Certainly Stephen Park Brown would know. The information and communications company he heads – NVT Group – has recently won a multi-million pound IT hardware management contract which it has been chasing for 13-years.
The Lanarkshire business has finally won the tender to provide support for the PCs, laptops, printers and scanners for the Central Government Centre of Procurement Expertise (CGCoPE).
Major institutions such as The Scottish Government, Crown Office and Procurator Fiscal Service, Scottish Court Service, Scottish Prison Service and National Galleries will all be covered as part of an initial three-year deal.
Park Brown said: “We’ve been chasing the central government contract since 1997 so we were delighted to have finally secured it last month.
“It’s worth an estimated *6.8m but that could well grow as we add on more central government agencies and departments.
“We have no idea at the moment how many agencies will be added going forward, but we have a network of engineers operating across Scotland now who can be at any office in Scotland within a matter of hours.
“Winning this contract has been a real turning point for us because it has taken us years to build up our skills in managing the bidding process in procurement.
“We have lost a lot of bids along the way but have been on a continual learning curve about the process.”
However despite the recent success Park Brown still believes there are major flaws in the procurement process.
He said: “Although we consider ourselves to be experts now there is still no real consistency and that means what works in one bid won’t necessarily work for another.
“There is now a degree of commonality in the process across central government, but for local government, universities, colleges, NHS and other blue light services but there is no commonality and all operate in different formats.
“The procurement experts for the local authorities are generally the people who are writing the procurement proposals. This is especially so when it comes to IT, as it is generally seen as a specialism within any organisation.
“But because there isn’t much in the way of formal procurement training for staff, it means there is little in the way of continuity in the overall process.”
The Scottish Government has recognised these failings and instigated the Public Procurement Reform Programme in response to the 2006 review of procurement carried out by John McClelland.
The primary aim is to increase the efficiency of the procurement process and deliver overall cost savings.
Park Brown hopes this will bring more of the *8bn spent annually by the public sector in Scotland to local companies.
“There are some public sector divisions, such as the Student Loans company, which ensure their staff have professional training in the procurement process, but that isn’t widespread”, he said.
“At the moment there is a real focus within the public sector to drive up their in-house procurement skills and their collective capability across the public sector in Scotland.
“They know they are now a huge industry in Scotland now in their own right, but the knowledge will take time to filter through.
“But that means it is very difficult for us to build our knowledge in order to be experts in procurement in the Scottish market, because we have to change and react as the public sector refine their own operations.
“The public sector in Scotland spends billions of pounds a year on IT, and there are more than 4000 IT companies based in Scotland who probably only get 10 to 15 per cent of that overall IT spend.
“But the majority of the services the public purse is paying for are commodity based, which means there is no longer any need to go to a globally footed company for supplies and services.
“We could have local suppliers managing those commodity based purchases as a third party supplier.
“Most of the big global computing and software companies now operate that way anyway as they have found it cuts their own cost base.
“Farming commodity IT contracts out to local companies who have a better understanding of the local market would undoubtedly mean they can offer a much better level of service than what a multinational can offer, and at a much lower cost.
“We won a major contract in East Lanarkshire a few years ago from Hewlett Packard, which won the contract from us in the run-up to Y2K, but we won it back from them because once they had brought the hardware side of the contract in cheaper due to their purchasing power, they couldn’t match us on servicing and management when it went back out to tender.”
Although public sector contracts make up just 20 per cent of NVT’s annual *6m turnover, it is an area of business the company is keen to expand.
Park Brown is confident the lead in from the private sector will open up new business opportunities for NVT in the private sector.
However the competition for public contracts is fierce, and he isn’t convinced the smaller companies have a level playing field in the bidding process.
He said: “We are seeing a lot of companies now bidding in the tender process who have no way of delivering on the promises they make, and that slows the whole process as it bogs it down in bureaucracy.
“There is also the issue of competitors using freedom of information (FOI) as a tool to access our unique selling points to use against us in competitive bidding.
“All they have to do is request to see the tender document from the public sector body tabling the tender to know how we plan to deliver the services we’re bidding on so they can compete for the contract using our unique selling point against us.
“We have recently appealed two FOI requests in this area.
“Our competition obviously want to know how we have become a success in our field, but our business is really being undermined as a result. The competition now knows how we have made this company a success and can replicate our practices to their own advantage.
“Although as commercial entities we are not forced to provide information through FOI, the agencies we are tendering to work with are bound by the rules of FOI, and and we have strongly challenged this, but to no avail.
“Another massive disadvantage in the tendering process is the fact the incumbent company holding the contract won’t always give the correct information to the procurement body of how they are doing certain things, like staffing numbers for example, or how the staff are being paid.
“In some of the recent wins we have had, we knew more from experience what we were being told simply wasn’t true, so we were able to adjust our own bid accordingly.
“So if we had believed the information provided by the incumbent, we would have significantly overpriced the contract.
“We won a contract recently where the incumbent told us there were eight staff who would be needed for the contract when in actual fact the real number was three, which meant of course a significant cost reduction to that contract in taking three rather than eight staff.”
Although Park Brown believes the procurement system is far from perfect there has been a shift away from just competing on price alone in recent years.
He said: “The public sector now knows from experience value is derived from the best overall offering rather than the traditional focus on headline cost.
“And most importantly, they now know they can demand value from the private sector.
“What we are seeing now from published weightings suggest the focus has shifted more towards overall service rather than price, and that’s from the realisation the cheapest bid doesn’t always work out to be the best value.
“So the big multinationals bidding for a contract may be able to offer hardware at discount due to their purchasing power, but they then have to factor in their underlying service and resource costs, which will be far in excess of that of a local supplier.
“And that is how we have managed to displace global players in the Scottish market after 13-years of trying. They simply can’t match us for service.
“It’s been a long road to get to this point, but we hope as this realisation dawns on the public sector the private sector in Scotland – which has been a very slow adopter of outsourced back office offerings – will now follow suit.”
NVT Group’s main source of revenue comes from its work with large Scottish SMEs, particularly in professional services.
And as lawyers, accountants and financial firms look to strip out costs Park Brown is confident NVT will reap the benefits.
He said: “NVT is now a major player in the SME market for helpdesk support, hardware and software support and maintenance because we can significantly reduce the cost of these services for smaller companies, though for some reason many companies remain unconvinced by this.
“As companies emerge from the recession, cost will continue to be a major issue as they look to grow their business again, because there is no point in growing turnover if the cost base is growing just as quickly.
“But the SME sector have been very slow adopters of shared services, but a lot more will be having a look at how they can strip out costs by outsourcing the non-core side of the business to a third party to look after.
“What businesses maybe fail to realise at the moment is there is so much of the back office operation which can be outsourced and bring with it significant cost savings through a shared service model.
“We can take all of the layers of IT out of a company and deliver them through our own model.
“So many companies across Scotland pay for an IT director at a significant cost to them and IT despite the fact IT is not their specialism, and by the same token, having an in-house IT department really doesn’t make sense in the overall ambitions of these businesses as that is a non-core operation with a huge capital cost.
“On average a company will save between 25 to 35 per cent for the client, and that is before we factor in how they procure their computer hardware.
“Even when its absolutely clear to companies we can save them *100,000 a year, there is still a reluctance to outsource the IT because it still holds this air of mystique.”