Fighting shy of public service tendering

David Cliff discusses the situation of fewer businesses willing to compete for public sector tenders.

Without doubt there is a clear public-private divide.

I deal with businesses up and down the country which frankly don’t wish to compete for public service tenders any more. They come out with the same arguments: the effort and timescales involved in the tendering processes against the likelihood of acquiring the business; distaste for a process that seems at best bureaucratic and is at worst perceived as corrupt; the growing belief that public sector contracts can no longer be run on a profitable basis at times when outsourcing is used as a cost cutting device by cash-strapped councils and the NHS.

It’s interesting to see that even bigger companies appear now to be fighting shy of many public service contracts, simply because the profitability element not only remains vilified by many, but is not particularly present in many of these pieces of business. When I look around certain public service operations and see over-manning, excessive and gratuitous levels of governance and the avoidance of simple, pragmatic things that most private organisations would implement in a flash, used to cut costs, increase quality and maximise efficiency, I cannot blame organisations from walking away from the table in this respect.

See also: How to apply for public sector tendering as a small business

So how is it that the front line workers in the public service are so hard pressed, have a cost of living crisis and find difficulty making ends meet? I recently saw the comparative wages of some NHS staff. A midwife bringing home £1,800 a month, a support worker £1,200. These are not Kings’ ransoms. The truth is, however, comparative wages are still lower in the private sector and, while I have no doubt that such sterling staff deserve more, their hardship is comparative to others.

A changing public sector

Contrast this, however, with the increasing career tracks that are available within public sector. Salaries have gone up, with chief officers, senior managers and others receiving remuneration that is higher than it’s ever been. Chief executives’ and chief officers’ salaries have gone up disproportionally over the last ten years. Although they don’t have the extremes of multiplicand factor, such as we have seen in the private sector (ie how many times more than the lowest-paid worker in the operation does the chief executive earn?), these are nonetheless significant enough to give rise to a group of chief officers now in public service, operating more like paid mercenaries. They thrive in an elitist environment that allows them to have all the benefits of being ‘intrapreneurs’ without having the risk of the entrepreneur.

Far less often now do we the long-serving chief officer within public service. With a spiralling level of salaries and opportunities, many are just ‘passing through’. This is often aided by government ‘stirring the pot’ with constant structural change that is ideologically driven as political arguments are ‘weaponised’ to gain votes.

Now in a corporate sense, this level of refreshment and change might be a good thing. After all, one doesn’t want to get into ossified organisations where the man or woman at the top stays there forever. But ten or 12 years, perhaps living on the patch, might be a reasonable incumbency and give some sense of connecting with the community before one hops off on the next career opportunity.

This begs the question of what we are dealing with in terms of public administration and whether it is simply a safe in-house career track for the ambitious who never have to operate in the howling winds of commercialism and have scant regard for ensuring processes that ensure the smaller business in their community actually has a hope to compete for public services.

What is the truth of it? When it comes to tendering, I find that organisations that espouse ‘buy local’ types of programmes indicate that commissioning is a resounding success, maintaining the money within local economic systems. Talk to local businesses and they will cite ‘usual suspects’ or outsourcing to national and other organisations that best represent the career ambitions of those at the top. The perceptual gulf is palpable.

The value of services

The fact is, a real debate lies around the social worth of commissioned services. In a time of austerity, cash-strapped organisations are going to seek to obtain the cheapest services they possibly can and will go anywhere to achieve these. The danger is, by working with organisations that are not necessarily incumbent in their local area, they prejudice the local economy, subject themselves to increased costs and most dangerously of all run the risk of providers that over promise and under deliver.

Most of all, there is the loss of those organisations that are small but have flair and innovation, which wouldn’t sully themselves with the process of competing in this obtuse market, even if they could afford to do so.

Between the ambitions of the career based elites that offer leadership and the wooden approaches of public service procurement, businesses who seek to tender into public service occupy a rarefied atmosphere. Equally many businesses that could truly contribute to an excellent mixed economy of public service confine themselves in the world of B2B or B2C as a fairer, more authentic, more survivable environment that has fewer gratuitous rules and, therefore, fewer tortuous games.

David Cliff is managing director of Gedanken and chairman of the Institute of Directors’ Northern Sector Group.

Further reading on winning customers

David Cliff

David Cliff

David Cliff is managing director of Gedanken and chairman of the Institute of Directors’ Northern Sector Group.

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Government contracts

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