I want to emphasise this is not a Brexit post! If you want to post on Brexit start your own. Thank you.
So we have put out to tender for a supplier of new passports. The current company (UK based) is over £100 million more expensive. They employ a few hundred in the UK - because they produce some of the current passports overseas anyway.
They lose out to the competition on price and now will appeal because it's wrong and that a UK company should produce passports. Ignoring (again Brexit and the fact we are in the EU still)... that £100 million is a saving worth having.
Could they have not bid a cheaper price and won honestly? Happy for De La Rue to make passports.... but to go to the courts. I hope they lose. £100m pays for a lot of NHS care!
EDIT: A quote:
"Based on our knowledge of the market, it’s our view that ours was the highest quality and technically most secure bid,†the company said, while admitting that its bid was not the cheapest. “In the light of this, we are confident that we remain the best and most secure option in the national interest.â€
Last edited by: rtj70 on Tue 3 Apr 18 at 01:35
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Perhaps they feel that the other company was too cheap and is a case of you get what you pay for. Maybe they are correct. KFC changed long term suppliers and look what happened there.
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It concerns me that Delarue consider that the winning bid was less than their cost price.Something smells
One thing I learned in a lifetime of involvement in high value procurement is that you get what you pay for.
We have all seen what happens when large contracts are awarded at minimum margins for suppliers...think Carillion
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So who specifies what security measures go into the new passport? is it the company or the government?
I hope that we won't be going backwards in security measures?
Also if they are produced 'off-site' (not UK) then they'll need to keep the current good turn around time for applications, last time I needed to do a simple renewal (online) it took just a week, which I thought was very impressive.
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Surely the turn round time for a new passport is down to the Government Passport Office, not the printers of the blank documents.
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>> Surely the turn round time for a new passport is down to the Government Passport
>> Office, not the printers of the blank documents.
unless of course they are using a JiT supply chain. There is a security risk in having lots of passport blanks in ready stock.
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Presumably there was a specification and a scoring system by which offers were evaluated. Scoring need not necessarily be a simple pass/fail on each criteria. There may be additional marks for offers going beyond the requirement - for example innovative solutions. Railway franchising is certainly done that way.
De la Rue seem to be saying their offer was better on quality and security and should have won on that basis notwithstanding the additional costs. While the difference - £120m according to Guardian - sounds a lot it will be a tiny fraction of the overall price and spread over life of contract.
They may also think Gemalto has underbid and hopes to recover the difference when 'events' mean Home Office needs to vary contract to improve security and/or quality. They'd hardly be first to try that one would they?
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>> They may also think Gemalto has underbid and hopes to recover the difference when 'events'
>> mean Home Office needs to vary contract to improve security and/or quality. They'd hardly be
>> first to try that one would they?
I can assure you that De La Rue were, and are, just as efficient and ruthless at contract management as Gemalto could be.
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>> I can assure you that De La Rue were, and are, just as efficient and
>> ruthless at contract management as Gemalto could be.
I don't doubt that for a minute.
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Ok so what we are saying is that blanks are shipped from Europe then your personal details are applied in the UK?
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Apparently, Gemalto is partly owned by the French Government, and it is thought they may have radically under-priced to get the contract.
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>> Apparently, Gemalto is partly owned by the French Government, and it is thought they may
>> have radically under-priced to get the contract.
The contract value has been reported as £490m. That implies that De La Rue quoted £610m, or 25% more, although I am certain it will be more complicated than that.
The people who have done the procurement will have some understanding of where the difference arises. They will have required the bids to detail the build up of costs and will understand where the differences are (and will have used that knowledge to test, question, negotiate and evaluate).
We have to hope and trust they have done that honestly and competently.
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>> The people who have done the procurement will have some understanding of where the difference
>> arises. They will have required the bids to detail the build up of costs and
>> will understand where the differences are (and will have used that knowledge to test, question,
>> negotiate and evaluate).
Then the whole thing is handed over to their political masters who will do what is best for their image or dogma in force at the time.
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>>We have to hope and trust they have done that honestly and competently.
My experience says that they will absolutely have done it honestly, thoroughly and in great and objective detail.
"competently" depends on perspective. Frequently the goals dictated to a Government Procurement Group do not align with the needs of the appropriate Operational Group.
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>> Apparently, Gemalto is partly owned by the French Government, and it is thought they may
>> have radically under-priced to get the contract.
Radically underpriced - 25% under radical?
Presumably if the government decides to award to De La Rue after all, all of the other bidders will also complain and we'll have to run the bidding again.
And if we then still go with De La Rue, the £110M will be divided up as a per passport cost and passed onto us when we need a new passport. So we will all pay to keep the 100 jobs in the UK printing passports.
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Yes. The printers supply blank passports
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>> Yes. The printers supply blank passports
Security wise they only contain the anti forgery methods, which is basically watermarking, security inks (some dissolvable, some invisible, some photo chromatic, some thermo chromatic, some fluorescent) nano printing and typeface (deliberate imperfections) and of course holograms.
The chip will just have the boot loader, the mag strip will be blank, both will be written on issue with the magnetic OCR printing, photo and foiling
Then the whole thing will fail to be recognised every time you try and use the automatic passport control booths at Gatwick.
Last edited by: Zero on Tue 3 Apr 18 at 12:14
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The automatic passport readers do seem a whole lot better now than they were a few years back. No problems on Sunday at Stansted and they were a lot faster than humans would be.
I miss the welcoming smile though!
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>> I miss the welcoming smile though!
Wouldn't know, never had one. They do a great scowl tho.
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>> Then the whole thing will fail to be recognised every time you try and use
>> the automatic passport control booths at Gatwick.
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....though, with a French-manufactured passport, the e-gates are now much more likely to go "bof!", and let you through........
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>> ....though, with a French-manufactured passport, the e-gates are now much more likely to go "bof!",
>> and let you through........
Only if you are an asylum seeker from Calais.
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The bit I still don't get is that De La Rue are saying their bid was the more technically secure bid, surely the HM gov set the standard and the bidders equal what has been asked for, so it should just be manufacturing costs.
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I have a feeling that under EU rules, which we are still a party to, the Government may not dictate the supplier of passports beyond setting the rules and conditions for the proposal assessment.
So it's difficult to see what can be done unless De La Rue can come up with a materiel difference in the proposals and the Government can come up with a reasonable explanation as to why that now matters when it didn't before.
By the way, we all do know that the EU doesn't dictate the colour of the passport and we could have had a blue one all along if we'd wanted, right? Croatia has a blue one, for example.
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A fuss over nothing.
Free trade means just that, you go to whoever gives you the best deal. De La Rue make passports and driving licences for many other countries so they can hardly get all indignant because someone else gets the contract for ours.
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As I recall, and t's almost 10 years since I last had any contact with De La Rue, they do NOT print all their passports in the UK.
Some of the current passports are printed in the UK, but categorically not all. I have no idea of the proportions.
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>> I have a feeling that under EU rules, which we are still a party to,
>> the Government may not dictate the supplier of passports beyond setting the rules and
>> conditions for the proposal assessment.
>>
...above a certain total value threshold (which is, AFAIK, still not much above £100k) this is the case (subject to a few 'escape' clauses).
The requirement would have been advertised in the OJEU (Official Journal of the European Community) for open tender.
There are all kinds of games you can go through to try to 'bias' the selection, but on appeal you had better (at least appear to) be squeaky-clean (against the documented requirement).
TBH, it appears to me that Gemalto are a rather bigger player in this space then De La Rue, and that in itself might account for some of the cost/pricing disparity. If this is then consolidated by just meeting the requirements of the tender, rather than 'gilding the lily' as is a possible interpretation of De La Rue's statements as loser, then there might be little surprise.
One thing is sure, however, and that is that some lawyers will make a killing.
Last edited by: tyrednemotional on Tue 3 Apr 18 at 16:04
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>> As I recall, ... De La Rue, they do NOT print all their passports in the UK.
That was my understanding too. So if they want to win this by being UK based they are already on shaky grounds.
By revenue Gemalto is much bigger than De La Rue and may well have more employees. But I have no idea how the sub-businesses that would handle passport manufacture compare. Gemalto are big in security and will have made the SIM in your phone for example.
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>>Free trade means just that
Indeed it does. And in the years to come this will happen more and more, as indeed it should. The more trade agreements we have with a wider range of countries, continents or regions then the more they will be able to compete in the UK.
Ironically this is likely to significantly expose UK manufacturing. Whilst many UK companies will enjoy competing in a wider variety of countries under potentially broader and broader trade agreements, UK manufacturing is likely to get it's collective a*** thoroughly kicked.
I don't think there's anyway to avoid that unless the UK simply isolates itself and has trade agreements with nobody.
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The EU is less about free trade than protectionism, but that is a losing battle in the end.
Without tariffs and regulatory friction (remember when the French insisted that all imported VCRs had to be sent to Poitiers for approval before they could be sold?) there is absolutely no possibility of making everyday stuff competitively when labour is 10 times the price of the competitors'.
Big manufacturing is pretty well extinct already. Brexit will finish it off, even its enthusiasts admit that.
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I see De La Rue let the appeal extension period expire, thus giving up hope of their "appeal" against the award of the contract to the foreign company.
They reckon the cost of tendering was about £4m. I know that it can be a costly process but if that's what it costs them to tender I'm not surprised they've issued a profit warning!!
www.bbc.co.uk/news/business-43807190
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>>They reckon the cost of tendering was about £4m.
There's a sort of Parkinson's Law that applies to how much is spent on that sort of thing. The job expands to absorb the money available for its completion.
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>> They reckon the cost of tendering was about £4m. I know that it can be
>> a costly process but if that's what it costs them to tender I'm not surprised
>> they've issued a profit warning!!
Didn't Manatee extrapolate a bid of £600m so .7% or something?
And bear in mind that's will be a fully allocated cost calculation, not an incremental calculation.
Last edited by: No FM2R on Wed 18 Apr 18 at 20:52
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> And bear in mind that's will be a fully allocated cost calculation, not an incremental
>> calculation.
Does that mean there's a cost factored into the profit if they lost the bid?
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I think NoFM means they will have included the full share of overheads (which they would have borne anyway) and the wages, pension, company car costs of all the people who worked on it (even though they would have been employed regardless) and probably lobbed something in for 'opportunity cost' to arrive at the £4m.
In other words, the amount that they would have been better off by, had they not done it, will be a lot less than £4m.
Unless they employed somebody like Accenture to do it for them, in which case it probably did cost £4m. :)
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As Manatee said;
Incremental calculation includes just those items which you only spent because of this bid. "What did this bid cost us over and above what we would have been spending anyway?"
A fully allocated calculation includes all those things that you would have spent anyway, whether or not you did this bid - overheads. So not just booking 1 month of your time, it will include one month of electricity for that part of the office, 1 month of your pension, 1 month of your company car, one month of your health insurance, etc. etc. etc. And that's probably what the £4m is.
Sooty, I didn't quite grasp your question, could you rephrase?
"Does that mean there's a cost factored into the profit if they lost the bid?"
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Sorry I didn't understand the terminology, it's a difference between 'partial' and 'full' costs.
I understand it now, thanks.
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>> Unless they employed somebody like Accenture to do it for them, in which case it
>> probably did cost £4m. :)
>>
...that's merely the starting bid before "change control" kicked in.... ;-)
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>> >> Unless they employed somebody like Accenture to do it for them, in which case
>> it
>> >> probably did cost £4m. :)
>> >>
>>
>> ...that's merely the starting bid before "change control" kicked in.... ;-)
RFS you mean.....
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>>
>> RFS you mean.....
>>
...you know....there are so many (non-IBM) meanings of RFS (some of them quite rude) that I prefer to stay with my original wording (unless you want to use "scope creep").
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UK Passports and best contract price - sooty123
