Why Procurement Matters

Procurement is often a company’s biggest cost item, accounting for as much as 80% of total costs in some industries. Companies seeking savings often look to procurement, but they may find that their procurement organizations are not optimized to make the most of the opportunities. In this video, Bain partners Klaus Neuhaus, Tobias Umbeck and Alexander Schmitz and manager Rainer Gerhard discuss the value of efficient procurement organizations, how companies can reach full potential Bain and how they can make the savings stick year after year.

Procurement in a country at war

Pechersk School International Kyiv – An IB World School since 2000.

Welsh National Procurement Award Winners 2014: Amber Services and Cartrefi Cymunedol Gwynedd

Last year marked the second of our Welsh National Procurement Awards, which recognise the very best of Procurement in Wales. At the 2014 Awards, Amber Services scooped the Green Public Procurement Award and Cartrefi Cymunedol Gwynedd took home the Award for Outstanding Contribution.

This year there are 10 Awards available but you only have until Friday 6 February to submit your nomination:
http://www.welshprocurementawards.org.uk/submission.html

Thoughts on Procurement Fraud and how to combat it. Whistleblowers role.

Government Procurement Fraud Lawyer lawyer Kate Scanlan explains how Whistleblowers can help recover government funds lost to fraud — and be rewarded for helping.

Resource http://www.reportgovfraudnow.com/

SAN FRANCISCO, CA January 15, 2015 / In a new Google Hangout, Government Procurement Fraud whistleblower lawyer Kate Scanlan explains how insiders can help recover government funds lost to fraud-and be rewarded for helping.

Government Procurement Fraud lawyer Kate Scanlan says, “It may not be a law of physics, but time after time the words ring true: Where there is funding, there is likely to be fraud. Case in point: government procurement programs. The United States is the largest purchaser in the world, buying everything from pencils to aircraft carriers. Most contracts it enters into are carried out with diligence and honesty, but with so many billions of dollars involved every year, there are bound to be unscrupulous contractors who defraud the government – and taxpayers. The good news is that there is a remarkably effective weapon that helps identify and beat back procurement fraud: whistleblowers.”

In a new Google Hangout from the law firm Keller Grover, Government Procurement Fraud attorney Kate Scanlan explains the various ways procurement fraud is carried out, and how the law empowers – and rewards – those who help stamp out these improper practices.

The video discusses the myriad ways contractors don’t keep their end of the deal with the government. For example, a procurement contract may be corrupted by bribes or kickbacks. Or there may be bid rigging – where competitors collude to split government business among themselves at prices they agree to. Or businesses may claim to be minority or veteran-owned in order to qualify for procurement programs intended to promote certain types of businesses.

“There are a lot of ways procurement fraud takes place, but they all share one thing in common,” says Scanlan. “They are based in deceit. Government contractors may not be who they say they are. They may not deliver what they promised. They may not deliver it at a fair price. Bid rigging, for example, deprives the government of fair competition, so it will end up paying more than it should. These are actions that hurt every taxpayer.”
Other forms of procurement fraud, says Scanlan, include a failure to follow specifications, the delivery of substandard products or services, and overcharging for material or labor costs.
In the Google Hangout, Scanlan discusses the crucial role whistleblowers play in beating back these frauds. Whistleblowers are individuals – often employees of the contractor – who know of, or suspect, improper behavior, and can shed light on the details. “Whistleblowers are our eyes and ears on fraud, alerting us to wrongdoing and helping to stamp it out,” says Scanlan. “Not surprisingly, the law has made important provisions to encourage and support them.”

As Scanlan notes in the video, the gold standard of whistleblower laws, the federal False Claims Act, provides a mechanism through which whistleblowers can file lawsuits claiming fraudulent activity against the government – and receive a share of any recovery the government ultimately obtains. That share, Scanlan notes, can be up to 30 percent. The False Claims Act also prohibits retaliatory action against whistleblowers, such as termination and demotion for speaking out about known or suspected fraud.
“With its incentives and protections, the False Claims Act has been extraordinarily effective in spurring whistleblowers to sound the alarm on fraud,” says Scanlan, whose firm has offices in Los Angeles and the San Francisco Bay Area. “The procedures can be complicated for the layman, but with knowledgeable legal counsel, whistleblowers can navigate the judicial waters with confidence — and with results. They can help bring down these frauds and steer government funds back to the purposes and programs for which they were intended.”

About Kate Scanlan Government Procurement Fraud lawyer:
Based in California whose firm has offices in Los Angeles and the San Francisco Bay Area, Kate is a seasoned litigator with more than a dozen years’ experience in complex litigation in both California state courts and federal courts around the country.

To learn more, report Government Procurement Fraud & speak with a Government Procurement Fraud lawyer call 866.486.1537.

Hey, you’re no amateur, right?

The professional buyer is alert to developing ideas, solutions, identifying opportunities to deliver enhanced benefits to their business and maintain vigilance on supply market risks.

The amateur buyer is locked in their little world, drunk with misplaced power and driven to shut out anything with which they are unfamiliar or which threatens the status quo.

How do they do it?

They use well tested techniques, destined to convince the supply market to bypass the buyer, thereby undermining, in the longer term, the buyer’s position.

As we engage with the bidder-side (suppliers, contractors, outsourcers, IT specialists, professional services) of all flavours and hues, we have sought to collate the kind of responses procurement people have provided to their overtures.

Here are some statements from the past few months:

1. “Send me an e-mail.”
2. “Put something in writing.”
3. “We only meet existing suppliers.”
4. “We aren’t interested in new things.”
5. “Talk to me again in six months’ time.”
6. “I am very busy right now.”
7. “Who else have you talked to?”
8. “We tried something like that a few years ago and it didn’t work then.”
9. “Why are you bothering me?”
10. “You are wasting your time?”
11. “I am saying no. Do not contact anyone else in our business.”
12. “I make the decisions and I don’t want to know.”
13. “I don’t want it, even if it’s for free.”
14. “We will make a note.”

All this is in sharp contrast to a central London, Head of Procurement, who advised us that she reserved ½ a day a week to personally meet potential suppliers who claimed they had a new product or business solution. She said that the investment of time paid huge dividends and kept her finger on the pulse.

This foresight and professional attitude is refreshing.

Can you hear the negatives already?

“I haven’t got the time.” “She is very lucky and can’t be busy.”

An open mind is a distinct asset in procurement – it is a significant personal and business quality in achieving your objectives and key results.

Asking the following three questions- would be helpful when engaging (by ‘phone, networking events, initial meetings) with potential suppliers, vendors contractors and partners (let’s call them “bidders”).

No doubt you’re aspiring to work in a fast-paced, dynamic environment to establish and develop trading relationships.

And your focus is on your objectives and key results.

Your “OKRs” (as the kids say it) ensures discipline thinking (the major goals will surface), you communicate accurately (lets everyone know what is important), establishes indicators for measuring progress (shows how far along you are) and focuses effort (keeps your firm in step with each other).

So how does this fit with engaging with bidders – and NOT being an amateur buyer?

You want to gather information – fast – and you want to analyse whether to take the discussions to another level.

So how do you ask the right questions to filter out those bidders who really ‘get’ what you want and will be ‘right’ for you and your OKRs?

Remember this isn’t the time for a PQQ type of interrogation; you want them to open up to you – let’s get the basic (and understandably necessary) information later. You want to find out what doing business with them will really be like. So leave the Quality, Finance, Sustainability, etc pop-quiz for later.

Here’s three questions that get the bidders you engage and meet with talking about themselves – and give you a better chance of taking discussions to the next level.

Question 1: Why did you think I was the right kind of buyer to approach?

I’m not saying you jump right in and say this, don’t be off -putting but let’s’ remember there’s a lot of buyers out there. You want to be approached – but not sold to, surely? Apparently some (many?) bidders will approach everyone they can! But they may give little thought as to why they are doing it. That can only be good news for amateur buyers 🙂

Do you want to be just another standard buyer? Or part of a market sector that an bidder is focusing on. Your time is valuable!

You want to be opening a dialogue with bidder that has market knowledge of your sector or shared objectives. Or where you fit a buyer profile that the bidder is actively looking for. There’s a better chance of establishing a better and more professional relationship that way. One where the bidder will want to continue to develop a partnership with you.

Let’s have a look at question 2:

Question 2: What do you think makes you different?

Please tell me, you’re going to walk away (or at least gently exit the telephone conversation) if they respond by saying “price, service and quality”?

Okay, maybe not; these facets are important, but how do you get that 1 to 10% of bidders that have thought about the innovative, unique (?) and genuinely useful propositions for your business? Here’s their chance to tell you what is different about them that aligns with your own issues and aspirations – and OKRs.

Now, a positive answer to this question really can deliver on all that good marketing and vibe we’ve been hearing about from applying yourself to engaging with bidders.

Last but not least, the third question. You are kind of narrowing your eyes at this stage. You’re (quietly) impressed with the responses to questions 1 and 2, and here is to the topper that, fingers crossed, means you’ve found a bidder that is in that top 1-10% that can materially be of help to you and your organisation achieve your OKRs:

Question 3: What added value can you bring to my organisation?

The ideal bidder will love the opportunity to answer this question. A bidder that’s let’s say sub-optimal or a run of the mill salesman-type will no doubt focus on cheap prices. Maybe that’s what you want, I don’t know, I’m just thinking there is more on offer to achieve your OKRs. Your ideal bidders’ added value emanates from their knowledge and skills in their total offering. Their value isn’t just their track record; although a relevant case study/example would be welcome. Their added value includes the qualities of perseverance, vision, commitment and flexibility (backed up by real-life evidence). Their knowledge, skills and behaviours matched with an openness to share their expertise with you, will, we believe, be a valuable asset of the ideal bidder.

Hey, you’re no amateur! Right?

Three good questions to start you off, though a checklist of other pertinent question are needed as follow ups.

Stephen Ashcroft BEng MSc MCIPS is a procurement risk consultant at Brian Farrington.

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Year 2015 Procurement Resolution

Procurement professionals and novices celebrate constant growth and development of procurement as science. Thanks to procurement networks, associations and dedicated groups procurement becomes hot topic in discussions, business plans, cost-reduction strategies and policy development.

Should we rest assured procurement profession will continue its glorious journey in 2015? Yes, if we have our 2015 Procurement Resolution ready.

Small in size but great in its vitality my 2015 Procurement Resolution looks as follows:

– Promote procurement as science and leading role of procurement in organizations,

– Be a champion in applying newest and most effective e-procurement applications in your work,

– Constantly update your policies to reflect market trends and corporate/institutional realities,

– Become an “exclusive” buyer for your vendors. Target discounts never reached before,

– Actively engage in procurement networks, contribute and share,

– Be a lifetime procurement scholar, our profession changes every day and there is always a room for improvement,

– Plan, plan, plan.

Influence that procurement has on progress of any company or organization is widely recognized. Both corporate world and development partners realize that unique procurement skills and expertise possessed by procurement teams can be converted into major savings and greater impact overnight. Thus, investing in procurement is investing in hard currency that can be used anytime, anywhere.

What are your procurement goals for 2015?

Nick Vergana

Procurement Manager

If you fail to plan, you plan to fail

To understand the vitality of procurement planning, let’s list only a few potential consequences of poor planning. 

– No bidders (zero bids) as a result of the tender

– Late delivery

– Higher prices

– Poor quality products, works or service

Each of these points is critical to your organization. 

No bidders. If due to poor planning you left the shortest possible time for responders to submit bids, you will most likely have no bids. If your tender is international you can bet on receiving zero bids. This means losing even more time for re-tendering and facing the following consequences.

Late delivery. If your planning is bad, your delivery time in the contract will certainly reflect it. Working on bid submission many bidders do not realize that expected delivery time is unrealistic, i.e. too short. The bidders are so busy to submit bids, so they work mostly on confirming prices and negotiating discounts with their own suppliers, but not assessing the reasonableness of expected delivery time. Only when award notice is made or contract is signed suppliers knock your door and ask for time extension. 

Higher prices. When your supplier delivers late, it pays penalties. Thus, your project pays less than it should pay initially. One may ask, so what? Isn’t it good? 

Let’s look deeper. The penalties your supplier pays are peanuts in comparison to the losses your project is going to face. And those losses will include but will not limit to worse relationship with final recipients, emergency procurements of missing items (naturally paying higher prices), critique by donors, stakeholders, media coverage ruining your procurement reputation and your organization’s general image, etc..

Poor quality products, works or service. Major international organizations have to constantly report to regional offices, headquarters, donors, etc. They have to report on successful delivery, implemented projects, reached targets and these should be reported in due time. Very often this rush to report on success comes with sacrificed quality. But imagine if your organization planned some extra time to correct errors, complete additional works (construction rarely goes smoothly), exchange defective parts, improve emerged situations, etc. Proper planning would solve all these issues.

Procurement Network receives numerous messages about poor planning. Those messages tell about conflicts and bottlenecks resulted from planning chaos. Why manage the conflict, if you can avoid it?

The good news is Procurement Network is ready to help your organization with procurement planning too. Our massive database of planning cases, formats and formulas is an unprecedented knowledge pool, it will help you organize your procurement beautifully and smoothly.  You can contact us anytime. 

Simon Dewton

Procurement Trainer