Procurisk
Home About Procurisk News Contact Us
Procurement News

Items from 2012

Headhunters
It has been reported that the BBC have paid ‘headhunters’ Egon Zehnder, fees of almost £400,000 plus VAT to fill 3 senior BBC vacancies since 2010. These positions were the digital media director, head of vision and the Director General. The process twice produced internal candidates, one of which was George Entwistle. Egon Zehnder, it appears, recruited Lord Patten to his position on the BBC Trust. The Egon Zehnder website highlights:

“The ability to make good ‘people’ decisions is today’s most enduring source of competitive advantage. Decisions at the time of recruiting senior talent cast the longest shadow of all.??    QUITE!!

Allegedly, the fees for the DG post were £157,000 plus VAT. If this recruitment process were to be interrogated, it warrants the following questions:

  1. Who awarded the contract to Egon Zehnder? The extent and involvement of HR should be probed, as should their engagement, or lack of it, with procurement.

  2. What role did the Department of Culture, Media & Sport play, if any? It may be borne in mind that DCMS appointed Egon Zehnder to recruit the Chairperson of the BBC Trust, Lord Patten. He is incidentally, a non-executive director of Russell Reynolds Associates, Headhunters.

  3. Who wrote and signed off the person specification, setting out the specific personal qualities and depth of experience required?

  4. Who determined the recruitment process? If it was the headhunters, why didn’t the BBC HR Department do it?

  5. Were advance payments made to Egon Zehnder (remembering the ship for St Helena case)?

  6. Assuming the figure of £157,000 is accurate, who has asked for a breakdown? Do we have



  •     per diem fees for the consultants?

  •     what overheads were allowed?

  •     what expenses were paid, including interviewees travel & hotels?

  •     what profit did Egon Zehnder make from the deal?


7. What specific Contract Terms & Conditions were agreed with Egon Zehnder?

The answers to the above would be informative. There is, of course, a lessons learned for any organisation engaging headhunters. They usually insist on an up-front payment on retention and typically this is non-refundable. Their operations are cloaked in secrecy, as they use varied tactics to identify candidates, having accessed their ‘knowledge garden’. Would we be expecting too much to assert that a competent HR Director should be capable of finding senior staff for an organisation? We also observe, through our experience, that procurement are excluded from the process to appoint headhunters. Would a reason be that they would ask too many awkward questions.

Finally, returning to the BBC fees of allegedly £157,000, at £1000 per diem it equates to 157 person days – who has the audited time expended, data sheets, to clearly demonstrate that under English Common Law, Unjust Enrichment has not occurred? We are not alleging it did, simply asking who can demonstrate it didn’t.
Read More >
Who last audited your accounts payable process and convinced themselves that false invoices had not, and would not be paid???
The invoice payment process in any organisation carries potential risk. A topical story is the former Labour minister, Denis MacShane who wrongly claimed at least £7,500 in expenses. A Parliamentary committee observed after work by the Parliamentary Commission for Standards concluded that between 2004 and 2008 MacShane submitted 19 invoices totalling £12,900 for ‘research and translation’ work carried out by the European Policy Institute. The commission also found that this Institute, in the way it was presented on the invoice – with a general manager and directors – did not exist (our emphasis). For the purpose of this paper we can accept that there is a danger of invoices being incorrectly paid in every organisation. In an Indian Government report (cag.gov.in) there is a relevant heading, “Fraudulent drawal/misappropriation/embezzlement/losses?? and at 4.1.1 of the report it states “Failure of the Executive Engineers to follow the prescribed system for purchase of bitumen by the contractors resulted in payment of RS 2.32 crone on production of 160 fake invoices.??  The damning observation is “Therefore, it appears that fake invoices were submitted by the contractors and the Assistant Engineers did not check the genuineness of these invoices and ensure the receipt of materials before finalising the claims of said contractors.?? And now, to the USA for an example of invoicing (thelensnola.org), where the Louisiana Legislative Auditor (Jan 4. 2012), reported “In our work on PA transactions at GOHSEP we discovered anomalies in the documentation submitted by Ninth Ward ………. we determined the following: Ninth Ward received $136,949 from GOHSEP for gutting the Semmes Building by submitting proposals and invoices purportedly from a contractor who stated the proposals and invoices are not his and who did not do the work.?? Bringing the situation nearer home, readers may want to research the situation at Barnet Council with RM Countryside Services Ltd. Reference can be made to Mr Mustard (mrmustard@zoho.com) where there are copies of invoices that can be studied. One example is Invoice No 5923 dated 25/10/2011. One item is a quantity of 39 “Remove Post?? at a unit price of £60.73 at a total price of £2368.47 plus VAT. The payment terms are “strictly 10 days Net.?? The skill in passing this invoice is the origins of £60.73 and who has the knowledge of its cost drivers. Therein lies a problem – who has the cost breakdown?

Here is a sample of what we have found checking invoices of customers:

  1. Provided the invoice value was within 10% of the contract value – pay it!

  2. Duplicated invoices paid

  3. A buyer submitting false invoices from a company owned by his family

  4. Invoices paid from solicitors and consultants for Lump Sums and no detail of services provided

  5. Erroneous VAT numbers on invoices

  6. Travel expenses unchecked or verified from an IT supplier

  7. Closed loop scenarios

  8. Buyer and stores personnel authorising invoices but goods never received

  9. Prices entered in pencil on invoice

  10. Invoices for which there was no Purchase Order – quite often expenditure authorised by Directors.


A pertinent risk question is “Who last audited your accounts payable process and convinced themselves that false invoices had not, and would not be paid??? Our ProcuriskÒ will assist in scrutinising risk in this process and could avoid £ millions of losses.

 

So, what can we do for you?  We can probably help you achieve your objectives – through our consultancy, training and coaching services – let’s start a conversation.

If you can spend a few minutes on the phone with me, I can assess the potential ROI of working with us.

If this is interesting to you, please email me and I’ll set something up.

Or call me on 01744 20698

Thanks

Steve

Twitter: @ProcureChange
Read More >
Changing The Gears of Selling
An ICAC report dated October 2012, “Investigation into allegations that staff from a number of Local Councils and other public authorities accepted secret benefits from suppliers and that staff from the local councils facilitated payment of false invoices from suppliers??, included revelatory findings.

In some quarters there is a ‘heads in the sand’ mentality where, it is wrongly believed that all third parties entering into contracts can be trusted. Quite recently, we held an event to debate how sellers rip off buyers. Some of it was tongue in cheek but behind the input lay logic and facts to illustrate how rip offs occur. The ICAC report fleshes out some specific detail.

“This investigation by the Commission uncovered a corrupt practice that appears to be endemic in the process of selling in bulk, where profits are dependent on repeat business. The practice is insidious because it proceeds on the pretence of friendship and is cloaked with false values that are used to seduce buyers.

Many of the salespeople whose conduct was investigated by the Commission were specifically trained in a selling process called the “Gears of Selling??. This process encouraged salespeople to pretend to have a friendship with the buyers. They were trained to ask questions about a buyer’s family, interests and health, and to portray an interest in these matters that they did not really have. This is apparent from the fact that once a buyer left his or her position, the interest and concern disappeared.??

We have always thought that the view of buyers as a ‘prospect’ is demeaning. The first gear of selling mentions that a positive professional salesperson doesn’t immediately start selling their products or services, what they do is to sell themselves as a person who is sincerely interested in the customer’s job, family, problems and hobbies, etc.

So, how can a professional buyer deal with this approach?

Tell the salesperson to change gear! There is a clue there!

Tell the salesperson you do not discuss personal matters outside of your family and friends. There is a clue there!

In fact, there are many responses and approaches to managing sales people, not all of them need to be adversarial or particularly complicated.  We just need to ensure that you enable and equip your people who are involved in buying to manage the gears of selling.

Coaching and Training

At www.brianfarrington.com we deliver two primary services to enable and equip you to manage ‘the gears of selling’: coaching and training.

With coaching, we work personally with the individual to identify their major challenges and opportunities and create a strategy or plan to address them. We then work through that plan over time and support them in its implementation.

Coaching usually takes place via structured 60-90 minute meetings or calls where we review progress and learnings since the last session, discuss priorities and options, and plan for the next time period.

We also deliver tailored training courses in areas such as:

  • Enhancing buying skills for professionals

  • Handling difficult sales team – by growing your buying capabilities

  • Commercial negotiation and influencing skills

  • How to set up and manage vendor engagements

  • Commercial awareness for project managers


Changing The Gears of Selling

So, what can we do for you?  We can probably help you achieve your objectives – through our consultancy, training and coaching services – let’s start a conversation.

If you can spend a few minutes on the phone with me, I can assess the potential ROI of working with us.

If this is interesting to you, please email me and I’ll set something up.

Or call me on 01744 20698

Thanks

Steve

Twitter: @ProcureChange

 
Read More >
Bid Evaluation
 

BID EVALUATION – TRIALS & TRIBULATIONS

There is a large undercurrent of complaints about the bid evaluation practices in the UK Public Sector. We are aware of widespread dissatisfaction with:

I.            the actual process

II.            the arrangement feedback given to unsuccessful bidders

III.            the point blank refusal to have face to face debriefs and

IV.            the potential for swinging decisions to a favourite supplier.

Our readers will be interested in the information on the US Government Accountability Office (Legal Decisions & Bid Protests) website. We have had reason to research the Emergint Technologies Inc. B – 407006 decision dated Oct 18, 2012. In this, the protestor argued that the evaluation of its proposal and the agency’s source selection trade-off determination were unreasonable. The protest was sustained. The recommendation is that the agency re-evaluate the protestor’s proposal and make a new price/technical trade-off decision. In terms of price, it was not insignificant. The successful bidder’s price was $78,992,868. The protestor’s price is deleted in the report. There are some illuminating points. “The evaluators also observed that the protestor’s total evaluated price was lower than the government estimate.?? The critical reader will now say, “So what??? They would also ask who produced the estimate. They would also ask if the evaluators actually know how many different pricing strategies there are, including penetration pricing.

There was a technical evaluation panel who reviewed the proposals. The winning bidder’s total score was 87.6 and the protestors total score was 79.3. The protestor challenged the agency’s evaluation of its technical proposal, arguing that many of the weaknesses identified by the evaluators were based on an incomplete or incorrect reading of the proposal (our emphasis). Specific examples are cited to make the allegation substantial.

One of the weaknesses identified in the protestor’s bid was that they were PMing projects on a task order. The panel found this was an erroneous assumption and a lack of understanding. The protestor’s challenge was accepted by the Agency who then argued that the error, whilst in error, had not disadvantaged the protestor. The ‘legal decision’ panel found to the contrary, adding that “This argument is not supported by the underlying record.?? and “We do not agree with the agency that the protestor suffered no prejudice.?? There is a lot more where that comes from!

BFL send a message to evaluation panels in the UK. You are being watched!

We also make some predictions:

  1. There will be many more challenges under the Remedies Directive.

  2. Some evaluation outcomes will not stand scrutiny.

  3. Some evaluation panel members are going through the motions and not applying sufficient due care and attention.


The public sector will, increasingly, shut out SMEs because of the false safety regulator that only large firms can deliver government services (if you don’t believe us check the amount of aggregation contracts playing into the hands of companies such as Capita, BT and others).



So, what can we do for you?  We can probably help you achieve your objectives – through our consultancy, training and coaching services – let’s start a conversation.

If you can spend a few minutes on the phone with me, I can assess the potential ROI of working with us.

If this is interesting to you, please email me and I’ll set something up.

Or call me on 01744 20698

Thanks

Steve

 
Read More >
West Coast Franchise
West Coast Franchise – Questions for the Minister

Almost everyone is familiar with the Minister’s announcement about the West Coast Railway Franchise. It is interesting to see the commentaries emanating from all sources – being wise after the event. Readers of our briefings (see Brian Farrington Ltd news August 29th 2012) will recall that instantly the decision was originally announced we pointed out that it had RISK STAMPED ALL OVER IT.

We now offer advice to the Minister who may wish to obtain answers to the following (noting we are simply asking questions, not implying wrongdoing). As background our readers may wish to bear in mind the statement in Hansard Column 566W 18 September 2012, ‘As a result of a legal challenge which the Government intends to defend robustly, we have not yet signed the contract with First Group and therefore the competition remains live. We expect to sign the contract soon.’

Q1. What role did the external advisers, Eversheds LLP and WS Atkins Plc play in the process noting the wording in the Invitation to Tender dated 20 January 2012 “Eversheds LLP and WS Atkins Plc are acting for the Department in relation to the award of the InterCity West Coast franchise…. (our emphasis)?

Q2. Were any other advisers retained, and particularly for the financial analysis, of the tender evaluation?

Q3. Is a claim against any professional adviser’s Professional Indemnity Insurance being contemplated?

Q4. Did any of the advisers limit their Limit of Liability on their PII?

Q5. Who wrote the tender evaluation criteria and who signed off the evaluation model?

Q6. Who tested the financial evaluation model with test data prior to it being applied on the actual tenders?

Q7. Who were the members of the tender evaluation team? Were their roles specified in writing?

Q8. Was there a tender evaluation guidance briefing document prepared and issued prior to receipt of the tenders?

Q9. What tender evaluation clarification meetings were held with each of the bidders?

Q10. What risk mitigation plans existed in the event that the procurement process collapsed?

Q11. What is the total cost being paid by DfT for all external advisers?

Q12. How, precisely were the external advisers selected?

Q13. Were the external adviser’s fees subjected to Treasury negotiation as has happened with other suppliers/contractors?

Q14. What impact will the West Coast debacle have on other Government procurements where there are continual allegations of poor decisions on contract award?

Q15. What plans does Government have to up-skill ‘Project’ procurement teams?

Q16. What specific training did the West Coast Franchise procurement team have?

Q17. Do you realise that SME’s are effectively being shut out of Central Government advice by creating tender evaluation models that only the large organisations can win?

Q18. Was there a procurement risk model for this procurement?

There has been informed comment, including the Daily Telegraph on Thursday 4th October 2012 ‘The Great Whitehall Railway Disaster’. It includes ‘Worst of all, it seems to have taken only three weeks to uncover the fatal flaws, which suggests they were not hidden that deep, and should have been much easier to spot.’ This begs a very important question. What was the process for evaluation? Was it people doing evaluation in isolated cells with no other person(s) checking their work? Had the case gone to court we would have discovered all the answers but, of course, we anticipate that there will be a very selective release of actual events.

Now consider another comment from the Daily Telegraph. ‘Private-sector bidders are nearly always more experienced and wily (sic) than the civil servants, who are not nearly as well paid as their opposite numbers.’ When the current Government came to power they made a great play on how they would want civil servants to experience the real world by being placed in private-sector organisations. BFL immediately wrote to the Minister offering that facility at no cost to the Government. The Minister did not reply but a civil servant sent a cursory reply and from that day to this there has been total silence! We suggest that it is not a pay issue it is business acumen and commercial competence that is the real issue.

So, what next? We can only predict. Richard Branson will be offered an extension to the existing contract. He will agree providing it is for an extended period, say five years. Fares will continue to outstrip inflation and the Government will be inactive in tackling it. All the bid costs will be repaid and the current estimated figure of £40 million could be in grave error! Incidentally, when the bid costs are claimed who will conduct due diligence to prove their accuracy and veracity? The Government will be sued by First Group because of their deteriorating share price and lost profits. A settlement will be made out of court and taxpayers will never know the extent of the settlement. No action will be taken to tackle the larger issue of Government procurement and the unfairness of some contract awards. The large external adviser consultancies will continue to thrive and SME’s will continue to be disregarded, despite the competence they possess.

WATCH THIS SPACE!

This briefing has been forwarded to the Minister for DfT.

 

 

 


 

 

Why people with procurement and proposals issues want to work with the people at Brian Farrington.


There are three themes that clients tell us over and over again.

First, they tell us they believe they are making a smarter investment working with Brian Farrington — bringing a thorough understanding of their procurement and proposals issues and a proven track record of enabling excellent returns on their investment.

Second, our clients are confident that they are working with ‘straight-talkers’ that bring experience, expertise and stay focused on client success; not on our next income target (no army of junior consultants that we need to ‘utilize’).

Finally, people - people, just like you - tell us they actually like working with us. They find us easy to work with and collaborative in solving issues that inevitably arise in procurement and proposals.

 

 


About Brian Farrington Ltd


Brian Farrington Ltd is one of the world’s longest established procurement and supply chain consultancy and executive training specialists. 33 of the current FTSE100 have retained our services, as well as leading organisations in the UK, North America, southern Africa and Asia.

Established in 1978, we have proven expertise and experience in strategic procurement, sustainability and risk management.

Brian Farrington Ltd solutions and services are formed through consultancy, training & development, coaching, interim resource and recruitment.

Our four core areas of strategic procurement, sustainability and risk management capability are:

  • Strategic review and commercial governance

  • Performance delivery and transition

  • Major project support including managing contractual risk

  • Learning & development in support of organisational aims.


For more information go to www.brianfarrington.com services
Read More >
DoITT
New York IT Procurement – Round 2

Introduction & Health Warning

Please refer to our health warning in our earlier briefing paper. In this ‘episode’ we are expanding on another issue that warrants a ‘lessons learned’ review.

Poor DoITT Contract Management Contributes to Increased Contract Expenditures

The Audit Report comments that “DoITT did not reduce the maximum contract amount by amending the contract when it decided not to require HP to complete two original components of the contract. As a result DoITT paid significantly more than it originally budgeted for PSAC 1 ………. In addition, DoITT did not limit HP’s mark-up or require HP to pass any savings on to the City that it gained by having subcontractors perform work on this contract. The system integration contract did not include a provision that would limit the mark-ups HP would charge if it hired subcontractors. HP relied heavily on its subcontractors to fulfil the contracted services. Of 528 consultants who worked on this contract, 413 were hired by (sic) subcontractors to provide services to the City. Consequently, HP simply billed at the staked contract rates, which were significantly higher than the rates paid to the subcontractors ……..we compared the hourly rates HP paid to subcontractors to the stated contract rates that HP charged to the City and found that HP charged a mark-up ranging from 9 per cent to 195 per cent. The total amount of mark-up paid during the seven sampled months reviewed was $2,302,686, with an average mark-up rate of 54 per cent.??

This raises a number of issues for contract managers, including:

¾     Who is accountable for raising and issuing contract changes?

¾     Who establishes the extent of subcontracting at the tender stage?

¾     Who checks who are subcontractors and who are full time staff?

¾     Who is accountable for negotiating mark-ups?

A degree of reflexion is needed in some organisations regarding the training that is provided to contract managers and if they are empowered to make decisions, they have to deal with cost control and contract performance!

To be continued.
Read More >
“Cutting Edge?? Commercial Management Training & Development Directory: Develop Your Skills
Brian Farrington Ltd - Training Directory

Our ‘blue-chip’ clients have the choice of the World’s leading training organisations. The fact they have chosen our expertise is, we believe, a testimony to our abilities. We have been training providers for over 30 years, presenting literally hundreds of courses. The courses detailed here are an indication of our range in the broad area of commercial management, purchasing and contracts. Whatever your needs we can provide a world class resource.

All the courses can be delivered individually or as part of a programme to any level on management. Our courses are client driven the content of any course or programme will be tailored to meet the client’s needs and to fit with their environment including duration.  

The quality of our training programmes is illustrated by the National Training Award for our development programme designed, delivered and evaluated with our corporate partner ScottishPower Plc. This training model can be successfully adapted for your organisation.

The success of a tailored development programme is based on partnerships between you, your training and development specialists and our consultants. We want the individual to benefit but we also want results for our clients. Take a positive step to developing the skills within your organisation. Contact Stephen Ashcroft to discuss the added value of a tailored development programme specific to the challenges and needs of your business.

Your Contact:

Stephen Ashcroft BEng MSc MCIPS

Business Consultant

Brian Farrington Ltd

Rainford Hall

St Helens

WA11 7RP

Tel 01744 20698

s.ashcroft@brianfarrington.com

“Cutting Edge??  Commercial Management Training & Development Directory: Develop Your Skills

 

 

 

 
Read More >
IT Procurement
Health warning - IT Procurement

This risk briefing paper is based on an audit report issued by the New York City Comptroller. On April 1, 2005, the Department of Information Technology and Telecommunications (DOITT) contracted with Hewlett-Packard Company (HP) as systems integrator for the Emergency Communications Transformation Program (ECTP) to transform and consolidate the City’s 911 Emergency Dispute System. Our briefing paper is not seeking to criticise any of the parties involved. We need to make it very clear that there were disagreements on some findings, between Audit and DOITT. There are important risk issues that warrant highlighting to encourage IT and Procurement specialists to ask “What are the lessons to be learned???

Cost of the project

“As of April 17, 2012, the City has paid HP $309 million of the $346 million currently provided for this contract. Effective January 2011, DOITT awarded a second system integration contract, not to exceed $286 million, to complete one of the original components identified in the project definition. Consequently, the anticipated overall system integration cost increases to $632 million.?? (Report extract). “Based on our analysis of the budget breakdown provided by DOITT, we estimate the cost overruns could be as much as $362 million.

Readers of our briefing papers will recognise a theme of IT projects exceeding their original costs, highlighting the difficulties of accurately estimating costs. This logic applies to IT specialists bidding for work. It is unquestionable that some put in a ‘best guess’, hoping to recover incorrect assumptions that cost them money, through a contract change process.

Award of contract to HP

As with any contract award, it is always worth probing the circumstances that lay behind it. “DOITT should not have awarded the system integration contract to HP in 2005 because 1) HP did not receive the minimum technical score DOITT  required to be considered a viable contractor and 2) DOITT did not maintain documentation to justify awarding this contract to HP. According to DOITT, after the only other contractor withdrew its proposal, HP was awarded the contract even though it did not achieve the minimum technical score because it received outstanding recommendations from two government agencies (NYPD and US Air Force).?? (Report extract).

Readers in the EU will be very interested in the contract award process, contemplating what would be the situation if only one bidder was left and they did not meet the previously set minimum criteria!

The Audit Report says “HP’s failure to receive the minimum experience and necessary skills to fulfil the requirements of the agreement. HP’s failure to receive the minimum technical score required should have been an early indicator that HP did not have the qualifications or abilities to fulfil requirements of the contract.?? (Report extract)

The project definition was sent to 109 pre-approved contractors but DOITT only received two proposals. According to the project definition “Proposals will be first scored on their technical merit. Only those proposals that are determined to be technically viable will receive further consideration.??

The story continues....Here

 
Read More >
Page 1 of 10
12345>Last Page >


Procurisk ® is a registered trademark of Brian Farrington Ltd.
Copyright © 2018 Brian Farrington Ltd. All rights reserved.

Brian Farrington Ltd
Rainford Hall, Crank, St Helens, United Kingdom, WA11 7RP

Privacy Policy       Terms and Conditions       Contact Us