Now Achilles get sucked into the Serco supplier row…

Now Achilles have been sucked into the row about how Serco are treating their suppliers.  The Telegraph reports:

Serco is shifting 4,500 of its smaller suppliers on to a new procurement system that has seen some pay £500 to be able to get contracts for the support services group. The suppliers have until November 19 to sign up to the system, run by supplier management company Achilles, with 700 already doing so and at least 15pc expected by Serco to pay fees.

Further on in the article, a supplier, who has apparently paid the fee says: “I have never, ever, come across something like this before. The Government has not asked Serco to pay to be a supplier so why have I got to pay?”

Well, let's demolish that comment anyway. That supplier may not have come across anything like this before but Achilles has been going with this business model for 20 years, and have assessed  over 55,000 suppliers in 22 countries (according to their website), providing supplier information, verification and assessment to buyers.  It is a well established business model, and Achilles' considerable success around the world suggests they are doing something valuable for their customers; and I know Achilles would argue they have in some cases helped to improve supplier standards across entire industries.

The fact that Serco work for the Government seems to me a total irrelevance in this debate - pretty much every large company works for 'Government' in some manner.  So would this be a story if it hadn't been for the previous furore?  I don't think so.

And while the supplier says "the Government has not asked Serco to pay", actually the cost of bidding for Government contracts is considerable, and it is likely that Serco has gone through accreditation (ISO 9002 for example) itself in order to bid better for contracts.

It's also interesting to note that charging suppliers or insisting on a specific accreditation that has an associated cost before they can bid for contracts is not allowed in the public sector (although I suspect it does still happen in places); this OGC Procurement Policy Note makes that clear.

"So authorities should not make paid registration with a third party a condition for bidding for contracts".

But for private sector firms who want to understand their existing or potential supply base and ensure minimum standards are in place, Achilles (and other firms like them) provide a useful service.  I do think that there should be a cut-off level; if I'm doing £2000 a year with a customer, and / or providing  goods or services that really are low risk and tactical, asking me to pay £500 seems out of line and basically a waste of everyone's time.   But the article says that Serco are only asking higher risk suppliers to pay for the Achilles registration, which seems fair; some may still be smaller firms but one would assume they are doing a reasonable amount of business.

So.. at the moment, this feels like an opportunistic non-story.  But it is another warning that successful suppliers to the public sector are going to have to tread very carefully over the next few years in terms of their behaviour or perceived behaviour.  They will be in the spotlight as public spending gets tighter, and those who suffer from public spending cuts (both less successful firms and private individuals) get angrier.

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