A cautious partnership
I have recently awarded a high-value contract where the public sector establishment will have to find a way to develop a good relationship with a small private company to deliver the commissioned service successfully.
It was not easy to arrive at the solution, however budgetary constraints dictated the outcome and the private company’s offers was commercially more competitive and the small panel evaluating the tender responses was united in its outcome.
There were some issues with this deal, that, while particular to this case, have no doubt been observed by purchasers elsewhere.
Firstly, the private company said while it did not agree with the way the public partner worked they were looking forward to working with them and would be happy to find a workable solution. This was a promising start.
Secondly, the public sector organisation had a lot of misgivings about the commercial offer. They thought cheaper must mean poorer quality and were worried, without any evidence, that it was a high-risk approach and they would need to conduct in-depth due diligence to mitigate possible risks (despite the fact that this had been already conducted by the commissioner).
Thirdly, the public partner was unhappy that all aspects of the contract were not under their jurisdiction.
We agreed, however, to allow the experiment to go ahead and to review it on a quarterly basis.
Supply Management readers know very well the difference between the private and public sector concepts of commerce. While I do not believe we will be able to reconcile the fundamental differences between them any time soon, I do think we could work together more efficiently to respond to an increasingly well-informed customer.
It is not easy to build trust and a strong collaborative spirit between private and public organisations but procurement professionals now have a platform to facilitate a change in perceptions by designing a more economically advantageous business opportunity for private and public organisations to deliver a deal together.
There have been many attempts at public and private sector partnerships and there will be many more still to come. I recognise there is a tension between these two approaches and I hope to use my role as a procurement professional to get the best out of them both.
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I’m unclear on what the issue is here. The public sector organisation in this case made the choice (following a competitive, exhaustive and expensive tender process)…to go with the cheapest option.
The small business could probably do the job cheaply because they have lower overheads than a big business and maybe see a bigger opportunity further down the line.
Then…the customer (the public sector) has the chutzpah to be “worried” that cheaper must mean worse quality – AFTER APPOINTING THE SMALL BUSINESS.
You also highlight that very quickly the small, nimble, agile entrepreneurs were able to be flexible.
I certainly agree that the public sector view of how commerce actually works is too far removed from the private enterprise reality.
Hopefully, although its a bitter pill for many people to swallow, the large dose of economic reality being dished out by this Government will focus the mind of public sector decision makers and we’ll see a more sensible relationship between the public and private sector.
‘Small is beautiful’ applies to small private companies. On the other hand, sizeable companies tend to be trapped by ‘too many cooks spoil the broth’. The former can adjust to circumstances more easily than the latter because of less bureaucracy. It is worthwhile to develop small suppliers. It is because possible cartels or oligopolistic competition from ‘big’ suppliers will, in no way, blackmail procurement.
Peter- the issue I was trying to highlight was the one Felix understood very well,which is a culture tension when a contract was awarded in two lots, one to Public Company and another one to small private business and there was expectation that two would work together.