Peter Marshall of Commerce Decisions – Do We Understand Our Tendering Processes? (Part 1)

The recent eWorld conference and exhibition saw a session led by Peter Marshall, Professional Services Director of Commerce Decisions, who provide very clever software that assists in the most complex tendering and evaluation exercises.

Marshall made some quite controversial comments about procurement practices, and I spoke to him afterwards about his views on why he believes many procurement practitioners and processes are not achieving good value for money - and this applies to both public and private sectors. He shares with me a deep interest in the technical and mathematical side of tender evaluation processes – we will come onto that in part 2 of our interview, but our first topic was more general, as Marshall kicked things off.

“Too often, I don't think we are doing the right things within sourcing processes to get the best value for money. Basically, many procurement people have a poor understanding of how evaluation processes and techniques affect decisions and outcomes”.

I asked him to expand on that.

“Well, we still don't have the right conversations with suppliers upfront to help determine the best questions we should be asking in the ITT or equivalent. There still seems to be a real fear about engaging with industry”.

But in the public sector, the Minister, Francis Maude, has been encouraging procurement people to do that for years. Why is it not happening?

“I believe many major public procurements are effectively run by legal people who perceive too much supplier engagement as increasing the risk of challenge. And the big risks for them are legal challenge or missing timescales - but the risk of buying the wrong thing or choosing the wrong supplier is ignored. Requirements are over specified, and there is little flexibility for industry to contribute their ideas as specifications are already set in stone”.

So just expand on this risk question – surely risk of challenge is a genuine and significant risk?

“But we have what we call an asymmetry of risk. The people driving the procurement own the risk of challenge and timing failure. But it is the end users, who are not so involved in the process, who ultimately own the risk of buying the wrong things or getting the wrong suppliers. So the people running the procurement and the ultimate users care about different issues - which is not good. So we end up buying the wrong things, over-specification and so on”.

Can you give an example of the sort of problems you've seen?

“Let's say an organisation wants to buy an IT system that initially will have 100 users - but maybe one day there might be 1000 users. There are two ways of approaching this in the evaluation. You can ask suppliers if their system already handles 1000 users and if they have examples of this. Or you can ask whether they can currently handle 100 and could scale the system to 1000. Do they have a robust development plans and so on”.

“Now they are quite different question. The first will be biased inevitably against SMEs (smaller companies), and may well end up with a poor VFM solution. So often we don't think hard enough about what we really require and the right questions to ask. And much of this relates back to talking to industry upfront to make sure we buy things in ways that don't lock out competition. At the moment, too often we are running processes and evaluating tenders in ways that mean we pay too much”.

In part two of our conversation we will look at a fascinating example of how our choice of evaluation methodology can lead to “interesting” conclusions.

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  1. Theo Anjorin:

    Interesting and informative article. I look forward to receiving part 2 of the interview.

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