Northern Ireland Water procurement leads to floods of tears

Supply Management features the sad story of Northern Ireland Water:

"Four members of the Northern Ireland Water (NIW) board have been sacked for failures in procurement governance around contract awards – and there may be more dismissals to come, a minister has warned.

NIW chairman Chris Mellor and three other non-executive directors – John Ballard, Ruth Thompson and Declan Gormley – have been dismissed following a “serious breakdown in the governance and control framework” of contract approvals."

But in the spirit of investigative blogging, I have got even more fascinating detail than the SM article suggested.  If you plough through the detailed report here, the contract, let as a single tender,  that triggered the whole thing is itself a contract for procurement consultancy!  And not just that - it appears to be a 'share of savings' consulting contract where the supplier (unnamed) is claiming £ million plus as their share.  From the report;

"The investigation into Contractor A, a consultancy specialising in procurement, had
concluded that that organisation had been engaged through a STA with a spend to date of
£660,000, a further £50,000 in the pipeline and a settlement on the six per cent incentive
bonus relating to ‘identified savings’ yet to be reached (detailed in Schedule 7 to the
contract master agreement and relating to the termination of the Customer Billing/Contact
contract). We understand that in December 2009 NIW received a further invoice for
£888,000 based on Contractor A’s calculation of the savings and interest to date on the
claims identified, which remain outstanding. We were told by NIW that the position is
under consideration.

A 'share of savings' invoice for £888,000 "under consideration"! I bet it's under consideration....and how much further liability might NIW be carrying for this contract?

So we have a failure of procurement governance in the engagement of a procurement consultant whose assignment was to look at other procurement spend.   Irony on irony....

I've always had real concerns over contingency fee based consulting assignment except in some very specific and clearly defined areas.  The "we'll take a share of whatever procurement savings we can find"  contracts in my experience almost always end in tears. I've twice gone into organisations to help clear up the mess left behind after such assignments, and in both cases the client ended up paying most of the contingent fees after painful legal disputes. Be very careful....

Finally, anyone know who the procurement consultant is in this case?  Anonymous comments welcome!

Voices (2)

  1. David Smith:

    ….as Pete Seeger once wrote (and sang) “When will they ever learn, when will they ever learn!”

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