Commisioner)for making shit up, acting contrary to statute, lying, deliberately causing delay and weapons grade incompetence across their organisation.

A right royal screwing up has been endured.

It would be easier to take if one suspected that they had some vestigial competence in the job hey're charged with doing - but they don't - not a shred.

This has to stop. It has to be confronted.

Local council demands half - as in 50% - of a small (4 houses) rural development - and a whole mountain of justifying paperwork - accounts, business plans, projected profits...

When confronted with a request that they enumerate the exact statutory instruments (and clauses) that they are invoking as authority for the above demands - they waited the statutory period and simply approved the planning without comment.

Go figure.

This stinks so badly it's getting difficult to breathe.

JuliaM said...

"Yes, but all these nightmarish Orwellian list of requirements does create employment, retention, hiring and contractor opportunities for those already inside government..."

Indeed! And don't forget that a lot of other public sector hobbyhorses get shoehorned in - bidding companies having to sign up to the usual PC 'anti-racist', 'green' malarky...

Gordon the Fence Post Tortoise said...

Roll on the day these folk don't have the corn to lay a trail for the chickens to peck at.

Peculation dressed up as the responsible stewardship of public funds and fiscal rectitude.

One accepts a proportion of public funds will be wasted (but the present levels are insane) I can't help thinking that wild profligacy, unrestrained cronyism and delusion are symptoms that precede downfall - and there's copious amounts of all three in our government at the moment - both locally and nationally.

Anonymous said...

I wanted to bid for a local authority project. Having previously worked for a large consultancy company I have 25 year specialist consultancy experience in the particular sector but I now work for myself. It was a small consultancy project £5k-£10k. In the PQQ they asked for a huge amount of information - my equality policy - its just me, my environmental policy, my health & safety policy, evidence of a huge public liability insurance policy and so on and so on. Experience of previous projects seemed to be an after thought. I spent two days putting together all of the stuff but didn't even get short listed. They awarded the contract to a large generalist consultancy who were a known "name". They bid twice what I would have charged and ended up with a completely inappropriate solution because they used a very junior inexperienced consultant to do the vast majority of the work. I no longer bother bidding for public sector work. As for framwork agreements I actually sat with a procurement manager who told me that they were sure I would do a better job but they only reviewed the framweork agreement for my sector every two years and I wasn't on it. They even admitted that the company they would probably appoint had done a very poor previous job but they had to take someone off the framework agreement so would probably get another poor job!

The Sheikh Of Arabeee said...

Anonymous- fuck off with your "consultancy". You're part of the problem, not the solution.

Bucko said...

We used to do a lot of public sector work but are moving away from it as fast as we can.

We still have one large contract that last week resulted in us loosing all nut related products from our vending machines (tweeted last week)and all the drawing pins off our notice boards after an "audit".

Dick Puddlecote said...

Gordon: Agreed some of this stuff is probably made up to pad their working day out, but each authority asks a core set of identical questions and demand similar 'policies'. Mostly to do with environment, equality, diversity etc.

Anon @ 8:02: "Experience of previous projects seemed to be an after thought."

True. It seems to me that they get round this by placing great store on financial standing and - considering our industry is already hugely over-regulated - the very fact that we have bothered to jump through the required hoops at all. After all that, I expect they assume that we must be serious about the job. Again, this helps larger players like us, but squeezes out the little guys completely.

Anonymous said...

And yet, despite the European Tendering Rules, have you ever seen a French government department using any vehicles of other than French origin ? Or an Italian government department using vehicles other than from the Fiat stable ? Or the German government departments using any other than VW/Audi/BMW/Opel ?
Until we start playing the same games, we'll continue to get stuffed at every turn.
Unless, of course, we get that referendum.......

Anonymous said...

Spot on! I own a very modest company and as specialists in our area we are well qualified for certain government work. Indeed the extremely large companies enjoying success with tenders in our area often used our work wholesale. So we contacted the relevant government department and faced exactly what you describe. Tenders were impossibly long and initial reaction time so short we would need to dedicate our entire staff 24 hours per day to meet the deadline. Then after that, again as you describe, we would have been unable to function while we tackled the rest of the process. And if you think that's bad, you should try the EU!

The upshot is that we have taken ourselves off all lists and the same suspects (PWC, EY, etc) make hay at £3000 per day (we charge only £800). Presumably their massive charges reflect the need to employ thousands to submit tenders rather than do the work (which they pinch off us).

Jim said...

All this sh1t is why I am firmly convinced there is no escape from it without full economic collapse. If the money were to REALLY run out - ie not enough to pay wages/pensions/benefits, or money is so debased through printing that people won't touch it, then maybe, just maybe, the Augean stables would be cleansed. The dead wood would have to go because there would be no alternative.

While the world continues much the same, even with 10% cuts here or there, the rotten core will remain.

I therefore wanted Labour to win the last election, because the Left will drive the country into the abyss quicker than anyone else. Sadly the Right do not have the nous, nerve or electoral backing to do what is necessary, and will only prolong the agony, with little or no relief.

Only when the country is brought to its knees will the public recognise what has to be done, and allow the politicians to cut out the cancer. Until then it is incumbent on any sensible person to look after themselves, and refuse to feed the beast - shrug like Atlas and leave them to deal with the mess themselves.

Gordon the Fence Post Tortoise said...

Dick, I don't believe it's down to individual officials dreaming up this shit, it's pumped out to them - with the relatively homogeneous results you describe.

Although the EU regulation number is (sometimes) quoted - the interpretation /implementation is the English provincial one. I am reliably informed that the process is known in the trade as gold plating.

There is an obsession in bureaucracy to emphasize and promote process in place of delivery - so they busy themselves with procedures and elaborating those procedures ad nauseam if unchecked - gold plating.

The amount of time and effort expended on the deliverable goods or services shrinks in proportion - to a point where nobody knows what these mysterious deliverables are - but they know the procedures have been completed. So there you have it! The Department of Business Enterprise and Regulatory Reform in a nutshell.

As anon@12:13 says, purging this absurd, wasteful, pointless, constipated behavior from our system is going to take a thermonuclear laxative.

SadButMadLad said...

What Jim said. It's not nice and it would cause a lot of people an extreme amount of pain but the end result would be more worthwhile. But all politicians always take the easy route because they care more about the party than their country.