Chris Stern, Managing Director at Stern Consultancy argues the dominance of red tape in the procurement process is causing mass frustration.
Solutions are now needed for an essential division in many companies.
We live in a world where there seems to be a need to justify any corporate decision that is made (especially in the public sector) and where it is critical not only to be fair but to be seen to be fair.
This all makes perfect sense and there are not many who would argue with it. To address this, procurement professionals have developed processes to ensure thoroughness and transparency, culminating in the European standard “OJEU” process, to which most public bodies subscribe.
These doubtless work well when a cost-based product or service is being procured. However, with catering contracts, the process often struggles to cope with the concept of revenue and the probability that services will change and develop over the contract period. It also seems to struggle with the complexity of our industry, where, like it or not, there is an element of subjectivity when measuring quality and where there are numerous moving parts. At its most extreme we have seen clients refusing to go on what we would regard are essential reference visits because they are “too subjective”.
There’s also a “light touch” version of the formal OJEU process for small sites. However, experience so far has been that procurement professionals are wary of it and tend to revert to “best practice” following the full OJEU nightmare just to cover themselves.
The result of this is often self-defeating, with potential bidders being put off going through the pain of responding to what often at first glance appear to be huge and unintelligible documents with lists of requirements before getting anywhere near the reality of how they might operate the services. Even the big, supposedly well-resourced contractors are hesitating and considering whether it is worth the time and effort.
On the receiving end of bids prepared via a lengthy and complex process, we often find that innovation and flair struggles to shine through and that we spend an inordinate amount of time looking at areas which are frankly not germane to an operator’s ability to run a great foodservice operation. We’re also having to take longer running a process thereby costing clients more in fees.
The problem is that the industry seems to have grown so fast that there is often a lack of understanding of how best to procure catering services.
I’m obviously not the first person to identify the challenges associated with the rules and regulations that are in place. There are several organisations who have put together “framework” agreements which supposedly streamline the process by having already addressed a lot of the boring administration needed to qualify bidders. Yet again though, these very often appear just to cause more, not less red tape in the eyes of potential bidders, so some don’t bother getting on the approved lists (in fact, it’s a bit of a mystery as to how they are supposed to know about all the frameworks that are in place). This can mean that clients seeking to tender their catering align themselves to a process with a list of contractors who at worst may be inappropriate for their very specific needs or at the very least may not include the very best players in the market. The basis on which they are listed is likely to be less about being able to provide great catering at a competitive cost and more about how strong their insurance policies are and whether they have correctly filed accounts. On one website, the following claim is made: “Suppliers listed on the framework were assessed during the procurement process for their financial stability, track record, experience and technical & professional ability, before being awarded a place on the framework”. Quite how they can all be qualified for any catering contract using this framework is questionable to say the least. This is indicative of the lack of understanding of our sector we are seeing.
So, what to do?
The answer is in the hands of the ever-expanding procurement industry. All this red tape has meant that procurement professionals have become an essential division of any reasonably sized organisation. The problem is that the industry seems to have grown so fast that there is often a lack of understanding of how best to procure catering services. They suffer from the same challenge we identified in the OJEU process in that catering is probably the only product/service they have to procure that operates as a living business and where sometimes higher costs can result in better value. This is anathema to anyone who has only ever procured cost-based products and services.
The Chartered Institute of Purchasing and Supply (CIPS) could, and in my opinion should, seek to develop a separate, specific process for procuring catering that is custom-built to get the best results for this very specific service. Inevitably there will have to be some red tape (and contractors have to take some of the blame for this, when they seek to challenge decisions made after a process, maybe looking for faults in it so forcing clients to be wary), but surely, it’s possible to develop a streamlined procurement vehicle that won’t scare off the smaller, more interesting suppliers.
CIPS could engage with consultants and contractors, who would probably be happy to help if we can arrive at a relevant, fair, but less onerous process that can then be communicated to their members as “best practice”.