Rigid processes that exclude smaller suppliers, aloof bureaucrats, the rail replacement stitch-up, timewasters – it all needs fixing

What should procurement look like at Great British Railways?

“What should procurement look like at Great British Railways?” was the question posed in a press release by its transition team last week as it sought candidates among suppliers to join a new Commercial Partnership Sounding Board. Participating on a board that chunters on about procurement might sound as exciting as the IT department’s Christmas party, but it does make you reflect.

The state of procurement in the UK transport industry isn’t broken by any stretch. I’ve stumbled across fantastically well-run processes, and some owning groups combine pragmatism with fairness, a real knowledge of the sector and empathy with the supply chain as well as passengers. These folk are highly personable, keen to engage and listen and have the best outcomes for customers at heart.

However, there are still too many procurement departments scared of their own shadows and frightened of challenge. Since the pandemic, they have also indolently carried out their work remotely on Teams, by email or on portals, reluctant to undertake site visits or encourage presentations until too deep in the process. They also try and take over the exercise, not deferring to the subject matter experts or the department who will be managing and receiving the service on a day-to-day basis. This does not lead to relationship building which is what is required once ‘in contract’, when the procurement mob disappears, leaving those managing the service to deal with the mess they have created.

Often, bureaucratic process favours larger companies which employ teams of people, compared to smaller organisations who have fewer resources and less mature processes and procedures, yet actually may have the best solution. Procurement documents are also issued with contracts that cannot be challenged, with an emphasis on signing up to terms and conditions even in advance of starting the bid process. Onerous contract provisions and over processed procurement, including costly and wildly excessive insurance requirements and bonds that are completely out of sync with the scale and nature of the work being undertaken and its potential risks,
just discourages small businesses.

Procurement has become a formulaic tick box exercise which largely measures compliance across a range of factors, policies and values but which fails to give sufficient credence to a supplier’s actual ability to deliver a service

Procurement has become a formulaic tick box exercise which largely measures compliance across a range of factors, policies and values but which fails to give sufficient credence to a supplier’s actual ability to deliver a service. It also onerously and without any margin of error, demands a prescriptive style of answering questions that diminishes the ability to demonstrate flair and imagination and a lateral approach. The ability to answer a bid question well and in the particular style or genre required is more important than ‘fit’ or experience.

This obsession with writing in a certain way has been a trademark approach to evaluating UK rail franchise bids. Since privatisation, there have been contracts awarded that have been successful for customers, stakeholders, communities, shareholders and government, such as Chiltern, Virgin West Coast, East Midlands Trains, South West Trains, GNER, c2c and maybe Merseyrail. But that’s a Crystal Palace win-like ratio and ultimately too many disappointments, particularly in recent years, even if, admittedly, the whole political and socio-economic context dooms most to fail from the start. Roll on the Passenger Service Contracts (PSCs) but it’s been 15 months since suppliers were consulted on these and folk who gave up a lot of time for an ‘engagement day’ and subsequent ‘supplier workshops’ but have faced debilitating silence since.

Forgive me, therefore, for not applying to join the ‘Sounding Board’, even if I was available on February 9 for its inaugural meeting (which I’m not). If you can’t make this date, the procurement process for the board to advise on procurement, kicks you out at the pre-qualifying stage. Oh well.

A bad example of procurement is (yes, you guessed it..) rail replacement. Regular readers of my column will know that the way in which this service has been procured and managed for donkeys’ years has been abhorrent. How can an owning group possibly run a fair procurement exercise in which one of its wholly-owned subsidiaries is participating, particularly these days when rail replacement is one of a dwindling number of revenue streams available for a transport owning group now that revenue risk sits with the DfT? An example of how this exercise cannot be fair is the emphasis on ‘policies and procedures’, which is, again, weighted to the owning group.

I learned, a year ago, of a renowned independent specialist rail replacement provider losing a large bid on the basis of not having experience of deploying taxis, even though it had the largest taxi supply chain, by some distance, in the UK and deepest experience in this field. The winning supplier had no experience with taxis and had for some time sub-contracted that service out to – you guessed it – the independent losing operator. It borders on comical really, but then again, if you had seen the way the process was run in terms of the poor quality of tender specification and the distinct lack of specific experience on the procurement side, it wasn’t a surprise.

Again in rail replacement land, I recently witnessed a TOC-owning group preclude from the pre-qualification stage a large supplier who had delivered an exemplar service, evidenced by scorecard metrics, over several years to them and predecessor franchise owners, on the basis of not scoring as well on case studies against a competitor that had no experience in this area. In the case of rail, they are, in some respects, only as good as the specification and contracts which DfT procures. There’s sometimes a feeling that the DfT doesn’t feel comfortable with TOCs making money, which in turn leads to TOCs only making money from affiliate trading such as rail replacement.

In 2021, I came across a bidding process for providing customer service training for several thousand employees at a UK train operating company. At the outset, suppliers were informed of a budget of around £2m for the whole programme, which seemed pretty realistic. The tender specification was about as easy to read as a railway working timetable and you couldn’t decipher whether the company wanted everyone trained externally or a ‘train the trainer’ approach. Indeed it was so lacking detail, putting the onus on bidders to come up with ideas even before pre-qualification, that it looked like the company was going out to market just to get some free consultancy, before running it ‘in house’ themselves.

Despite around 10 folk from their side on the various calls (many of them switching off their cameras to create a sense of aloofness and a ‘we don’t want to get too chummy’ approach), we were still in the dark. The company I spoke to put in a subterranean level price, well below the budget, only to be told several weeks later that they were looking for something in the region of £350-400k (to design a course and train several thousand staff, really?). They were asked to re-submit a proposal, though knew they’d be unsuccessful, because straight after their first tender pitch, a very indiscreet person on the evaluation panel had been royally gossiping about them to someone at another TOC outside their owning group and it got back to them.

Admittedly, the defeats rankle, although I avoid putting in a complaint or seeking redress. My wife calls me ‘a crowd-pleaser’ – always keen to get along and not formally moan. There was one experience, though, a year ago, when I did grumble to the organisation’s CEO – a big industry name, I’ll have you know. We were asked for ideas and help in coming up with a solution for a rapid, but far-reaching review of UK rail – the usual free of charge homework you do to help companies determine what might be in an eventual tender specification. We helped them do this so they could properly advise the industry funding authority on what financial resource was required and why they were the best company to manage the process.

And then on the Thursday evening, we were asked to complete a tender submission by the following Monday. We dropped everything, threw the kitchen sink at it, no sleep over the weekend and no Match of the Day on TV, only to be told we were as good as the winning bidder but couldn’t win it anyway because we aren’t on the company’s supplier framework. We’d actually just missed the boat to apply to be on it and the next opportunity for this to come round again wouldn’t be for 18 months at best, more likely two years. This wasn’t my first or my last experience of helping give advice for free to this organisation, but like a constantly spurned lover, us desperate suppliers, us sad losers, just keep coming back for more and the problem is these organisations know this.

It’s important not to have the life sucked out of you by procurement exercises. The frustration is sometimes dealing with humourless individuals or those with minimal experience of the sector and the requirements of customers

It’s important not to have the life sucked out of you by procurement exercises. The frustration is sometimes dealing with humourless individuals or those with minimal experience of the sector and the requirements of customers. There are some who make you feel like a little upstart with the temerity to bid for a piece of work or come on a call excited about the opportunity and brimming with ideas that might not fit their dull templated, scripted, multiple choice type questions. Some procurement folk are lovely (generally those who have also worked in other parts of the industry), whilst others are plain arrogant and bereft of basic social skills – oh and they hate entrepreneurs. The problem is that they know the supply chain has to be deferential and it’s gone to their heads. They collect their pay-packet whatever happens each month, whereas we have to leave our caves and hunt for food to bring home.

Meanwhile, many transport companies spew out mumbo-jumbo in their own tender bids about their ‘social value’ contribution – they show off about how they employ small, local suppliers, setting up ‘innovation hubs’, but trust me, it’s all self-serving, token nonsense. They’re not doing it to help.

Procurement teams often frustrate those elsewhere in their organisations, sometimes, rightly because they insist on fairness, but also because they don’t appreciate the speed at which a line manager needs them to act. In some large organisations, I’ve sat in meetings where the most highest ranking individual has despaired at the way in which their own procurement departments have tangled themselves up in unnecessary beaurocracy. As a bidder you can be caught in the crossfire.

You don’t get the impression that procurement folk chat among themselves on a pan-organisational basis in transport. They should found a forum or club in the sector so they can share best practice and also develop, coach and mentor each other.

Part of the issue is that procurement isn’t glamorous, so you’ll seldom see a procurement bigwig on stage at a conference inspiring others, and you’ll be hard pushed to come across a career pathway from the procurement department to managing director/CEO.

GBRTT’s desire, though, to reach out and involve the supply chain is great. It’s not unprecedented either – they spent last year undertaking the most comprehensive of consultation exercises with suppliers. Hopefully, it will emulate the DfT who have long sought to unlock the SME market and has largely been true to their word. Despite my grumpiness, the situation is not beyond repair, though there is a need for behavioural, cultural and capability issues to be addressed within the sphere of procurement. There are, though, good eggs out there, drop me a note and I’ll tell you who they are, providing it doesn’t scupper the process…

ABOUT THE AUTHOR: Alex Warner has over 29 years’ experience in the transport sector, having held senior roles on a multi-modal basis across the sector

This article appears in the latest issue of Passenger Transport.

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