Public Sector Buyers Ask ‘Where is the MEAT?’
Where is the beef? is a popular catch phrase – one that has even driven US presidential campaigns. However, in the public sector MEAT has replaced BEEF with the focus shifting from the lowest price to the Most Economically Advantageous Tender as the primary basis for awarding contracts.
Well, at least that is the theory. Like you I live in the real world and I know many of you selling to the public sector will say, ‘MEAT is a smoke screen, price is the only thing that matters’. So, let’s keep an open mind.
MEAT Gets Reconstituted
The acronym MEAT which stands for Most Economically Advantageous Tender is a recognition that the lowest price tender is not necessarily the right choice, or even the best value. As a result public sector buyers are advised to focus on the optimal ratio of price to value. So, is this happening in practice and what are the implications for they way sellers sell.
As anybody who has ever made a purchase is sure to have discovered, the cheapest is rarely the best, or even the best value. There are a range of factors other than cost and in particular what is got for the cost and the issues of the broader business case.
Total project and full lifetime cost are vital considerations too. After all, there is no point saving 10% on building costs, in respect of a hospital that will cost an extra 20% annually to run, or will depreciate fully over 20 years, as opposed to over 50 years.
That is why buying decisions are a little more sophisticated than finding the lowest cost tender, unless off course it is for clearly defined commodities, or rigidly fixed specifications. In these instances the issues of ROI and business case may well be sidelined.
Now ROI, or business case are term that are not as widely used in the public, as in the private sector, however both can easily be substituted for by the term MEAT.
Helping Buyers Find the Meat
- The lowest price?
- The Most Economically Advantageous Tender?
Sellers must find new ways to interact with buyers around the price-value equation. That is because buyers, just as sellers, are not accountants, and may stumble with cost benefit equations, the quantification of benefits and the creation of a ROI/MEAT.
Herein is a new role for the seller – to help the buyer to build the business case, or to build an economic-social model that defines MEAT for the specific purchase in question.
That is a model that the buyer and the various project stakeholders own that can withstand the intense scrutiny of internal auditors, a Freedom Of Information request, or perhaps even the press.
Sometimes Cost Is The Only Issue!
Public tendering via the competitive bidding process may constrain sellers by presenting a fait accompli specification. It limits the focus to just one side of the costs benefits equation – that is cost.
In other words if the specification is set, then the only basis for differentiation is price right? Well, limited interaction with the buyer around the issue of specification means that proposals or tenders are limited in terms of their ability to influence the specification.
However that does not mean that it is should not be the seller’s objective. If all the seller has got to work with is the price tag then perhaps he, or she must walk away.
Price Myopia Affects Buyers And Sellers
A sellers we often complain that buyers are too focused on price, to the neglect of other key considerations that could ultimately result in a better deal overall. However, just as buyers can be myopic when it comes to price, so too can sellers.
The role of the modern seller has to be to influence the specification, not just to take what is given and calculate the price. The fact that sellers are not called to the table until specifications are set (often set in stone) means that sellers must find new ways to engage with buyers earlier in the buying process.
S0, here are two questions for salespeople to consider:
- Who likes paying taxes, or thinks they are paying too much tax?
- Who thinks that their tax money is put to good use and that there is little, or no waste involved?
Better Public Buying Benefits Sellers
In helping public sector buyers to buy, sellers will be helping themselves as well as doing a considerable public good. That is because better public sector buying is to the long term benefit of all.
There is understandable public ire when public sector waste is exposed. Just look to the revelations of public sector excesses in the UK in recent weeks. We all want our public servants to make our money go further. That includes salespeople just as it does any other group.
All this means we want public servants to get better at buying. After all bad buying in the public sector is not in the interests of the sales profession, just as it is not in the interests of the tax payer. That means helping buyers to buy is firmly part of the seller’s new job description.
In recent years Governments have invested considerable sums defining public sector buying processes, training public servants in buying, putting e procurement at the centre of buying and generally scrutinizing public spending. With pressure to cut government budget deficits this trend is set to gather even greater momentum. So, for sellers helping buyers to find the MEAT is something that is here to stay.