Finally to add my weight behind the falsehood that the result of a tendering process "must" go to the lowest bidder. It is entirely down to the purchaser as to how they weigh up the pros and cons of each tender submitted. It is very convenient for an organisation to say they need to save money so get it for the cheapest price you can, but that does not precluding those assessing the tender from flagging up where the bid does not meet the specification. If the level of detail provided does not give you insight into the suppliers ability to meet the specification, then the process has been flawed from the start.
I agree with your appraisal, but I also know (from a Contractor's point of view) that it is very difficult for Public Servants to justify not accepting the lowest bid.
The only time I ever experienced this with a public sector client was in the award of the tunnel and bridge contracts for the Oresund Crossing between Copenhagen and Malmo. One of the groups bidding were lowest on both the bridge and the tunnel contracts and the client was concerned this would stretch the resources of the consortium too far. The bridge and tunnel contracts were then awarded to two different groups of bidders, one of which was not the lowest bidder. An enlightened client who understood the risk and acted accordingly to ensure the road and rail link would be completed on time.
On many occasions during my career in construction we found ourselves on a tender list against "lightweight" contractors, who we considered would be unable to properly assess the risks.
The key to the bidding process is in the hands of the client, in drawing up a tender list of competent, financially stable contractors, and defining the scope of works accurately. The client also needs to identify the risks and decide which party is best suited to carry these risks, either individually or jointly.
For those who remember the bidding process for the IMUs at the time of Rail Privatisation, Jarvis were awarded the East Coast contract simply because many of the major UK contractors declined to bid for the contract, or heavily qualified their bids. It was seen as far too risky because there was no asset register. In other words the bidders didn't know what length of track or how many sets of points needed to be maintained under the contract, so how could they price the work?
Many of the major UK Contractors, mine included, were not prepared to accept this risk.
Contracting, particularly at the higher end, comes down to risk assessment at the various stages, pre-tender by the client's team, during the tender process by the contractor and their team when pricing the work, and again at the pre-award stage by the client's team. Decisions have to be made as to which party is best suited to competently manage the risk at least overall cost.
I don't believe a comprehensive risk assessment regarding the financial standing of Carillion was carried out before drawing up the lists of contractors selected to tender, or again before awarding the contracts.
The directors' remuneration packages, conditions of employment, and bonuses will now be examined to assess what contribution these "drivers" will have made to the collapse.
Also, I ask, was the reporting of losses carried out in a timely and proper manner.
The hedge funds were obviously well aware of the situation, as they have been "shorting" Carrillion for a long time.
Sad times for a lot of innocent individuals, and a massive impact on many lives.
