MOD Awards Multi-Million Contract to Deloitte Without Competition

Remember the Alix Partners contract that the Ministry of Defence awarded without open competition, with day rates of £5,000 a day (plus lunch expenses)? All, somewhat ironically, to advise on saving money on contracts?

That was traced back to Andrew Manley – or at least his signature on the contract. Now this latest issue may not be down to him, given that he is currently suspended whilst his expense claims are investigated (see here). However, the organisation he is (was?) responsible for, the Defence Infrastructure Organisation (DIO), placed an interesting EU ‘Contract Notice’ the other day.

DIO “intends to award a contract to Deloitte LLP for the provision of implementation support for the DIO Transformation commencing February 2014 to November 2014. It is considered that this requirement can be placed using the negotiated procedure without prior publication of a contract notice pursuant to Article 31(1)(b) of Directive 2004/18/EC (Regulation 14(1)(a)(iii) of the Public Contracts Regulations 2006) for technical reasons because Deloitte LLP has the specific expertise and knowhow to provide the support and is the only contractor able to complete in the timescale required. No other party has the necessary technical expertise and knowledge required to provide the support.”

So no competition because Deloitte are the only people in the whole wide world who could possibly do this ‘implementation support.’  The value of this contract extension - £3.6 million.

They’re not the only ones at it. We know the Cabinet Office has let some pretty significant non-competed consulting-type contracts in the past couple of years, despite their role as guardians of good procurement practice.  I suspect the MOD case is a contract extension where Deloitte is firmly embedded in the programme, and the perception is that it would just take too long and be too disruptive to move them out or pause while a competition is run. However, you might also think that a bit of forward planning would have allowed a mini-competition (from a framework) to be run to at least put a bit of competitive pressure on Deloitte.

The DIO Transformation Programme in itself will see a whole lot more private sector involvement – a Capita-led consortium (with American engineer URS and PA Consulting) was announced  recently as the preferred bidder for a 10-year, 400 million pound contract to help DIO manage its military estate, beating big rival Serco.

We all know that competitive pressure drives valuer for money, and contracts awarded without competition often therefore fail to achieve value.  That’s the risk with cases such as this. Anyway, we’ve put in an FOI request to find out a bit more about this Deloitte contract, and we’ll let you know how MOD explain it in a month or so’s time.

 

 

Voices (11)

  1. Peter Smith:

    Thanks Tom Catuk – interesting to have the story actually. I felt one or two of the comments overstepped the mark and came close to dis-allowing but in the end – free speech and all that. However, i will let you have the last word on this and close comments now I think on this issue. For now at least.

  2. Tom Catuk:

    It’s a shame that what is sometimes a really insightful blog site is allowed to be used as a platform to air the views of disenchanted and I’ll-informed commentators who clearly bear a grudge.

    As one ‘on the inside’ I hope the blog site can also be used to give others an opportunity to respond.

    Firstly I cannot comment on the Deloitte award so will leave others to do that.

    As for cabinet office ‘lunatics’, a ‘corrupt administration’ and tie continued jibes against CCS and Proxima’s role in its creation I would say this.

    Most independent observers I have spoken to are of a view that the creation of CCS is something that never quite happened in the past. The programme to put this right has been a genuine effort by those behind it to finish the job.

    It is clearly ridiculous that different departments buy common things completely independently and it can only be right to attempt to handle these goods and services on a cross-Government basis.

    It is also surely right to give the central body a broader remit: which in the past has been largely constrained to the creation of Framework contracts that were too often unfit for purpose.

    CCS does need to earn its stripes and demonstrate its credentials – and hopefully in time it can become a procurement body of which Britain can be proud.

    As for the use of Proxima and of competition – the ‘facts’ (and I make no apology for citing some here) are that, after a brief initial scoping study, the build programme business was tendered via a mini-competition. EY and PwC were both initially successful, and both used Proxima for their procurement and operating model subject matter expertise. No smoke or mirrors and nothing for Cabinet Office to be embarrassed about.

    Rather than sniping at CCS we should now get behind it, and encourage the rest of the Public Sector to do the same.

    1. Bill Atthetill:

      “EY and PwC were both initially successful, and both used Proxima for their procurement and operating model subject matter expertise. No smoke or mirrors and nothing for Cabinet Office to be embarrassed about.”

      Seriously Tom, in quoting your comment above (implying that after winning the commission/s, they then ‘sub-contracted’ the original ‘architect’), in the context of public sector procurement, you still think that the process sound and transparent?

  3. Trevor Black:

    I used to believe that some of the decisions made were simply the consequence of ignorance. That is no longer the case. This is simply corruption no matter which way you look at it. If you worked in any other public sector organisation you would be suspended then sacked and quite rightly so. Don’t expect heads to role – this is now becoming the norm in an out of touch and clearly corrupt administration.

  4. Flog:

    Taking the conversation back to the award notice.

    Award criteria – MEAT in terms of previous experience 100%!! Have they not read the Linakis case, do they not know that you cannot mix up selection and award! Or that MEAT is EU speak for value for money?

    No mention of award criteria that could be used to determine if the arrangement with Deloitte represents a vfm solution? Does whoever drafted the award notice and/or approved it not even know the basics? The ‘previous experience’ – ‘anyone else would take too long to get up up speed’ could bethe justification for negotiated without a call for competition, the basis of the award decision should have been genuine elements that determine MEAT ( vfm).

    Further, technically, they should have published a VEAT notice (i.e. an open standstill notification). If an alternative bidder decides to challenge at this stage could we see our first real chance of an ineffectiveness claim and it being successful? Perhaps not to the extent of the contract being set aside, rather, the award of alternative remedies? Wonder how much the civil financial penalty could be? And what exactly the words ‘effective, proportional and dissuasive’ mean?

    1. Secret Squirrel:

      They would be relying on Regulation 14, Use of the negotiated procedure without prior publication of a contract notice, arguing that only Deloitte would have the technical ability to fulfil the contract; hence none of the other would exist.

      1. Flog:

        I realise that SS, however that’s not what the award criteria states as published in the award notice – which at the end of the day, is the ‘official declaration of how they awarded the contract. The justification for N w/o a call is there was no one else, the applied award criteria should be about MEAT – albeit, playing with words, there should have been some reference to price and non-price criteria

  5. Bill Atthetill:

    Excellent!

    Indeed, as you rightly point out Peter, the Cabinet Office, aka Crown Commercial Service has broken every one of its own rules, and there’s a growing mountain of evidence to prove it. And yet, nowt – not a peep out of the NAO or the PAC. All’s well in Denmark, it seems. There are so many people on secondment or being give to the CCS “FOC” from the large consultancy houses (the promise of futute business, apparently), and, everyone just giggles when asked the question “so, how did you procure the services of Proxima?” Nepotism is rife and the deckchairs have simply been shuffled to accommodate Bill Crother’s personal favourites. Bill himself unfolded a new deckchair and sat himself in it as Chairman. How many times have you seen that happen in the last few decades – a complete absence of governance, process, and transparency (and there’s me thinking he was still on temporary promotion….) And, seriously, a ‘Director of Commercial Advice’? Who created this role and complete nonsense? (Once 4,000 senior civil servants have been goven commercial awareness training at taxpayers expense, will we still need this post?) There’s also a vicious rumour ‘floating through the cistern’ that senior members of the Proxima team are now working directly within Departments, helping them understand the CCS model that they have designed (or are they providing commercial advice) but, regardless, it’s all wrong. I couldn’t care less about Deloitte winning a single-tender in the MOD – that happens everywhere, in other Departments and across Local Gov and Health. the number is simply larger because it’s a high concentration of spend (one Department, £20bn of spend) and they need to deliver. What is so very wrong is that the organisation that promotes itself as being whiter-than-whiter does pretty much whatever it wants and with whomever it wants. It’s been so desparate for resource that it has literally employed individuals recommended by friends, family and people they meet….

    1. Concerned of Thames Valley!:

      Can somebody important please forward Bill’s accurate assessment to Amyas Morse and Margaret Hodge – are the lunatics running the asylum? No the egotists are running CO!

      1. Secret Squirrel:

        Has anyone seen the business case for the CCS nonsense? As far as I can see, CoTV has it spot on. It’s egotistical gibberish based on no evidence.

  6. Dave Mischief:

    Thank you Peter for making me quite depressed today……

    I, and I’m sure many colleagues across the public sector, spend a lot of time convincing people within our organisations that they need to comply wioth the EU Regs – both in the letter of the Regs and the spirit of the Treaty etc. and they can’t just go to their preferred supplier and poor preparation is no reason to get round the rules and etc. We warn them about challenge and the spectre of the Mystery Shopper (“Shop a Public Body” initiative) and point out it’s better to comply with the Regs.

    And yet twice within a week we see the Government driving a coach and horses straight through the Regs with the above award to Deloittes and the Childcare Vouchers to Atos.

    I also know that CCS are extending frameworks that cannot be legally extended without providing proper information to those organisations who may use the framework – and if it goes wrong it’s the end user that gets the challenge not CCS.

    I’m very disenchanted with Central Government’s one rule for us and one rule for the rest of you attitude – hopefully someone will have the courage of Virgin to issue a challenge to these awards – nothing like another £50M worth of costs to concentrate some Governement minds (or maybe they just don’t give a damn!)

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