1.6 To achieve their respective objectives and work to a common goal with a single business focus, each side needs to understand the objectives and business of the other, and that understanding needs to be gained during the procurement stage of the deal. We found that authorities and contractors had made efforts to do this. Figure 3 shows how National Savings and Siemens Business Services (Siemens) gained an understanding of each other's business. Both parties regard their relationship as being very good.
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| How National Savings and Siemens came to understand each other | |
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| How National Savings gained an understanding of Siemens' business | |
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| Contractor's view 'National Savings were very clear that the strategies of the businesses needed to be aligned. They were pro-active in seeking information from us about our operations, strategies, and financial standing. National Savings also visited Siemens AG to satisfy themselves that Siemens as a whole fully supported the proposed partnership.' | Authority's view 'National Savings sought a genuine understanding of Siemens AG's strategy and Siemens' organisational structure and attitude and approach of key individuals. Detailed evaluation undertaken of Siemens' financial position and future strategy of the business.' |
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| How Siemens gained an understanding of National Savings' business | |
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| Contractor's view 'A pre-condition of Siemens bidding for the contract was that the National Savings business strategy was aligned with that of Siemens. During the procurement this was achieved through understanding the procurement documentation, which was comprehensive in this respect, and numerous discussions with National Savings.' | Authority's view 'Understanding was vital given the scale of the outsourcing. Numerous workshops, discussions and interviews undertaken as well as an extensive due diligence process.' |
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| Source: National Audit Office survey of authorities and contractors | |
1.7 Some contractors, however, considered that authorities made little effort to understand their business. One contractor felt the authority had relied on its advisers to build a relationship with the contractor during the procurement. In another example, a contractor said that the authority did not appear to comprehend that the special purpose company formed to deliver the PFI project was a commercial organisation with business objectives.
1.8 Some authorities and contractors have found it valuable to have their respective objectives set out in the contract. An alternative is to document them outside the contract but in a format where they can be easily accessible to staff working on the project.