Delivering Government Contracts — An Interview with John Fernau

John Fernau, fernausolutions.co.uk

For SMEs who want to learn about doing business with the UK government, there are few better people to talk to than John Fernau. John was the head of procurement for the London Olympics before running procurement for the Home Office. Now his company, Fernau Solutions, offers assistance and support to businesses wishing to sell to government.

John has a unique perspective on government procurement, having worked both on the buyer and supplier sides. We interviewed him on his advice for suppliers to government once a contract is won.

Please could you tell me a bit about your experience and the work you’re doing now?

I’ve been on the buying side of procurement for just under 20 years. I was Head of Procurement for the Olympic Delivery Authority for six years and then I was the Commercial Director of the Home Office, so I was responsible for procurement and contract management there. After a couple of years of doing that I thought it was time for a change in career and I thought I might address something that frustrated me at the Home Office. The supplier pool was quite limited and that meant that the solutions and the ways forward that suppliers were suggesting tended to be quite repetitive. I thought if I could use my experience on the procurement side to help SMEs and new entrants to win government contracts, that would diversify the solutions on offer, benefiting businesses themselves and the government. I’ve been doing that for the last three years.

Once your business has won a government contract, what’s the first thing you should do?

The first step is to read and understand the draft contract before they sign it. All the terms should be as in the tender, and the scope and the timeframes and the programme should be all as per their bid. Often in high profile projects where there’s a major stakeholder such as a minister or a councillor who takes an active interest, there is the potential for them to insist on bringing things forward or changing scope. As a new supplier to the government, you might feel a bit overwhelmed and be willing to change the way that you do things. However, it’s really important that you diplomatically resist that pressure and run your programme in your normal timeframes. While you might annoy them by refusing to do things you wouldn’t normally do, if you then deliver on all the timeframes, the client will trust you. Whereas, if you agree overly ambitious programmes at the beginning and don’t deliver, your lasting impression will be of unreliability. That’s why it’s really important that you stick to your guns.

What are your tips for making sure you deliver all contract requirements and that you have proof that you’ve delivered?

I think there are two sides to this. First, you must make sure that you can absolutely deliver what you promised, so if you’ve earmarked the people who have to deliver this contract, you need to have those resources ready as soon as the contract starts. Secondly, when you’re negotiating how the contract might work in practice, make it clear how the client will know and accept that you have delivered. This involves defining milestones in a programme and setting out the processes for feedback and sign off. Be absolutely clear on how the client will know that your service, or whatever it is, has been delivered. I’ve seen a lot of situations where that’s been unclear and that causes contention.

Are SMEs at a particular disadvantage when the scope of a contract changes? If so, what is the best way round this disadvantage?

They can be because they don’t necessarily understand how the public sector manages its contracts and they particularly might not know the tactics of a lot of the big contractors, who say, ‘Bid to win and deliver to margin’. This means you bid extremely competitively to win the competition. Then, when the contract changes, as it may well do, they can increase their margin when they quote for how much it will cost for the changes. Some of the smaller suppliers, new entrants and SMEs, might not understand the difference between a competitive situation and a non-competitive situation, which can cause them problems.

How common a problem is scope creep? Can you think of any examples?

It’s very common in big and complex contracts. It also becomes more prevalent when there are lots of different users involved, because they all have needs that could change. This is why IT is the sector the most renowned for scope creep. A good example of how to control this involves change control. When I was at the Olympic Delivery Authority there was a change control board that was chaired by the director of construction who hated change, because he knew that change can threaten progress. That’s the sort of discipline you need.

If you are a supplier and it is your first time dealing with this kind of thing, what’s a good way to respond without threatening your relationship with the government buyer?

There shouldn’t be any reason that the relationship should change in any way. You may think it’s good that the contract’s getting bigger, but have a note of caution in your mind, especially if the contract isn’t big or complex, because a lot of changes might suggest that the client doesn’t really know what they want. As it’s their satisfaction that will build your reputation, it’s a good idea to build in some form of change control.

Big and complex contracts almost always inevitably have change, and so do IT contracts. The change itself is not necessarily bad, but the issue is how it’s managed. You need to encourage your client to put in proper change control procedures, because continual and uncontrolled change will prevent you from delivering. You won’t be able to get any traction and if the client is changing their mind all the time you might well end up somewhere completely different to what you started.

Does this ever become antagonistic? If it does, do you have any examples of how to resolve those kinds of issues?

It can get antagonistic if the scope wasn’t very well defined at the outset. For example, there was a major contract with one of the Home Office’s agencies where the contract wasn’t particularly well defined. The supplier came in, but unsurprisingly they find it hard to deliver something that wasn’t that well specified and it got a bit ugly at that point. If you find yourself in this situation, my strongest advice would be to negotiate and agree a way forward. Do not walk away. You should clarify what the requirements are, rebaseline how long it will take to deliver those requirements, then begin delivering. If things still don’t work then your relationship with the client is going to get worse, so your intention must be to agree a baseline that you can deliver, then go ahead and do it.

You said not to walk away. Is there ever a situation in which you should walk out on a contract?

I think it’s the absolute last resort because it will do you lasting damage. Regardless of how badly behaved the client has been or how poorly they’ve made decisions, your reputation in the public sector market will be as someone who walked away. However, if the scope has changed and you don’t think you can deliver it any more, you might have to tell the client that the scope needs to change back or else the contract won’t be viable and you’ll have to terminate. Additionally, if the client does not meet their contractual obligations to you so that you cannot deliver, for example if they withhold information or resources, you have no option but to walk away. If you fear you are heading towards that situation, my advice would be to really behave strictly in accordance with the contract. You need to give the client repeated advice that they are not complying with you and that they need to meet their obligations, because if the client starts to think about possible termination, they will start to behave more contractually too.

If you’re about to sign a contract and you notice that there are requirements in the contract that exceed those in the tender, what’s the best possible way to approach that?

We’re back to that problem where you’re under pressure to agree to something and you worry about kicking up a stink. You need to say, diplomatically but assertively, ‘This isn’t what I bid for and it isn’t what I can deliver. If we go ahead it’s going to be bad for me as I can’t deliver and bad for you as the client.’ For a bit of extra leverage, you might use the commercial argument that the services in the contract aren’t what was procured.

You mentioned before that one of the reasons for scope creep could be political, it could be that this is somebody’s pet project. Is this problem really distinct to the public sector or is it something you also notice in the private sector?

I think it happens anywhere, but the difference with the public sector is that that senior sponsor may well have made commitments to early delivery publicly. That leads to a rigidity that’s particular to the public sector, they won’t let a project slip because they will lose face and lose credibility in the face of public scrutiny. This creates a real pressure which ultimately leads to some things going wrong.

In contrast to this, what are the specific benefits of contracting with government?

In the most basic terms, the government is a good client and you will get paid. I think the more strategic point is that, once you’re over the threshold it’s easy to stay there, so you can carry on winning more contracts. In some parts of the public sector, that’s even stronger than others, so once you’ve built your reputation, further sales and further contracts will flow quite easily, possibly easier than in the private sector

Is there anything in particular you would like us to mention on behalf of Fernau Solutions?

My key offering is my 100% win record for the bids I have supported. My focus is on bid support, so if people have a tender coming that they’ve been targeting then get in touch. I’m very happy to help people put together very strong bids and I can offer that full range of service, including bid writing.

Thanks very much for sharing your time and expertise.

Find out more about John’s bid support service by visiting fernausolutions.co.uk.