Exclusive! Major UK government supplier is “pulling out of tenders”

A bit of a teaser today...we'll try and get more solid information, but this is where I wish I had the resources of a real media outlet to follow things up quickly and fully!

Anyway, it’s worried me for a while that the rather blunt approach the UK government ’s Cabinet Office is taking to their largest suppliers* might have some unintended consequences.

It’s a difficult issue – there’s no doubt that some major suppliers haven’t done a great job or provided best value over the years, so the approach pioneered by the Minister, Francis Maude, of beating then around the head to generate “savings” has some merit. I’m not arguing 100% against that approach certainly.

But, as we said back in April,

If we look at areas as varied as social and health care, offender management, innovative medical equipment, forensic services, even more traditional areas like IT and construction, what we arguably need is innovation from suppliers, and the private sector helping the state to do things differently to make step changes in outcomes and value. That won’t just come from beating large suppliers around the head to extract a few percentage points of margin. I’m absolutely sure that most large suppliers don’t see the UK government and public sector as a preferred customer right now; there are few immediate visible consequences of that, but in the medium term, we could all lose out”.

So, we heard unofficially last week (not from within government, I should say) that a  large and strategically important government supplier in the IT / telecomms field has pulled out of a number of government tenders recently and is strategically reviewing its involvement with UK government contracts.

The more aggressive commercial approach and margin reductions demanded have made them look at other customer opportunities – globally, and mainly private sector, interestingly – where customers are prepared to pay premium prices in return for innovation and service. Unlike the UK government.

Now some may say good riddance to any supplier who doesn’t like the legendary Cabinet Office “haircuts”,  but this isn’t a market where there are dozens of suppliers. And we also heard that their withdrawal is causing some consternation in the Departments involved.

We’re trying to get more official word on this, then we can tell you more, so watch this space.

 *   We also  understand that one of the Crown Commercial Representatives appointed in May, David Jephson, who was covering IBM amongst others, has stood down already. Funny the Cabinet Office didn’t tell us... 

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Voices (8)

  1. Tim:

    I believe Jeremy Heywood has been involved in the latest escalation. A major supplier is refusing to deal with CO.

  2. Bill Atthetill:

    Cabinet Office (and its latest off-spring, the new Crown Commercial Service) is suffering from a range of disorders, currently, ranging from myopia to schizophrenia.

    Its myopia is increasing through a microscopic focus on short-term savings. These, of course, can’t be measured – they’re forever lost in the small print of their ‘NAO approved’ savings methodology. CO/CCS continue to claim savings in areas where core Departments strain their eyes in looking for the same savings on their own bottom lines…).

    The schizophrenia is magnified by the article in the latest Private Eye which exposed that the largest suppliers to Central Gov were invited to an ‘private’ meeting with CO to explore the expansion of ‘outsourcing opportunities’. G4S and Serco also attended the meeting, but CO would only admit this under duress (aka: a succession of FOI requests from Private Eye…). I wonder if they were asked for more savings when they attended… .

    When is Jeremy Heywood going to wake up and see what everyone else can see – that it’s not working, it doesn;t stack up (or even add up) and the fragility of the new CO/CCS operating model is starting to show through ever-widening cracks.

    The new CCS could have been the ‘springboard’ to a spectacular success. But whenever you take a deep dive on their savings figures (actual or projected), it’s heading for a spectacular flop. But, hey, it made a big splash in news headlines, at least for a while…

    1. Secret Squirrel:

      It will make headlines for a lot longer than a while. The inevitable PAC and PASC hearings will be rather painful, I suspect….

  3. Tim:

    I heard last week that another IT supplier is threatening to pull out of UK govenrment. They are fed up with dealing with the Cabinet Office

  4. Sarah:

    Any more news on this one ?

  5. Innovation Dojo:

    Sounds like the Government needs an Innovation Portal to help solicit these new ideas. Funnily enough, that’s why we created one! Next step is to educate procurement teams to use eSourcing less as a big hammer and to embrace approaches like the Innovation Portal to conduct more ‘Request for Idea’ type activities, which are not just initiated by buyers, but can be initiated by suppliers as well.

    1. PlanBee:

      Alert! Alert!

      Advert masquerading as a whimsical post. Peter may I suggest that said poster is sin binned for a week for such outlandish self promotion

      1. Innovation Dojo:

        🙂 Well, if we don’t promote ourselves, no one else will!

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