The spending axe is falling all over Whitehall, with knock-on effects right across the rest of the public sector, but these hard times could still be good ones for travel management companies looking to do business with the public sector.

People who hold public purse strings will be looking for deals that offer good value and that help them to meet their efficiency targets.

And those parts of the public sector that never previously troubled to consolidate their travel spending will find themselves under pressure to do so.

Even with the impact of the current round of sending cuts, it’s worth remembering that central government, local government, the National Health Service, devolved administrations and quangos will remain huge organisations with a lot of money to spend.

Yet private firms can be deterred from bidding for public contracts by the perceived complexity of doing so. Lengthy processes and tender documents that demand information on everything short of the bidders’ inside leg measurement can be daunting, and appear unreasonably costly in terms of the management time needed to compete.

It is worth persevering though because the public sector has a massive advantage for suppliers – you get paid.

Invoices can go astray or be disputed like they can be anywhere else, but public bodies do not go bankrupt, delay payments due to cash flow problems, or abruptly vanish. Secure a public sector client and the payments are as guaranteed as they can be.

Steve Summers, chief operating officer of Key Travel, which deals with many public bodies, says: “It is difficult to generalise around such a diverse sector, which inevitably uses a variety of ways to buy travel. But it is largely true that customers in the public sector can be relied upon to pay, although fragmented approval processes can mean you have to wait a while for your money.

“Large aged debt can be a problem for a small supplier from any sector dealing in low margin goods/services and travel is no different.”

Vera Philippou, director of Delta Travel, which deals with a number of NHS bodies, agrees: “It is an advantage with public sector clients that you know you will get paid and they will not go out of business or disappear, and even if an invoice gets lost I know it will be paid eventually.”

She has though found bidding to the public sector a complicated process as “the pre-qualification questionnaires are often lengthy and sometimes hardly about travel.

“They instead ask about equal opportunities, environmental and health and safety policies.”

This approach is common, if a source of frustration to suppliers. It is driven in part by the normal desire of any client to know they are dealing with a supplier who is reputable and financially stable.

But the public sector will also wish to hold suppliers to the same standards by which it must operate.

For example, a public body’s reputation would be at risk if it used a supplier with a poor health and safety record, or one which disregarded environmental issues when public bodies themselves face targets for recycling and CO2 emission reductions.

Summers says: “It is right that any organisation wants to perform a level of due diligence on any proposed supplier, and of course there are European regulations that apply in most cases governing the process for such a tender process.

“There is an obligation on organisations, however, to ensure that the process they demand of suppliers is proportionate to the service being requested and that the process is not of a scale that it deters smaller organisations that may actually have the best solution for the client.”

Some tenders can absorb months of management time “something that the average TMC cannot support while at the same time fees are constantly being marginalised”, he notes.

A further hazard for bidders, Summers says, is the trend to use procurement consultants, “who are not necessarily audited or accredited, yet they are often given open access to run a lengthy tender process that requires suppliers to expose all of their intellectual property”.

“Again, one must balance the need for due diligence, which is the absolute right of the client, with the potential erosion of hard-fought differentials between TMCs, as the consultant moves onto the next job.”

Summers adds: “I certainly believe the industry would benefit from a code of conduct for travel procurement that encouraged clients to go deeper into the areas that matter and not to spend time disproportionately in areas that do not add value.”

So, what should those who want to win public sector business do to navigate this maze?

Paul Seddon, who advises clients on procurement for the consultancy
Expense Reduction Analysts, says: “Any TMC that is interested in becoming a preferred supplier to a public sector organisation needs to be reasonably well-informed about the processes of public sector procurement and to have a system to monitor for opportunities as they arise.”

Central government travel procurement is organised by Buying Solutions, on a framework contract which runs until March 2013.

The presence on this of suppliers NYS Corporate and Redfern Travel suggests, says Seddon, “that the door of even central government work is not closed to smaller TMCs, and getting on to the successor framework in 2012/13 is an obvious goal for an ambitious TMC that wants public sector business”.

More generally, he says, “public bodies welcome approaches from suppliers, so if you feel there should be an opportunity to do business with local authorities and the like in your region, then approach them as you would any prospective customer.

“If they have preferred supply arrangements, these will come up for renewal, competitively, so get your interest recorded.

“To equip yourself to win in competitive tender for public bodies, you need preparation. Very few win at their first attempt, so be prepared to work at it and also to get advice.”

Wendy Wills, managing director of the tendering consultancy Ways2Win,
advises: “Public sector tendering really does not have to be the black hole that it is perceived to be.

“As long as you are aware of the requirements and process then it can be seen as a ‘game’ that is full of strategy, risk and excitement.”
She points out that the thresholds at which public contracts must be advertised across the EU were lowered in January “meaning that far more opportunities will be publicly ‘up for grabs’ across Europe – helpful because there is more openness and accountability, unhelpful because there will be more competition”.

Tendering processes in the public sector will be either ‘open’ or ‘closed’, the difference being that in the latter there will be a pre qualification stage though which bidders must pass to be invited to tender.

Wendy Wills says: “The rules of the game have been designed by the EU so our local buyers have a huge task in front of them with every tender to abide by the complex legislative process, so they are not just being awkward when they get to the stage of inviting us to tender. Many are actually very helpful.

“There are more and more opportunities to freely meet with your local buyers that I would advocate just phone up your local procurement departments and ask.”

But what about the cuts? They could be both a threat, in that there will be less business around, and an opportunity in that the public sector will want help to find good value.

A spokeswoman for the Office of Government Commerce, now part of the Cabinet Office Efficiency and Reform Group, says: “Travel is likely to be one of the categories included in the new approach to centralisation of procurement of common categories of goods and services within central government.”

The ERG is looking at Whitehall spending of all kinds, with a brief to conduct centralised procurement for commodity goods and services to drive down prices, renegotiate contracts with major suppliers across government.

Steve Summers says: “There is clearly pressure being exerted on all manner of public sector and non-profit organisations to save money. In addition to staff headcount reductions, customers are reducing the overall travel miles, lowering the class of travel and adopting a more managed approach to the travel category.

“It is this last feature that will enable the TMC to add more value to its clients, helping them implement cost saving strategies and controls that bring real savings to bear, rather than using more draconian methods.”

The certainty of a public contract is worth having in economically turbulent times, but winning them is a matter of understanding the culture and requirements, keeping alert to opportunities, and keeping one’s spirits up when the questions asked seem onerous or pointless.

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