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Could the G4S security contract have worked?

23/07/2012 by · Leave a Comment

Last week Win that Bid published a blog quoting a director from G4S as he proclaimed the rise of police privatisation. I wasn’t entirely positive about the prospect… and even as it went live on the site G4S became embroiled in a massive contract scandal reported across the world, destroying their share price.

There has been lots of press coverage about the company’s failures, but what about the contract itself? Could they have succeeded in meeting it at all?

There were warning signs last September, when the firm reported that it would not be able to recruit more than guards than it was originally contracted for without a great deal of prior warning. The Home Office then took four months to confirm what it actually needed (far more than the contract called for, naturally). All security staff have to be centrally vetted and licensed through the Security Industry Authority (SIA) before they can be deployed, drastically slowing down their recruitment process. There seems to have been an awful lack of clarity about the pricing structure of the tender contract, which allowed the Olympic Sponsors to add more and more requirements to the contract. G4S simply couldn’t provide the resources asked for, and didn’t communicate that very well.

This raises a second issue with the contract: there was no provision for outsourcing. The authorities wanted to hand the entire £200 million contract to a single security company. This created problems for G4S and seems like a wasted opportunity; Win that Bid has worked with plenty of qualified security companies in London. Many of them were very interested in pursuing Olympic security contracts and were disappointed to find that there were no opportunities for them do so, either because of the sheer scale of the contract or because they were vulnerable to changes in the tender contract. The tender contract isolated G4S; before taking the contract they should have considered their contingency plans in the event the requirements changed, as they usually do in contracts this large and politicised.

Based on these facts, G4S certainly appears to have a strong case to complain about the government’s conduct in this contract. It hasn’t taken that opportunity. Possibly, it simply doesn’t want to jeopardise the security contracts it already has with the government. The political climate and the scale of the bid certainly left G4S in a very poor negotiating position; something that any company should consider before bidding for a tender.

A company trying to win any bid, let alone a security contract, should make sure they plan for contingencies. G4S weren’t prepared for big changes in the contract, and have paid for it.

Filed Under: Business Strategy, Construction, Olympics 2012, Uncategorized · Tagged: , , ,

Financial Viability and how to prove it

05/04/2012 by · 1 Comment

Are Public Sector bodies as transparent as they can be about their reasons and processes for establishing the financial viability checks?  It is clear that everything does need to be clearly accountable however there is a strong trend to lean on small businesses in the procurement process as buyers are risk averse.

Accountants and auditors have highlighted that their internal contract management systems may be inadequate and that the suppliers’ financial standing may pose a risk of loss or poor service.

So how can a small or medium sized business prepare for the increased scrutiny?  Based on reviewing those reports here is our top 5 tips that indicate you have the systems in place to meet the needs of the buyers:

  1. Create financial performance thresholds for each contract – be clear about the process of escalation and outline the plan for early notification
  2. Provide accurate up to the day information to the public sector senior management teams to allay any concerns – don’t run accounts in quarterly arrears
  3. Create a secure ICT pathway dedicated to the financial management of the project with restricted access – link finance to contract performance and provide clear reasons for good, on target or poor performance
  4. Present clear lines of escalated responsibility and provide the reverse for decision making show the financial cascade – be clear about who is measured against the budgeted performance targets and help them understand why they are specifically accountable
  5. Explain how you isolate each project from the risk presented by new contracts; this from personal experience is one factor I had not taken into account.
Want to find out more about what the Buyer wants and how to win public sector contracts? Our blog ‘ What does the buyer want‘ can help.
Filed Under: Uncategorized ·

SMEs and public sector tenders

16/12/2011 by · Leave a Comment

What do the latest changes mean for your business?

Small and medium sized enterprises (SMEs) can feel locked out of government tenders by the Pre-Qualification Questionnaire (PQQ) requirements. The Cabinet Office wants this to change and over the last year they’ve taken some steps to do just that. In this article we’re going to take a look at what they’ve recommended and how that could make things easier for your business and applying for public sector tenders.

There are a few issues that face SMEs when public sector tendering. The first is that public sector departments are risk averse because of limited budgets and competing political demands. No authority wants to hire a small company and discover it can’t fulfil the contract. To avoid this UK government tenders focus on compliance and financial robustness, favouring established companies.

Worse, SMEs can be inadvertently filtered out of the process by asking far too much of them in compliance requirements or in the scale of the contract. The Cabinet Office is currently recommending that contracting authorities split their contracts into separate micro-lots for each required service. This ought to help SMEs by reducing the size of each contract and allowing them to take advantage of their specialist expertise that a large company trying to do everything might not possess.

The Finance Problem

Public sector tendering often requires demonstrating financial stability backed up with plenty of financial data, which can be a problem for many SMEs. They may simply have not been operating long enough to meet those requirements and probably lack the required level of insurance. They may not have enough staff to collate all the information they need.

The new guidelines encourage procurers to allow for alternative forms of financial information. UK government tenders and their contracting authorities are being encouraged to be more open about exactly what details are necessary.

Changes in “Technical and Professional Capacity”

The last thing any local authority wants is to be made complicit in some awful pollution or racism scandal by one of their contractors. So they’ve tended to put equal opportunities, health and safety and environmental compliance into the “technical or professional capacity” section of the PQQ. It can be expensive to prove that an SME is in compliance with all these rules.

The Cabinet Office has asked contracting authorities to remember that this section should only be about previous similar contracts, quality control and technical staff. This doesn’t mean that the compliance issues are now irrelevant: instead, the local authority is likely to use the “eligibility” section to ascertain whether the bidder has a record of dumping hydrogen sulphide into municipal swimming pools. The hope is that the move will draw a much clearer distinction between mandatory and discretionary grounds for disqualification, helping SMEs. If a contracting authority isn’t clear about where the line is, ask!

Big Changes in Best Practice

The Cabinet Office has issued a model PQQ in line with all these new changes which government departments are now required to use. By only including the minimum requirements of the regulations, the hope is that the bar won’t be set too high for SMEs to consider. Better still for SMEs, the Cabinet Office has a “mystery shopper” report. Suppliers are being encouraged to report poor procurement practices and unclear tenders.

The new guidelines for PQQs all aim to make the process simpler and cheaper for SMEs to engage in, and provide more outlets for them to question decisions or get feedback. Not all of the potential hurdles have disappeared, but they have got lower.

We would love to hear about how the changes have affected your business so what do you think?

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Filed Under: Bid Writing, General, Opportunities, PQQ, PQQs, Procurement, Tender Writing, Tenders, Top Tips, Uncategorized, Win Bids, Win That Bid ·