Is centralised Government procurement killing Scottish Marketing Agencies?

There's a lot of self congratulation around the devolved administrations - Wales and Scotland – in terms of the way they've managed to take a more centralised approach to procurement. Some of it is well justified and indeed the Government Procurement Service in England, with their collaborative procurement strategy, are taking their cue from those countries to some extent.

But there is a downside of large centralised contracts, which are often multi-supplier frameworks because of the need to offer a range of alternatives to their multiple users. This article in Glasgow based marketing and media website, The Drum, throws a bucket of cold water over the Scottish public sector approach to buying media and marketing services.

The first complaint is that many - or even most - of the 60 suppliers on the central Scottish government framework just aren't getting any business.  “The reality is there simply isn’t enough work for even a tenth of the companies on these rosters”, says Giles Moffatt who “used to work in Scottish agencies, but left because of Procurement”.

And things are getting worse, he claims.

“In 2009 the Scottish Government appointed a roster of five highly capable direct marketing agencies. In five years, only two briefs have been issued, with average fees barely into double figures. Now they have widened it even further, with specific rosters for subsets of marketing subsets like mobile marketing, SEO, segmentation”.

And secondly, the process for choosing which firm on the framework to use for specific work  - the mini-competitions as they're known in the jargon - is often out of all proportion to the eventual  value of the contract.

“One of the worst examples was a mini-competition for a design project with a value of two thousand pounds. All ten agencies were invited to pitch. No budget was disclosed. Three pitched. All of them quoted well above the budget available, and the project was scrapped. A waste of time for all involved.

The Scottish Government – itself so keen on showing ROI for its activities - would do well to consider the economic cost of its procurement practices. Common sense calculation shows that for every £30k-£40k of fee income, the mini competitions cost our industry £216,000 – in other words, six times the value of the work”.

And the end result? (Although I must say this looks more like a result of a general decline in public sector spend than the specific procurement process):

“Nielsen’s Agency survey in 2007, featured 10 Scottish agencies in the top 100. What you might expect given our share of population.  Now, there are only two”.

Food for procurement thought, at the very least. Anyone like to put the other side of the argument?

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First Voice

  1. Dan2:

    Despite the millions of pounds saved by Government in cutting marketing spend, I confidently predict the market picking up in 2014 if not sooner… in line with any approaching election.

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