Briefing Notes

Balanced Scorecard for Public Food Procurement – Part 1 of 3

I recently came across Defra’s “Balanced scorecard for public food procurement”, published in July 2014. In their own words it “describes an evaluation approach where more straightforward criteria, such as cost, are ‘balanced’ against more complex criteria, such as health and wellbeing, resource efficiency and quality of service.” They go on to say, “This will allow broader aspects of service to be weighed against cost”. Isn’t that the aim of most procurement exercises? There’s plenty we can learn from in this “balanced scorecard”, so much so that I’ll write about three examples, each example in a separate Blog post. The paragraph below is the first example. The main point to learn is you should never make a promise you can’t keep and more especially you shouldn’t caveat any promise you do make in such a way as to give you the potential to contradict it away entirely. Promises made with the intention of manipulating the expectations of potential suppliers, especially beyond what is realistic and achievable, don’t work. You’ll receive tenders and supplier performance commensurate with your attempts to manipulate.

Technical specifications and award criteria (heading from balanced scorecard)

Each of the five headings under the balanced scorecard can have mandatory requirements, either technical specifications or contract performance conditions, and award criteria aspects to them. The technical specifications are the factors that must be met to qualify for consideration for the contract. Contract performance conditions must be met to be properly performing the contract once awarded.”

Award criteria are to enable procurers to evaluate bids against each other. They give opportunities for suppliers to be rewarded for operating to higher standards.

Read the last two sentences as if you are a potential supplier, which is exactly what the writer should have done but doesn’t appear to have. This paragraph is early in the document (page three) and therefore it is instrumental in setting the scene and expectations. When I first read it, it raised my expectations but my previous experience of the public sector suggested something about it wasn’t quite right. This niggle meant I thought it prudent to dig a little more by trying to answer questions such as:

  • How will award criteria give me opportunities to be rewarded?
  • What are the opportunities?
  • What are the rewards?
  • What are higher standards?
  • What will cause the purchaser to give me an opportunity to be rewarded for operating to higher standards?

 

How will the award criteria give me opportunities to be rewarded?

As a potential supplier I’d want to know how the award criteria could give me opportunities to be rewarded. I’m intrigued and the purchaser has raised my expectations with “opportunities for suppliers to be rewarded”. However, the quiet voice ratting around my brain tells me that this can’t be right. By the time I’ve got to the next page (page four) the quiet voice is an awful lot louder. This is because of the caveat (see paragraph below) the purchaser has inserted. It’s one of the four benefits they describe under the heading “Benefits of the balanced scorecard”.

“It means bidders can be rewarded for operating to higher standards where it is economic to do so, yet procurers are not forced to adopt such measures.“

It’s the bit in bold that constitutes the caveat. “Where it is economic to do so” qualifies the “rewarded for operating to higher standards” and “yet procurers are not forced to adopt such measures” provides them with a get out of jail free card. Defra has just reverted back to stereotypical public sector behavior and it’s quite clear, at least it is if you’re a cynical potential supplier, that suppliers will not be rewarded for operating at higher standards. Why would a cash strapped public sector pay more for higher standards when they don’t need to? I’m still none the wiser about how award criteria will give me, as a potential supplier, opportunities to be rewarded for operating to higher standards. No that’s wrong, I am wiser. I’m now confident there are no circumstances, perhaps better to say extremely limited circumstances, when I’ll ever have the opportunity to receive a reward for operating at higher standards. Remember the purchaser only mentions it as an opportunity, they don’t say it will happen. Just the opposite, as they write quite a lot about why it won’t. If there’s a causal link between award criteria (cause), opportunities (effect), reward (effect) and higher standards (cause) I can’t see it. Did the writer intentionally leave potential suppliers to make their own assumptions?

What are the opportunities and rewards?

No idea. They are left to your imagination. Rewards are a bit easier to imagine, perhaps being able to charge a higher price for operating at higher standards? However, we’ve just found that this is unlikely, extremely unlikely, to ever happen.

What are higher standards?

I’ve more of an idea with this one, although I’ve made a few assumptions and suppositions to get to it. I’m assuming the writer means “mandatory criteria” (really a criterion) and “award criteria” to be standards. These standards include, no score, satisfactory, good, very good and excellent, although not always all five.

  • To enter the ‘game’ my answer has to equal or exceed the first standard (mandatory criteria).
  • To play the ‘game’ I need the purchaser to evaluate my answer as equal to or better than the standard that gives the minimum evaluation score.
  • To have an opportunity to win the ‘game’, that is the purchaser awards me a contract, their evaluation of my answer is likely to have to exceed one of the two highest standards, very good and excellent.

Just be competitive I have to assume I’ll need evaluation scores on the higher rather than the lower side. This renders the higher standards mentioned in “opportunities for suppliers to be rewarded for operating to higher standards” irrelevant. However, this is because I’ve assumed rewarded means I’ll be paid more but it could be that rewarded simply means I get an opportunity to win the business. That’s the problem with having to make assumptions, you just never know. Another wrinkle is the difference between the mandatory standard (criteria), the no score standard and the standard that results in a minimum score, such as satisfactory or good. Why the difference? A combination of them all as the standard to give a minimum evaluation score would reduce complexity, anything less wouldn’t receive a score. These are the standards for Animal Welfare from the balanced scorecard.

  • Mandatory criteria“all food served must be produced in a way that meets UK legislative standards for animal welfare, or equivalent standards”.
  • No score evaluation – “less than 30% of total monetary value of animal derived foods that will be supplied from farm assured sources, where the associated schemes provide assurance that UK legislative, or equivalent standards for animal welfare, have been met or exceeded.”
  • Good evaluation (lowest) – “at least 30% ….”
  • Very Good evaluation – “at least 60% ….”
  • Excellent evaluation (highest) – “more than 90% ….”

These standards show that 100% of the food I supply could meet UK legislative standards, the minimum criteria. However, if I don’t buy at least 30% (of total spend) from farms in an approved assurance scheme then the purchaser will evaluate my answer as a no score. Why would I consider submitting a tender if I couldn’t at least register an evaluation score? I wouldn’t tender if I couldn’t be certain of achieving one of the top two evaluation scores. This means, to me as a potential supplier, mandatory, no score and good standards are irrelevant.

What causes the purchaser to give me an opportunity to be rewarded for operating at higher standards?

Other than the assumptions I’ve made it’s not clear what will cause the purchaser to give me opportunities to be rewarded for operating to higher standards. It’s not clear what the opportunities are, what the rewards are or what the higher standards are. However, it is quite clear from the caveat, “where it is economic to do so, yet procurers are not forced to adopt such measures”, that the purchaser doesn’t have to give these opportunities, whatever they are, and doesn’t have to reward me for operating to higher standards. The context in which the purchaser operates, that is the cash strapped public sector, makes it extremely unlikely they would spend anymore than the minimum. There’s more. A stereotypical trait of purchasers in the public sector is the rapid reversion to behavior in line with common perceptions (the mean), in this instance buying at lowest cost/price. The paragraph (caveat) below qualifies the mandatory criteria for Animal Welfare such that it supports this common perception and legitimises it. Higher standards and, especially, rewards are now a distant memory.

“If in any particular circumstances, this [all food produced in a way that meets UK legislative standards for animal] leads to a significant increase in costs which cannot reasonably be compensated for by savings elsewhere, the procuring authority shall agree with the catering contractor or supplier to depart from this requirement and the reasons for doing so shall be noted and recorded.”

This means the purchaser can buy food that has not been produced to UK legislative standards, something that does not appear particularly palatable (no pun intended), especially to farmers in the UK. This does appear to suggest that the purchaser can, with some justification (such as I haven’t enough money), discriminate against farmers in the UK in favour of farmers who don’t have to meet UK legislative standards. It’s more expensive to meet UK legislative standards and it’s not as though Farmers can decide not to meet these standards, it’s a legal requirement.

What potential suppliers can learn

This is what potential suppliers can learn.

  • Understand what you read
  • Use realistic scenarios to test your understanding
  • Ask questions until you do understand
  • There isn’t such a thing as a stupid question
  • Your understanding is the purchaser’s responsibility
  • Never assume
  • Assess, carefully, your chances of winning
  • Tender when the odds are in your favour
  • Tender when the odds are in no ones favour
  • You don’t have to tender, you decide
  • Not tendering is sometimes a better decision

Here’s an example of what I mean when I mentioned working through scenarios. Consider a scenario for the possible award criteria/evaluation you might achieve for the Animal Welfare example above. If your current approach will result in only 25% of animal derived foods from farm assured sources then you have some decisions to make. You could decide to:

  • Change suppliers to increase the % of animal derived foods from farm assured sources, although you’ll need to decide by how much, at least 30% or 60% or more than 90%, and if it’s possible
  • Rely on higher evaluation scores from other answers making up for a No Score evaluation
  • Not to tender this time and concentrate your resources on winning other tenders that offer better chances of success

Or, if you are desperate enough, you could consider saying you’ll buy at least 60% and hope the purchaser doesn’t check too closely. Here is an important (not flippant) message to purchasers; you have to be careful not to push potential suppliers to be over optimistic or even lie to improve their chances of success. My advice to a potential supplier would be that you should submit a tender if, and only if, you buy at least 60%.

What purchasers can learn

When you write as a purchaser with the intention of publishing what you write you should be aware of the following.

  • Write for your audience, not yourself
  • Be clear, consider the impact on those who will read it
  • Write in plain, sensible, realistic and down to earth English
  • Tell it as it is, over egg it and it becomes see-through
  • Rid the need for interpretation and assumption
  • The reader interprets your intentions, not always how you see them
  • Be clear about cause and effect
  • Be consistent throughout
  • Motivate with realistic expectations
  • Contradict a promise and it causes amnesia (of all the good stuff)
  • Beware of unforeseen consequences
  • Potential suppliers have different perceptions to you
  • Unfinished documents can damage your reputation
  • Or reinforce and perpetuate a poor reputation
  • Potential suppliers aren’t daft, promise only what you can deliver

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