Wednesday, 3 October 2012

Robust Flawed or Inadequate Railway Franchise Processes RFIs RFPs and ITTs

Few of us outside the Rail Industry know the details of what has  really happened in the troubled franchise process for West Coast mainline.

The media will be focusing on the huge compensation bills. The Labour opposition will no doubt enjoy the discomfort of the Coalition Government with the story  fortuitously blowing up during their Party Conference in Manchester. No doubt past awards under Labour Governments will  be raked up etc.

For  those  in  Professional Selling and Procurement though ,there could well be important lessons for Procurement Processes and Supply Chain Management in the Private sector as well.

 Taking a look at the guide to Rail Franchises issued by the Department for Transport the language and structure of the process is pretty similar to the due diligence language and approach of Private Sector Procurement and the growing Procurement Outsourcing World.

More and more in Sales have to compete in beauty parade presentations to qualify for approved supplier status and then jump through the hoops of Tendering processes in response to RFI, RFP and ITT. These are time consuming and expensive activities. Even after being awarded a bid further negotiation can still take place.

Those familiar with the rigorous procedures such as ARIBA system, or the request from Outsourcing Giants like Accenture will know the experience all too well.

The rise in outsourcing procurement has also led to process driven procurement systems driven by the continual drive for Year on Year savings.

The power is weighted heavily on the buying side whose final decision is seldom challenged in the Private sector. They are the 'customer' after all.

I guess one of the interesting differences in the public procurement field is that decisions are occasionally challenged and the process is more transparent.  Of course the decision to challenge is a brave thing to do. It is also an expensive action to take.

Sir Richard Branson’s initial challenges to the Department for Trade Dft came to nothing. The challenges fell on deaf ears ( no responses given) until he decided to go to court. The e petition  gathered 173,994 + votes helped garner Parliament and the broader customer public to take an interest in the case.

Take a look at the Video clip of Sir Richard speaking at the House of Commons  Transport Committee  on 10th of September Click here for BBC video clip

The Department for Transport  has dropped their plans to remove Virgin Trains of its right to run the main London to Glasgow rail route.  The Daily Mail’s Ray Massy and Hanah Roberts reported 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 issues  apparently are around inflation calculations, risk measurements and Quality assurance . Reports suggest these have been found wanting in the Procurement Processes of the Rail Franchises . Another question many of us will be asking is

 "Are there similar issues in Private Procurement Processes and Systems ?"

 Suppliers want a level playing field. Procurement  wants the best suppliers.

from some notes I took at a CIPS presentation

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