Wednesday, 19 September 2012

Could supplier blacklisting backfire?

We have been aware of the UK central government plan to blacklist poor performing suppliers for some time. Today a new twist was introduced when the CBI, who frequently support procurement reform, entered the discussion and made clear they do not support the initiative.  The CBIs director general said:

"It's an unhelpful development, from our point of view. In 2010 the government came to suppliers and said, 'we want you to take a haircut and we want you to share your ideas'. We've taken a cut in margins and offered our intellectual property up to government to find better ways to operate more efficiently and this is what we got."
It is surprising given the traditional closeness of CBI to the government that they were not consulted upon and contributed to the development of this policy.

But what is more surprising is that the government CPO, Bill Crothers, believes this is the first time a company's record has been taken into account in the public tendering process.  Quite frankly I am both mystified and concerned
.  My experience of public procurement was that I always took into consideration a suppliers past performance and I always believed that was good professional practice.  As a bidder that has also been my view and experience.

I also considered the review of past performance in the supplier appraisal  to be entirely consistent with the public procurement regulations, particularly the Restricted Procedure.  If that's not the case why on earth are suppliers being asked for reference sites?  Then again, if it has been a policy decision not to consider past performance, why not?  Could a failure, previously to consider past performance be one of the fundamental reasons why we have seen some high profile procurement disasters of late?  is it really possible that the recent rail franchise was awarded without consideration of past supplier performance?

Having said that the CBI also claim:
"Where a contract has gone badly wrong the industry is willing to be upfront." 
I am staggered that John Crickland believes that is believable!

However, I have other concerns.

While I clearly believe past performance should be taken into consideration in the selection process, I am seriously concerned that poor supplier performance in one contract may not be remotely relevant to a different contract.  Take for example, G4S performance with the Olympics, to me it would be  totally inappropriate to use that as a basis for saying G4S could not provide cash collection services to the public sector.

I am also concerned about the robustness of record keeping.  Who decides what is defined as significant  poor supplier performance?  How will that be communicated to the public sector?

Equally how do we address reinvention of suppliers? I can recall a previously blacklisted accountancy firm who merely changed their name and continued, under the reinvention, to win significant public sector contracts!

A further concern is this deteriorating into a tit for tat with the CBI.  What would be procurement's response if the CBI developed a register of poor performing buyers - naming and shaming those last payers and poor specifiers?  Clearly that would not be good for UK plc or the achievement of an Industrial Vision!

Let's hope we can retrieve some of the trust which looks as if it may have been broken and look forward to the development of a policy which makes sense to both buyers and suppliers, is pragmatic and actually applied.  Am I a dreamer?

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