Tag Archive | "procurement"

BDO says average single business fraud is £4.5 million

BDO’s six monthly Fraud Track update shows an increase in the number of business fraud cases that were reported.

The report for the six months to the end of May 2011 also showed a year-on-year decrease in the value of fraud from more than £1 billion to £920 million. There was also a significant drop in the value of an average single fraud, down £1.5 million to £4.5 million.

However, there were 205 reported cases of fraud in the six month period, the highest number since the inception of the report.

Simon Bevan, BDO’s head of fraud services, said the insurance and finance sectors could be dealing with fraud through civil means rather than criminal prosecutions. He believes the financial services sector could be reluctant to report fraud and 90% of fraud is never reported. A lot of those who do report fraud question whether the police or the Serious Fraud Office are the best people to deal with it.

Whilst the value of reported fraud in the insurance and finance sectors has nearly halved, public sector fraud has almost doubled since this time last year.

The report also showed that only 2 cases of procurement fraud where reported to the police in the last six months, even though this is the most common type of fraud. Bevan pointed out that two-thirds of all the investigations he has conducted over the last twenty years have involved procurement fraud.

85% of buyers think they should be doing more to combat the problem of procurement fraud, according to a SM100 poll earlier this year.

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We’re a bit short on wise men in so many areas

Much discussion this last week about the awarding of a contract for railway rolling stock to a German company rather than a UK one. One of the reasons given was that we aren’t allowed to select on the basis of where the supplier is based, so we had to go with the cheapest offer, which just happened to be German. Them’s the rules.

OK, so if they are the rules, how come Germany has trains made in Germany and France has trains made in France then? Are those Johnny Foreigners not playing it with a straight bat? Clearly something is amiss, and certainly we wouldn’t indulge in any such nationalistic practices. After all, we’re British and we don’t do that.

Or something. From where I sit it’s more a case of we’re British and we don’t know the rules. Again.

Let’s leave aside Bombardier’s financial handicap, which could be minimised if we had the will to do it. Let’s also leave aside the thorny question of exactly why a commercial operation like a train company has to lease its rolling stock from a government-funded supply organisation subject to procurement rules. Yes we have to adhere to both OGC’s procurement strategy and the wider EU one (parts of which are totally Greek. No, literally: Greek. A key judgement is quoted in its original Greek…). And yes, those rules say you can’t select on a national basis, only on an EU-wide one.

So how do the Germans and the French square that circle? Simple, they read the rule book…

What you can do is evaluate the wider economic benefit of your decision. In other words if you save £1 million (sorry, €1 million) on the purchase but lose €2 million in associated business, then you can make that one of your selection criteria and adjust the weighting you give it. As long as everyone knows the criteria up front – which they will, that’s also a rule – you can then justify buying a more expensive product on the basis it saves you money overall. Simples.

And it’s not just procurement. One of the banes of my life is something called ITIL version 3. ITIL V1 was a simple way to manage an IT estate effectively and safely; ten inter-related areas that controlled everything in what became known as Service Management. Then came ITIL v2 and this was a well-rounded, fairly comprehensive solution that actually worked and that built on the many good points of v1. And paid my mortgage for a good few years.

Then along came v3. A moose in a field of gazelles. Vast, overwhelming, minutely detailed; ten products are now libraries in their own right, with encyclopaedic coverage of anything you are likely to want to do. And the bureaucrats love it; they can write swathes of processes, tying things down so well that you almost can’t move without checking the rulebook first.

Ah yes – the rulebook. We’re back to that.

Because the rulebook states quite clearly that ITIL is not a methodology, it’s a best practice framework. Just like Prince 2, you’re supposed to follow the core principles and use as much as you need to make your particular environment work. So why am I reviewing a 78 page process then?

Because people don’t bother learning the rules. And rules, as Wilde said, are for the obedience of fools and the guidance of wise men. Such a shame we’re a bit short on wise men in so many areas.

About the author: Alan Watts

Alan has worked in IT for most of the last 35 years, and first went freelance in 1996. He has been a PCG member from its start and has been spreading the message that freelancing is a professional career choice for many years. Alan also runs Malvolio’s Blog, a personal but highly informative take on the life of the modern freelance.

Alan Watts, Principal Consultant, LPW Computer Services

© 2011 All rights reserved. Reproduction in whole or in part without permission is prohibited

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Are more public sector contracts on the cards for contractor accountants’ clients?

UK contractors will be pleased to learn that the government has committed to overhauling the process by which SMEs compete for public sector contracts.

This will be achieved by cutting bureaucracy and becoming more open and transparent in its dealings.

The national chairman of the FSB, John Walker, says this is a victory for small businesses in the UK. The FSB has been campaigning for SMEs to have the same opportunities to public sector contracts as large organisations do. The new measures to get rid of red tape and open up transparent communications channels, which were outlined on Monday, are most welcome, he said.

There also needs to be a genuine change in culture within government procurement when it comes to dealing with SMEs, Walker added.

According to the Federation’s statistics, 70% of smaller businesses rarely bid for public sector contracts because of lack of awareness.

The situation is so bad that the UK ranks 24th out of 27 member EU states as far as access to public procurement markets goes. Only 24% of public sector contracts are awarded to small businesses in the UK, compared to 44% in France.

The REC has also been campaigning for a change in procurement practices for several years. Kevin Green, the chief executive of the REC, said that at last we are seeing action instead of mere words. The REC wants to see a competitive, dynamic market where recruiters can compete based on their capabilities and competences. He added that the REC will monitor the implementation of the new measures and will continue its constructive work with the Cabinet Office and OGC.

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