Derby City Council reckons it saved £250,000 by putting its mobile phone bill up for auction, and now everyone else can get financial help to do the same thing. Derby's saving came at the end of a 52-minute auction, conducted electronically, with the eventual winner offering a price around 60 per cent of what the council had …
How does putting their mobile contract 'up for auction' differ from putting the contract out to tender?
Isn't this just a boastful way of reporting something that is just good business practice?
It's different because
the auction lasted 59 minutes, whereas a tendering process can drag on for months and even afterwards can wind up with the council being challenged in the courts by one of the losers.
Anyway, I'm not that impressed - is the cheapest really always the best? And if it's the law for councils to always choose the cheapest (which it seems to be), is it any wonder that we wind up complaining about shoddy council gear and services?
Its a "reverse auction"
OK in theory tis like a reverse auction. There is a tender thing etc, but in a reverse auction each "bidder" gets to see how much the other one has bid, if they have undercut you you can put in a lower bid (if you have the margin left to do so). who ever bids the lowest wins.
Obviously you need to level the playing filed re all the specs/sla's etc, so its a bit more exciting that straight "blind" tenders.
... wasn't there a car insurance site that ddi this
? You put your details in and insurers bid against each other ?
it allows for the old boy network to get stuffed. all that junk that account managers 'bring to the table' <<coff, sorry>> for the sweetening of the deal to the gatekeepers in accounting..
i remember working at the local PCT.. pipe cleaners of absolutely normal specification : £1.50..
because they had a preferred seller list from which they had to buy from.. and who had paid the toll to get on the list.. the exact same product costs £45.
it's rife. there needs to be more of this, see icon..
When I was working in the local council
Siemans had a terrifying hold on tech support. A couple of things I saw personall.
Floppy drive failed in a desktop and it was a cost of £40 for someone to come look at it, £80 replacement part (clearly gold plated) and then another £40 for the second visit to install it.
Power supply failed in a desktop. Again £40 for someone to come look at it. £200 pounds and a month wait for a new one then another £40 for teh technitian to come out again.
Most of the time people just did thier best without.
HELLO? Gah. Disconnected? What do you f**king mean no signal? BLOODY CHEAPSKATES!
Let's enjoy the power of O2 :D
The cheapest is ALWAYS the best!!!!
Great, so they are now on 3, have no signal whatsoever, have the same handsets for the term of the 30 year contract and have saved £250,000. Really?
Message to Local Gov: Best value doesn't mean cheapest, when you will you learn that????
It's not just local Gov
I've seen it plenty in Central Gov too, the cheapest pretty much invariably is NOT the best.
It's never about the best, it's about how much money is going to be left over.
More money left over means the management can award themselves big bonuses, then bugger off to another project/job while the original one collapses in the shitheap it always does.
Call me a cynic, but the cheapest offer always wins govt. business, it's never been any other way. How else do you explain the existence of Crapita, how do these companies continue to win business regardless of their history of failure?
The people making the decisions always have the fallback to say "look they said they could do the job for £x, how was I to know it would overrun for x months and cost £y?" it's that deniability they're looking for, they can't justify picking a more expensive quote (unless of course the quote is coming from a family member)
"Great, so they are now on 3, have no signal whatsoever"
Which would be a good point were it not for the fact that 3 have the largest 3G service area and roam across to Orange for 99.5% coverage on 2G as well.
If you'd written:
"Great, so they are now on o2 and the network's crashed again" I'm sure most people would agree.
I've procured IT for 5 years in local govt, the rules say best value not simply the cheapest.
Local Authorities have many, many, many ... many different types of contract tendering.
From simple one-off jobs through to service agreements lasting several years.
They also have procurement processes and well in short these can be improved upon (such as wording the questionnaire and assessment criteria to favour a preferred provider).
I'd hope that local authorities would tie-in to sites like MyBuilder.com to offer all contracts from the smallest to the largest.
"Best value doesn't mean cheapest,"
No, indeed it doesn't, but whether public or private, corporate sweeteners rarely get you best value either. For several years I worked in, and travelled extensively for, a company with a central "Corporate Travel Agent". You could always get cheaper accomodation and cheaper tickets than they'd get, despite the buying power of American excess, but going independent meant the corporate Purchasing Manager didn't get as big a kickback (from his management) at the end of the year for "saving the company money by centralising bookings".
Marvellous. I'll drink to that.
A lot of complainers here...
...seem to be bitching cos Derby saved £250,000 - surely we should be complaining when councils waste £250,000 rather than just assuming that the saving wasn't a good deal?
That kind of thinking leaves us with a government that spends money and spends and spends and any suggestion of money saving is all about cutting services...
I'm in local government, and have some input on evaluating tendered bids for contracts. We do not go for the cheapest, the scoring matrix is split 60/40 quality/price so as to avoid having to award contracts to a bidder "just" because they are cheapest.
Every little helps.... I suppose...
Most councils could save 30% on costs overnight by getting rid of the army of 'coordinators' and 'advisers' that cream so much off the top before frontline staff ever get a fraction of the resources they need to actually serve the public.
That said, I suppose anything that genuinely improves the so-called tendering process can't be bad. I worked in local government for several years, and the tendering/contract situation was a disgrace. Dodgy contracts that produced bottom-quality goods at top prices, despite the pretence at tendering - usually arranged over that most notorious handshake.
I've seen the most basic desktop computers supplied at £3k a shot - £5 staplers at £30 each (with employees bringing in their own pens rather than constantly argue for more than one a month). £40 to change a light bulb. Redecorating and refurbishing jobs costed out at a huge multiple of what you and I would ever dream of paying for the work. Even when it came to laying off staff, they'd sooner sack 20 cleaners or school auxiliaries than one highly-salaried administrator who wasn't even missed when they took a holiday. Staff so savagely reduced it was hard to see who was left for the over-abundant managers to actually manage. Genuine front line staff frustrated at the lack of the most basic resources to do the job they trustingly thought they'd been hired to do. One employee wrote in her resignation, "I have never before worked for an organisation where the words 'Tell me what to do and I'll do it' were regarded as insubordination!"
And don't even get me started on senior officers' perks and expenses...
That was some years ago, admittedly, but I see no evidence anything is changing. The very people that should be pruned out are the ones being allowed to make the decisions - why on earth would the turkeys ever vote for Xmas? Out of every £1 we pay in council tax, at least 50p goes in sheer waste - which is why I get so angry when surveys ask me whether I support lower taxes or reduced services - I know for a fact it's possible to have both, once we get rid of the deadwood at the top.
I'm not holding my breath...
@AC: The cheapest is ALWAYS the best!!!!
Its a City Council so urban coverage only - no need to worry about a lack of rural coverage
The important difference will be in the spec, the time frame and the fact that everyone will know what everyone else is offering. With a tender process it will get bogged down with "extras" often intangible or inconsequential but still needing to be quantified - and it is unlikely that figures will be shared as any tender document I have seen is marked business confidential so if the council spills the data then they are asking to get sued.
Then you add in all the other stuff that can be filed under the headings of schmoozing, bullshitting and back-handing then a tender process has no better likelihood of generating the "best" deal but far more likely to cost far more.
As long as you specify the criteria fully then there is no reason a good Dutch Auction couldn't work pretty well.
As with most things - some companies will take a loss on the initial profit to make it back at a later date though inflating the cost of other items that would have previously been free of charge, or at a reasonable fee.
As with most things - its not how much you pay for the service - its how much you pay the lawyers to get the contract right up front - something local (and to a greater extent central) government is well known for getting right*
*of course I jest!
Addendum to Appropriate? 21:16 GMT
Dash! I re-tread my post and it seems to imply that Local Authorities should improve by rigging questions and assessment criteria to favour preferred providers - Uh-huh baby.
That is what happens now and it should be done away with proper and properly be done away with.
MyBuilder.com also provides service user to provide feedback and that is a critical oversight in local authority procurement processes. And, to be fair, is one reason why many organisations chase such contracts (they know whatever they do afterwards is totally acceptable so for a three year contract do great in the first six months, perform outstandingly in the final six months and do abysmally in the middle koz that is where you will make your profits muni).
Plus: If anything goes terribly wrong make sure that there is an election in the middle of the contract span.
You can't believe the improvement in my broadband speed of late.
It just so happens that the original contract is about its 12 month deadline (after some terrible connection problems)
I wonder if the two are related?
My answer: of course they are related (shame it will not influence the changes intended though).
BT.com this means you :-)
Because, as everyone knows, you have to manage your side of the contract yet at the same time make the service user feel suitably charmed at key decision points yes?
This process put the onous on the internal reqiremetns capture process. As long as all the buyers requirements are captured, fully scoped and understood, then the auction process is fine.
And in answer to the second post [@Dennis O'Neill] the 'aution' may only have lasted an hour, but the council will have, should have, spent the weeks in advance doing their prep' work.
The Local Authority problem tends to be lock-in to existing suppliers combined with lazy purchasing officers. They should refuse any contract that demands exclusive supply rights.
I ensure that any purchase over £50 comes across my desk in the form of a purchase order. A quick web search soon ensures that the proposed purchase has a good price. Good suppliers soon get to realise and offer realistic prices. If we turn down an offer we always give the supplier the reason. Any failure to deliver, without a damn good reason, is punished by temporary blacklisting. For sure it generates a small admin load, but the healthy financial practices save an awful lot more.
If the supplier insists on an annual roll over contract renewal we will do business with them, but automatically issue an advance notice of cancellation well before the notice period, typically in the first month of the contract period.
And this is news why?
Reverse auctions have been around for years, normally accompanied by a formal tender process for the service side. Normally not all those asked to tender will be invited to the auction - only those who fit the service criteria will be. For companies/local authorities that have a huge call spend, then its a pretty sensible way to do it.
If this council is saving a cool £250k, how high is their mobile phone bill?
re And this is news why?
Precisely! - the question that should be asked is "If they can SAVE £250K, WTF have they been doing up to now?".
Everyone could show large savings if they'd sat on retail rates for a decade.
You pay peanuts, you get monkeys
The problem with this is that, while they may have picked the *cheapest*, there's no guarantee that it represents the *best value*. If they make a mess that ends up costing a quarter of a meg to deal with, then it's *not* a saving.
Also, the whole competitive tendering process is fundamentally broken; because it encourages players to offer unrealistically-low bids, which they know full well they can't deliver on. And when this is public services we're talking about, ordinary people suffer.
There is, however, a simple fix which works nearly every time, in my experience: Pick not the cheapest, but the cheapest-but-one. That way, anyone who bids far too low in a deliberate attempt to game the system runs a real risk of not getting the contract.