Procurement
May 22, 2014

Let’s banish the bullies

Last month’s reference to greener grass gently opened the door to this month’s topic – dealing with the buyer practice of bullying the supplier community and still expecting to get quality results.

I, too, used to be a buyer bully. I was with Public Works and Government Services Canada; we bought for THE GOVERNMENT, and therefore were on a holy mission. We obviously knew best on every issue, and if you didn’t like our rules, you could just go away. There were plenty of others out there who wanted to do business with us.

One day I was tasked to draft a suitable reply to a small businessman who had written to the Minister. The situation was simple. The businessman had a PWGSC contract; the government was very late in its payments; and without this revenue the businessman was suffering financially. He could not pay his employees or business expenses and was facing difficulty paying his personal expenses like his home mortgage – in short, life was desperate. What to answer?

Technically, as it happens, the standard government contract does not actually say that the government will ever pay its suppliers. It says rather that payment will be made within specified days of accepted invoice and, if not paid within 45 days the government will start to pay interest at prevailing rates.

Well, hooray! The government owes me $10,000 for my work, but is late in paying. I can’t flow that $10,000 through to my expenses, so I start to fall behind on payments and incur huge line of credit or credit card debts and the government is kind enough to send me pennies per month for its lateness (and, by the way, make sure that I declare those pennies on my income taxes, so that the government can get some of it back!).

You doubt? Look at my article last month. Bullying is alive and well and in an international development agency, for goodness’ sake.

The last time I wrote on this topic was before I agreed to participate with a major Canadian international group in a bid for a contract with a foreign government. Bids had to be in by the end of January 2013, and valid for 90 days. End-February 2014 – one year later – and there has been no decision on the contract yet. Bullying is international.

What’s the big deal, you may ask?

Well, here is Supplier Reality 101.

Being a supplier – especially a small one – means a day in, day out search for business. That business is not some nice academic or theoretical concept, but is the daily reality of earning a living, supporting ourselves, paying our staff and suppliers if we have them, paying taxes, socking away something for a rainy day, and if there’s anything left over, maybe a bit for retirement.

Being a supplier to government is all that, with a healthy dose of risk thrown in, because selling to the government is really special.

A track record of quality means nothing. When the government needs to buy, you will be cast headlong into a “fair, open and transparent” competition in which what you have done in the past has little value.

Even that depends on whether the government actually lets you try to win business. In the wrong place at the wrong time you will find that you can’t even bid for contracts because you are not on a Standing Offer or Supply Arrangement – too bad, so sad, but you will get the chance to qualify a year or two from now.
Oh, great: I’ll just tell that to my mortgage company, and surely it will wait patiently, but in the meantime Revenue Canada still expects me to make installment payments against my taxes, using revenue that I can’t earn.

If the government magnanimously offers me the chance to bid for contracts, I sweat and struggle, costing myself time and money, only to find out, not that someone else got the contract – that’s a business risk – but that it decided to do something else and cancel the process; all of us who bid, ensuring that the government can say the process was competitive, end up paying for the privilege. Most of the time, it doesn’t even apologize nicely.

Oh – did I talk about the waiting game?

There is greener grass out there. If you are in government and see yourself in the above you should (i) stop it, (ii) be embarrassed if not thoroughly ashamed; and (iii) do a better job of achieving better procurement results through quality interactions with the supplier community.

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