Christmas Trees and the dangers of price benchmarking

Supply Management had the story this week of a “50-fold price difference on government Christmas trees”.  Freedom of Information requests extracted how much UK government departments had paid for their Christmas trees.

Interesting,  but not (for me anyway) in the way that it was reported, as yet another example of “inconsistent” Government procurement. I don't want to sound like a overly serious procurement geek, given this was just a light-hearted exercise, but my three thoughts were these.

·         Is this really a valid use of the Freedom of Information Act? How much did it cost all the departments to respond to something that is fun, but not really very important in the greater scheme of things?

·         Do we really think that it would be better if government centralised its buying of Christmas Trees? How much more bureaucracy would that require? For a start, we’d need someone employed by GPS / CCS as Category Manager, Seasonal Decorations – at SCS1 level of course. And think of all the time taken up harmonising specifications and so on.

·         But most importantly, it highlights the difficulty of making broad comparisons. Because I would immediately have to ask several key questions before we could really see if Department for Transport (a £15 tree) are heroes and the Foreign Office (£750 for a tree) are spendthrifts.

I need to know:

a. What was the specification of the tree – real, artificial, size, quality.. etc?

b. Where was it delivered to? And was delivery included in the fee?

c. Were there any ‘added value’ services included in the price – erection, decoration, disposal.... etc.

 So, perhaps the DfT tree was 1 metre high, half-dead already, bought from a market stall, carried back to their office and erected by a junior staff member.

The Foreign Office £750 might have been the cost of getting a beautiful 5 metre tall tree to the British Embassy in Ulan Bator, erecting it in the courtyard, decorating it with lights and baubles, and making sure it was disposed of in an environmentally friendly manner in January. In which case, £750 may be a real bargain.

We don’t know this of course – but we equally don’t know that wasn’t true.  So, one of our New Year resolutions is that we’re going to be very rude about any surveys, price comparisons, “benchmarking” exercises and similar that don’t look at issues in the round and instead consider merely price -  when other factors have to be taken into account to make the comparison valid.

So repeat after me...

Price comparisons are meaningless without considering the specifications.

Price comparisons are meaningless without considering the specifications.

Price comparisons are meaningless without considering the specifications.

First Voice

  1. Procurement Bob:

    Fair enough for Christmas Trees as the spec does vary wildly. However I’d disagree for a lot of commodity items (a lot of what government buys). Price benchmarking shines a light on where you’re not getting a good price and makes you ask the question – could we be getting a better one? There’s always a reason why the price varies, but in a lot of instances it’s due to a lack of information for the buyer, inconsistent procurement and suppliers making a best guess at what will win them the business. As a taxpayer and procurement professional I welcome this level of transparency and wish we weren’t so defensive and a bit more open to ask the question why.

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