Tuesday, 28 August 2012

Is it worthwhile Selling Bidders challenging Public Sector Buyers? - Virgin Trains duel for the West Coast line

Update to oiginal post
The Department for Transport have dropped their plans to strip Virgin Trains of its right to run the main London to Glasgow rail route.
Reported by the Daily Mail’s Ray Massy and Hanah Roberts October 3rd 2012
 Transport Secretary Patrick McLoughlin
“I have had to cancel the competition for the running of the West Coast franchise because of deeply regrettable and completely unacceptable mistakes made by my department in the way it managed the process.”
“A detailed examination by my officials into what happened has revealed these flaws and means it is no longer possible to award a new franchise on the basis of the competition that was held.”
“I have ordered two independent reviews to look urgently and thoroughly into the matter so that we know what exactly happened and how we can make sure our rail franchise programme is fit for purpose.”
The news coverage and tributes over the weekend to Neil Armstrong - the first man to walk on the moon -has reminded me just how brave the pioneering astronauts were.

They also were extremely savvy about the world of Procurement in the Public sector for example :-

"As I hurtled through space, one thought kept crossing my mind: Every part of this capsule was supplied by the lowest bidder.

John Glenn, first American in Space

The new trains promised by winning bidder First West Coast Ltd will travel at somewhat more modest speeds but the company has promised:-

  • 11 new 125 mph six-car electric trains on the Birmingham-to-Glasgow route and provide more direct services between destinations.
  • Additional Pendolino tilting trains  and they promise will deliver more than 28,000 seats a day.
This winning bid has been challenged.

Is it worth challenging the Buyer when it’s the Public Sector ? 
 Perhaps we can learn from competitive athletes.

 Such challenges are high risk of course.

In the recent London 2012 Olympics, the South Korean fencer Shin A Lam staged a sit-in for more than an hour in protest after her semi-final match in the individual epee.

Lam had appeared to defeat her opponent, only for the clock to be controversially reset by the referee who ruled their was one second remaining.
A sketch of the dissapointed fencer

In that second Britta Heidemann scored the fateful point that took her to the final.

Lam was offered a medal for sportsmanship in consolation, which she rejected.

Can such a clock be re-set in a competitive  business bid situation?

We have all been there.

You put together a bid involving a massive amount of time and talent for a competitive bid and then get the disappointing news that we have lost.

What is our next step?

 Some will accept the news and move on .

 Others will ask the question “ Is it all over?  Can we challenge the decision? “

 Come what may following  the disappointing news of our failed bid, we may undertake a process of lost business analysis . Possibly ask what else could we have done?

Today 28th August 2012 the contract for the UK West coastline rail is due to be signed between the Department for Transport and First West Coast Limited who were declared the winners a few days ago. The new operation is due to take up their role on December 9th 2012.

The Department for Transport are in a position of strength as the ‘Buyer’.
extract from a UK Government Advice booklet
 for SMEs bidding for Public Sector work

 However their decision and indeed their procurement procedures  have been challenged by entrepreneur Richard Branson who is adept at media campaigns as well as running a rail service which has doubled passenger numbers on the line.

There may be some lessons for SMEs in Sir Richard throwing down his gauntlet in this duel with the Department for Transport.

The Department for Transport have been rather shy about explaining in any detail their decision . They have chosen 'empty chair' approaches to media invitations to engage in discussions to account for their decision to spending of tax payers’ money for the contract.  
Much talk of 'due process' has been issued in their careful statements to the press.

"… the winning bidder was decided by a fair and established process and no reason has been advanced to convince DfT not to sign the agreement."

Virgin are now likely to ask for a judicial review.

A spokesperson for the Department for Transport said: "We are in receipt of a letter from Virgin Trains which is a precursor to legal action. We are reviewing the correspondence. The Department is confident in the process it undertook and the decision made in awarding the West Coast franchise."

On another front a challenge has come from the end use customer – the travelling public.

This cause has been subsequently been taken up by Her Majesty's opposition - the Labour Party.

Due end users / customers have any influence on such deals? ( Maybe not but voters, tax payers and TV viewers etc…)

An e petition launched a few days ago has passed  150,000 signatures as at 7 a.m. today.

 Petitions beyond 100,000 signatures usually merit a debate in the House of Commons.

It would look extremely odd and possibly very embarrassing for both Government and the Department for Transport if a debate is conducted after the contract with First West Coast Limited has been signed.

Just imagine - Who will the Government and/or The DfT ‘field’ to appear the BBC Newsnight Programme ?
 –  Neither  'Empty Chair '  nor stonewalling strategies  convince the viewers on that programme) - example of Paxman's determined interview approach .
As the author of the Art Book -The Victorians  ISBN  978-1-846-07743-2- no doubt Mr Paxman might postulate on the thoughts of John Ruskin (1819-1900)

"There is hardly anything in the world that someone cannot make a little worse and sell a little cheaper, and the people who consider price alone are that person's lawful prey.

It's unwise to pay too much, but it's worse to pay too little. When you pay too much, you lose a little money -- that is all.

When you pay too little, you sometimes lose everything, because the thing you bought was incapable of doing the thing it was bought to do.

The common law of business balance prohibits paying a little and getting a lot -- it can't be done.

If you deal with the lowest bidder, it is well to add something for the risk you run, and if you do that you will have enough to pay for something better."

Time will only tell whether Sir Richard Branson  ( Virgin Trains ) or Tim O'Toole ( First Group) will be the Shin a Lam or  Britta Heidemann  and whether the Department for Transport (under pressure from Parliament) will be the clock resetting referree in  this duel for the West Coast line.

The Backbench Business Committee meets weekly, when the House of Commons is sitting, to hear representations from MPs for debates in backbench time.
The Committee can consider any subject for debate, including those raised in e-petitions, but an MP must make the case for their consideration.
More information about the Committee is available on its website

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