Six ways to kill business with Procurement, Part 3: Contractual Suicides and Laziness

And so we continue the descriptions of how Procurement can contribute to not-so-successful outcomes of the whole business…

Contractual suicides

 Ts&Cs are boring. They are long, hard to read. Many times, they are written in very small shrift. But the general rule is: if it is worth having a specific contract, you need to read it. Sometimes, actually, not having a bespoke contract might be better. There are government laws that regulate the sale and purchase of goods and services. So if you placed the order and received the services or products – it is not like you are thrown out onto an uninhabited island. There are rules and regulations that protect all sides of every deal. However, if you choose to sign a contract and, and especially, use your supplier’s documents – read it. It is mandatory. If you think that worst-case scenario of not reading an agreement might mean that you will have to pay a bit extra or be stuck with a supplier for a bit longer than you would have wanted initially – that is not entirely true.

I once dealt with a situation where we needed to negotiate our way out of a contract—a vending services contract which signed without reading. The situation was threatening the overall results of a low margin business. It was an outsourced service business, with forecasted £120k annual profit and only one year left in contract duration. To keep it short: the person committed to a completely not needed £600k spend, which would have been a pure loss to the business. And it is just a small example. There are plenty of cases where faulty contracts lead to unfortunate situations.

 Laziness

 To me, not doing your homework appropriately is being lazy. Let me give you a few examples:

  • The Public Accounts Committee report says Ministry of Justice pushed on with an overly complicated project without clear evidence it was needed.”. (parliament.uk, n.d.). This was £60 million.
  • The Ministry of Justice (MoJ) has written off £56 million in IT costs … The project centred around plans to set up a single Enterprise Resource Planning (ERP) system for HR, finance, procurement, transactions and payroll. The MoJ decided to abandon the project to avoid duplication when they discovered that the Cabinet Office was planning to implement a similar scheme…” (computerworld.com). Surely they had to go through OJEU procedures to award the contract in the first place? It is a bit of a sarcasm, you are right.

Please look up more keywords online: e-borders programme with Raytheon (hundreds of millions), Gov.uk Verify, Lidl SAP introduction (five hundred millions), Emergency Services Network modernisation (overrunning a budget by £3.1billion), Home Office’s DBS modernisation project (4 years late and £229 million over budget), Army recruiting Partnering Project. And, of course, the all-famous no-deal Brexit ferry company with no ships and no experience in running Channel Services.

Procurement professionals, blindly relying on tenders and not doing their homework properly in the first place, should cause any CFO or CEO a massive fear. “But…but the tender submission says that the supplier will hire all the people they need…” – tender submission is nothing more than just another template sales pitch. If you were lazy and did not challenge the statements or collect all the information to make business and procurement decisions – then it is not the supplier’s fault, right?

Six ways to kill business with Procurement, Part 3: Contractual Suicides and Laziness

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