Exclusive MOD news: £12M contract awarded to US firm without competition

We've learnt that the MOD awarded a contract in February 2011 to the US consulting firm AlixPartners to assist the MOD with a "period of intense negotiation with a number of our major industrial suppliers".

Amazingly, for a contract of this size, the work was not advertised and no other firms were asked to bid for the work, which could be worth up to £12 million for Alix Partners over the next year or so. "Very tight timescales" were quoted as the reason for the lack of competition.

Alix Partners are not as far as we know on any existing UK Government framework contract and they're not a firm who have a high profile (in my experience) in Government circles; but they seem to have around 100 UK based staff, and, having looked at their website, clearly have some impressive people. Their 'core business' appears to be around restructuring of private sector firms.  Anyway, someone in MOD likes them enough to engage them in this direct manner.

There are obviously a few questions around this.

  • Why such urgency to award a contract (without competition) given that the programme is going to take a year? It's not as if "negotiations with major industrial suppliers" are going to be completed in a matter of weeks.
  • Even if time was of the essence, why did MOD not attempt any competition at all (a mini-competition from an existing framework could be run in 2-3 weeks)?
  • And why were Alix Partners chosen - a US firm without apparently a major UK Defence presence - they're not exactly an obvious choice?
  • Is it appropriate to place a direct contract when there are relevant frameworks in place for Government e.g. the Buying Solutions MCAS , which includes a Procurement 'Lot' with several expert procurement and commercial consulting firms available on it?
  • Were the requirements urgent / extraordinary enough to justify the lack of competition under procurement regulations?
  • What sort of day rates (or other fees) are being paid to AlixPartners?
  • Did Cabinet Office approve this (which is I believe the process under the current 'moratorium' on consulting spend)?

If I were a real investigative journalist I guess I'd try and answer these questions. But I'm not, so I'll just throw them out there.

We're not making any political point with these questions; and I can't judge whether MOD really needs this help. Some might question as well whether this is appropriate when thousands of MOD staff are being made redundant. But our main point is this. Anyone in Procurement knows that competition drives value.  How do we know, without that competition, whether MOD have got the best deal from AlixPartners in return for their potentially £12 million expenditure? Are they the best people for the job?  Are their rates reasonable?

The lack of any competitive process, when there are many consultants with deep MOD, procurement and commercial experience who would have loved to (at least) have a chance to bid, seems disappointing. It also raises some questions about proper process, adherence to EU and UK procurement regulations, and use of public money.

And this is likely to have come from a very senior level; a single-tender action for such a lot of money is not a decision (in my experience working with and in Government) that a Procurement Manager, even a Director, D-G or 3-star General would make. This is 'top of the office' stuff. Ministers or MOD main board.

I did ask MOD if anyone could give me some further explanation, but there was no response.  We're not pre-judging, but it does all seem "interesting".

 

Voices (8)

  1. Mr. Adams:

    Why not do a Freedom of Information (FOI) request if you want to have your questions answered??

  2. Peter Smith:

    Thanks for that Ian – and your interesting comment on the stationery contract post as well.
    There’s some basic questions around fairness, value and transparency here (on the MOD contract) – we haven’t finished with this yet by any means, more to come from Tuesday!

  3. Ian Heptinstall:

    I see your revelation gets a prime-spot mention in the latest Private Eye (No.1287, p5)

    I’m not sure I like their simplistic comment that putting work out to tender will by itself bring better value though….but I guess they didnt ask you to comment further.

    As to the value the government would get from £12M worth of consultancy…mmmm. I would have thought there are several majors who would be happy to take the work at-risk for a slice of the savings, and many other capable organisations who could provide professional support for a non-contingent fee.

    The commercial issue is probably not whether Alix will do a good job, but whether £12M is a sum which should be seen as not significant, and so not important. From a Kraljic/Positioning perspecive, £12M is a “bottleneck” or “acquisition” purchase to the government, so maybe someone used the model in a rather simplistic way and decided the value was “unimportant” Whatever, I reckon Alix did a good selling job on someone.

    However our government have other issues they should consider as well as just commercial ones….. about fairness, equal opportunity & their SME/local agenda. This selection shows how really important this is…”do what I say, not what I do”…..

    As you nicely point out, anyone who cant run a fast but good selection process looking at several potential providers, isnt really a procurement professional. Anyone can carry out a structured 3 months selection process, it takes skill and judgement to do a reaspoanable job in a couple of weeks.

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