New documents have been dragged out of Crown Commercial
Service (CCS) which expose how they deliberately conspired in favour of their
preferred Big 6 consultancy suppliers at the expense of SMEs. And how this went
not just to the top of CCS but also to the Head of the Civil Service and the
Minister responsible. And how they sought to cover it up.
In December 2016 Crown Commercial Service (CCS) went out to
tender for a replacement framework for management consultancy services across
the UK public sector, excitingly called “Management Consultancy Framework”.
This consisted of a range of specialist lots for areas like finance, audit, HR,
IT etc, together with a key lot, Lot 1, for general business consultancy
services.
CCS put an estimated value on lot 1 of £700m to £1.05bn over
the four year term, shared across a maximum of 40 suppliers. This lot
encompassed services including project and change management, organisational
strategy, forecasting and planning as well as some more complex areas such as
mergers and acquisitions. However, it would provide an opportunity for smaller
suppliers to ply their trade alongside the traditional big firms in many areas.
Lot 1 attracted 177 bids from across the supplier community,
many of these being SMEs. All bidders had to follow the same format of
responses, including demonstrating they had provided at least 2,200 days of relevant
consultancy services within a three year period and that they provided all of
the core specialisms required.
The bids were submitted in February 2017 and the 177 bidders
anxiously awaited the results, which were due in mid June. That date came and
went, and the next thing bidders heard was a message on 31 August 2017 to say
that Lot 1 was being cancelled due to a “construct error in the criteria” which
“did not adequately assess the Bidder’s quality of delivery to the level
required”. At the same time they announced that a replacement framework would
be developed to replace Lot 1.
This caused considerable disquiet in the management
consultancy community. If each of the 177 suppliers put five days of effort
into bidding that lot, the combined cost to these organisations was somewhere
in excess of £500,000. There was discussion in online forums about what had
happened, with a suspicion that the lot had been cancelled because the big
consultancy firms had been unsuccessful. CCS refused to provide any further
comment.
In May 2018 a Freedom of Information request was sent to CCS
by Elliot Watson, whom I contacted recently to discuss his request. You can see
the request and the responses at https://bit.ly/34lPwRJ.
He asked CCS questions including when the so called construct error was
discovered, whether they had a shortlist of suppliers already identified by
then and for details of any internal documentation surrounding it.
Elliot tells me that CCS did all they could to avoid
replying to him, and he needed two formal decision notices from the Information
Commissioner before they finally sent him what he wanted to know. But the documents
recently released at the URL above show a shocking picture of why CCS cancelled
the procurement for this lot simply because the big firms had not won it.
The first documents released to Mr Watson show
communications between Chrissie Joseph, Director in the Professional Services
division at CCS, Malcolm Harrison, the then CEO of CCS and Peter Lawson,
Strategic Director at CCS. These outline the “problem” that the Big 6 firms are
not on Lot 1, and that they will have to issue “mitigating advice” to customers
(which appears to be to use other lots where the major firms were successful).
They also state that the average day rates on the Finance and Audit lots had
increased by 11% and 36% but as the major firms were successful on these, there
was no apparent issue with this.
There are then two emails where an unnamed Category Lead and
Chrissie Joseph seek advice from an undisclosed person (probably someone within
Government Legal Department) on whether they will be able to hide all documents
about what they are doing against future Freedom of Information Act requests,
so it appears clear that they knew what they were doing was highly questionable
and wanted to do what they could to cover it up.
Malcolm Harrison, CEO at CCS, then had to attend a meeting
with John Manzoni, Chief Executive of the Civil Service, where this debacle
would be discussed. There is a briefing note from Peter Lawson to John Manzoni,
and another similar one where the Minister responsible, Caroline Nokes, is also
copied in.
Shockingly this admits at the start that the existing
Consultancy One framework has been extended “unlawfully” to December 2017,
which nobody seems to care about.
It then goes on to say that “having completed the evaluation
of lots 1-3, a review revealed that lot 1 had an error in construct which distorted
bid evaluation”. The result of this error resulted in “the proposed selection
of suppliers, many of whom are unlikely to be suitable for the complexity of
the programmes expected to be called off from Lot 1”. It then stated that “in particular,
the exclusion of a number of major consultancy firms would have rendered the
lot practically unusable”.
They went on to state that Lots 2-8 are usable, and whilst
there are some “gaps” in lots 4 (HR) and 8 (IT) in “major supplier
representation” these do not necessarily need such representation.
So it is clearly set out that the problem with Lot 1 was
that the major consultancy firms had been unsuccessful, and as a result CCS
considered the lot unusable. This is despite the fact that in a previous
response to Mr Watson they had stated that out of the top 30 suppliers on Lot 1
only 13 were SMEs, indicating that there were 17 large firms who presumably
would have been capable of supplying larger projects (and all of the suppliers
had demonstrated they had provided 2,200 days of similar consultancy over 18
months and so were not one man band consultancies).
As a result of their preferred Big 6 suppliers being
uncompetitive and hence unsuccessful, CCS decided to cancel Lot 1. They
describe in the paper (and in other documents) the need to come up with a credible
explanation for this that only applies to Lot 1 (as their favoured suppliers
are on other Lots). They describe how they had sought advice from Government
Legal Department who were uncomfortable with the approach as it admitted some culpability
on the part of CCS (even if it does not expose the downright corruption on
cancelling the framework because their friends were not on it). The legal advisors
stated, however, that suppliers had never managed to successfully claim for
wasted bid costs in the past so they would probably get away with it.
John Manzoni, Caroline Nokes, Malcolm Harrison et al all
agreed with this approach, and so cancelled the lot to protect their friends in
the major consultancy firms. They then set about creating a new framework where
they could be sure that these firms would be successful, skewing the
requirements for “Management Consultancy Framework Two” so that there was a lot
specifically for the major firms with a requirement to have two case studies of
a minimum of £5m each over an 18 month period – and that lot has turned out to
be the highest used to date with £29m of business shared across just ten major
suppliers. They also awarded a smokescreen lot for general consultancy on the new
framework with no entry requirements to pretend that they cared about SMEs,
knowing that customers could always push business through the “complex” lot to
ensure it went to one of the big firms rather than having to deal with SMEs.
This whole sorry tale demonstrates how Crown Commercial
Service is not fit for purpose as the UK’s key purchasing body. They put out
what suppliers thought was a fair and open competition, and encouraged SMEs to
participate. When they found that their friends in the major consultancies had
not been successful, rather than accepting that it was time for a change, to
break up the oligopoly and drive better value for money through a new range of
suppliers (some larger and some smaller), they contrived and connived to steal
the opportunities from the successful suppliers and create a new framework to
make sure the big firms stayed in place.
The upshot of all this is that if you are in a big organisation
with lots of Government contracts, you will be fine as CCS has your back; if
you are a tier 2 supplier or an SME trying to break into the market, forget it
as if you manage against the odds to beat the traditional suppliers, CCS will screw
you over.
