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The problems with price-based tenders

Executive Compass Branding

The purpose of putting the provision of goods and services out to tender is to ensure that the buyer receives the best value for money possible.

However, value for money should not simply mean the cheapest price put on the table by potential suppliers. Eligibility, technical capacity and most importantly, quality, should take precedence over price. After all, you get what you pay for, and this could not be more apparent than in the recent horsemeat scandal. Has the supermarkets quest for cheapest price resulted in poorest quality?

Food supply chains have been the focus of the tabloids for some time now, as more and more meat products are being reported to have traces of horsemeat in them. Some meat products in fact have a lot more than traces of horsemeat in them, with one particular sample of a Tesco beef burger found to contain 29% horse instead of beef.

There have been many conflicting reports and accounts of where the horse has been entering our supply chain, some stating it has come from further up their supply chain through slaughterhouses in Poland, Spain and even the Netherlands. Large supermarket retailers are now doing everything in their power to ensure that their corporate branding and imagery is not tarnished because of this debacle, and now Malcolm Walker of Iceland has turned to blaming local councils for the extensive spread of tainted meat products through hospitals and schools in the UK.

He spoke on the Andrew Marr Show on the BBC stating that the true problem actually lies with the local councils who are awarding large scale catering tenders for schools and hospitals on price alone. This in turn drives down the quality of the meat products, so that they can become more and more competitive on price in order to secure the contracts. He also added that retailers should not be blamed for the horsemeat crisis, in a somewhat ‘don’t hate the player, hate the game’-esque argument: “If we’re going to blame somebody let’s start with local authorities, because there’s a whole side to this industry which is invisible – that’s the catering industry. Schools, hospitals – it’s massive business for cheap food and local authorities award contracts based purely on one thing – price … dodgy cutting houses and backstreet manufacturers have been supplying products to the catering industry and a lot of that is bought by local authorities for schools and hospitals – that’s where the problem really lies,” claimed Mr Walker.

A spokesperson for the Local Government Association has since come forward and stated that councils were not to blame for what has been dubbed a “major supply chain failure”. The chair of the LGA has also said that the relationship between councils across the country and their catering suppliers were very much the same as the relationship between a typical consumer and a retailer. “We have a contract with that retailer to provide us with what it says on the wrapper and that is exactly the same with local government providing contracts for school meals or, indeed, the NHS with hospitals” stated Merrick Cockell (Local Government Association Chair).

The Local Authorities Caterers Association has also come forward and made a statement regarding the comments made by Malcolm Walker, saying that the monitoring and control procedures that are currently in place have meant that the quality of the food and meals served in schools across the country has in fact risen, not fallen.

One phenomenon that may follow such audacious claims on national television is that the procurement process for catering contracts adopted by local councils could become the focus of further scrutiny. If contracts have previously been awarded on merely price alone, it is very unlikely that they will be in the future.

This is potentially good news for bid writers in the catering industry. If councils are now going to put an increased weighting on other aspects when awarding a contract, such as quality, environmental or socio-economic factors, this provides catering bid writers with more scope to add value to a PQQ or tender submission.

We always welcome the opportunity to add value to any tender submission, regardless of the industry or scope, and with this current issue in the spotlight, perhaps we may be receiving more calls from catering companies who are looking for assistance in adding value to their submissions.

If you do need any help at all, such as writing the full PQQ or tender, writing policies and procedures or even our review and advisory service, please do not hesitate to contact us today. We can help you to secure your next public sector catering contract.

Call us now to speak to a member of our Bid Team:

0203 507 0314 or direct to mobile: 07590 276 006