Case studies

Providing sufficient information throughout procurement allows bidders to know what they are getting themselves into and minimise contractual risk, as well as supporting a fair and open contract.

For the InterCity West Coast franchise (2012 report), the Department for Transport's invitation to tender contained significant gaps on how the Department would calculate any capital needed from bidders. There was considerable confusion among staff about the primary purpose of the subordinated loan facility. Some bidders told us that when they asked for clarification on issues, staff did not appear to know the answers and it often took some time before there was clarification. We concluded that this contributed to cancelling of the West Coast procurement.

For Transforming Rehabilitation (2016 report), the Ministry of Justice set out its commercial strategy to bring new suppliers into the market, and put extensive effort into attracting a diverse range of potential bidders. While more than 700 private, public and third-sector organisations registered an interest, only one of its contracts was won by a supplier from outside the private sector. Voluntary sector bidders were put off by the scale, fixed timetable and associated risks, and a lack of detail about the Ministry's requirements for financial guarantees from bidders.

Our 2016 report on the UnitingCare Partnership contract found that bidders faced significant difficulties in pricing their bids accurately due to limitations in the available data. It was difficult to determine accurately the volume, services to be provided and the costs of providing services, and bidders had to make large assumptions, with scope clarifications made late and in some cases even after the contract was signed.

Contracts need to be profitable for suppliers to remain interested. In 2014, a supplier withdrew from providing contracted-out health and disability assessments (2016 report) for the Department for Work & Pensions following concerns over the negative impact of the contract on claimants, its reputation, staff and profitability. The Department and suppliers recognise that inconsistency in the approach to the contract, inflexibility in setting terms and potential financial losses reduced the attractiveness of the contract.

The motivation of the Ministry of Defence's supplier for military flying training (2015 report) to look for cost reductions within the contract is likely to have been affected by reductions in the overall value of the programme to implement new core training as well as the structure of the incentivisation regime. Its potential earnings reduced while its planning and infrastructure costs have been largely unaffected by the changes. During the procurement of the Fixed Wing contract amendment two bidders withdrew from the competition, leaving one bidder, as they had concerns about meeting the commercial and technical requirements of the Request For Proposals.