Keystone Column 64. Procurement risk

Welcome to the Keystone Column. This week we look at procurement risk – both specific cases and wider trends. Its not all doom and gloom however: we also look at EU funding opportunities for innovative SMEs. As usual, we conclude with our weekly list of current Irish public tenders.

Business stories

Nuclear waste

The Belfast Telegraph reports that engineering services firm Babcock will take an £800 million hit after terminating a major Government contract to decommission and manage 12 UK nuclear sites. The firm said the amount of work required was “materially different” than initially specified, explaining that the mismatch between what was requested in the contract and the work that needed to be done put the contract at risk of legal action.

The £6.1 billion contract ran into controversy last year after a High Court judge ruled that the Nuclear Decommissioning Authority (NDA) had wrongly awarded the contract. Already the NDA has shelled out £97.5 million to settle litigation claims by two American firms – Bechtel and Energy Solutions – over the deal.

Energy Secretary Greg Clark announced that the UK Government is now launching an independent inquiry into both the 2012 procurement process, as well as the reasons why the contract proved to be “unsustainable”.

Rising nationalism

In its “Procurement Outlook Report 2017“, GEP identifies growing nationalism as one of five “global super trends” that will have a significant effect on procurement this year.

From the success of Brexit in the United Kingdom and the election of Donald Trump in the United States to the growing strength of nationalist parties in France and Germany, the pendulum seems to be swinging away from a full embrace of globalisation.

Supply Chain Quarterly notes that the report predicts that rising nationalism will cause increasing uncertainty around trade relations, put a strain on international cooperation efforts, and create a general sense of geopolitical instability: potentially offseting any growth benefits that might result from other economic policies favored by many nationalist parties, such as tax cuts and deregulation.

As geopolitical instability flares up, supply chain and procurement organizations should make sure they have a well-defined risk management process, GEP recommends. For procurement, this will mean an even greater need to closely monitor supplier performance and identify and mitigate any potential risks.

Interesting trends

Planning for Brexit and an uncertain US trade policy

Warning Irish businesses to plan for the worst after after UK prime minister Theresa May triggered article 50 as expected, PwC noted this week that differences over the free movement of people and the size of any financial exit settlement mean the UK is likely to arrive at a hard Brexit and “third country” status as a trading partner, with tariffs applying both to exports and imports. Coupled with President Trump continually threatening new border taxes, border closings, and visa program overhauls – these are uncertain times for anyone involved in cross-border trade.

Sourcing Innovation ponders how to manage these procurement risk in this blog: Are your costs going up? If so, are they going up 10%, 20%, 100%? Are sources of supply going to be cut off due to trade bans? Is your best talent going to be locked out of the US or UK?

So how do you plan for Brexit and other risks? One approach is scenario planning — attempting to identify potential disruptions before they happen so that mitigation plans can be identified and put in place now. When the disruption is an unpredictable tax hike or border closing, the key to survival is considering “what if” the current supply chain becomes unsustainable. Look at how your supply chain (and cost of trading in the UK) will look is standard World Trade Organisation tariffs apply between the Eu and the UK. Look at all possible scenarios for each component of your supply chain? What local (and EU-based) alternatives can substitute? What other territories have a stable trade outlook?

There are at least two years of Brexit negotiations, and at least four years of the Trump presidency, ahead. By all means hope for the best, but smart businesses have already begun preparing for the worst.

Innovation

Horizon 2020’s SME Instrument

As part of the Horizon 2020 programme, the European Commission is seeking potentially disruptive businesses to invest and support. If you are part of a highly innovative, ambitious and passionate small- or medium-sized business with global ambitions, then your business could receive up to €2.5 million in funding and world-class business coaching!

The instrument will take place in three phases, with the aim of transforming disruptive ideas into concrete, innovative solutions with a European and global impact. SMEs are recommended to apply for Phase 1, but may also apply for subsequent phases depending on the progress of their proposals.

The three phases are:

  • Phase 1. Concept & Feasibility Assessment – Idea to concept (6 months)
    The European Union will provide €50 000 in funding, and carry out a feasibility study to verify the viability of the proposed disruptive innovation or concept. The SME will draft an initial business proposal (around 10 pages).
  • Phase 2. Demonstration, Market Replication, R&D – Concept to Market-Maturity (1-2 years)
    Assisted by the EU, the SME will further develop its proposal through innovation activities, such as demonstration, testing, piloting, scaling up, and miniaturisation. It will also draft a more developed business plan (around 30 pages). Proposals will be based on a business plan developed on phase 1 or otherwise. The EU aims to contribute between €0.5 million and €2.5 million.
  • Phase 3. Commercialisation – Prepare for Market Launch
    SMEs will receive extensive support, training, mentorship and facilitating access to risk finance as the project is further polished into a marketable product.

Full details of the Horizon 2020 programme for SMEs are available here: http://ec.europa.eu/easme/en/horizons-2020-sme-instrument

 

 Note: we are in the sourcing & procurement business. We highlight things we like or that are novel or innovative. We seek neither compensation nor recognition for doing this. We are fully paid up members of the pay it forward mindset. Innovators should be encouraged.

New public procurement tenders this week 

Visit the Keystone website to view our take on the 500+ active public procurement opportunities with more than five days until their deadline. There are a vast range of services, supplies and construction related to public procurement opportunities in the following sectors (there are many more sectors than the sample list below):

  • Construction and related trades,
  • Professional & Advisory Services,
  • PR, Media, Advertising and related,
  • ICT supplies and services,
  • Training,
  • Property & facilities management,
  • Vehicle & automotive,
  • Catering and related services,
  • Cleaning and related services,
  • Waste Management,
  • Maintenance and related services,
  • Horticultural supplies & services,
  • Research & environmental monitoring,
  • Printing, office supplies and related services,
  • Trades,
  • Medical and scientific research, supplies and services,
  • A vast range of other services and supplies.

http://keystonepg.ie/keystone-e-tenders-report-open-ytd-as-at-3003-by-date/

http://keystonepg.ie/keystone-e-tenders-report-open-ytd-as-at-3003-by-sector/

Businesses interested in any of these strategic procurement opportunities that are unsure of how they can follow-up on these tenders can contact Keystone at any stage. We would be happy to discuss your needs and where they may fit with your business growth plans. These public procurement opportunities are sources of business growth and innovation for companies across the country.

Please note, e-tenders often has public procurement opportunities incorrectly categorised so people relying on e-tender alerts could easily miss out on opportunities if they are dependent on it. E-tenders is only as reliable as the people inputting tenders and mistakes are made very frequently. The Keystone Column includes all live tenders posted on e-tenders that have five or more days until their deadline as at March 30th 2017.