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Business News 2009
Business News->Asian Business loses out on London Olympics 2012 contracts
Asian Business loses out on London Olympics 2012 contracts

(12 May 2009)

Alok Mitra , Chair of the Ethnic Minority Business Group (EMBG)Asian businesses in the UK are in danger of losing out on £2bn worth of London Olympic 2012 contracts due to a lack of information, knowledge and inertia according to the Ethnic Minority Business Group (EMBG). The group's research among its business members indicated that there was a perception of the 2012 contracts being "sewn up" among larger companies with considerable discrimination against small and medium enterprises (SMEs). A charge that was vehemently denied by Mike Mulvey, CEO of London Business Network, the organisation responsible for the CompeteFor, the procurement website of the London Organising Committee of the Olympic and Paralympic Games (LOCOG).



Mr Mulvey was speaking at a joint event organised by the EMBG and Hindu Council UK to help ethnic businesses engage with the opportunities that the London Olympics 2012 will bring to the nation. Hosted by Deputy Mayor Richard Barnes at City Hall on Tuesday 12 May 2009, the event saw 150 business owners gather to listen to Neil Walker, Community Relations Manager from LOCOG, Richard Sumray, Chair of the London 2012 Forum, Mike Mulvey, CEO of London Business Network, Kristina Richmond, Procurement Manager of LOCOG, Dr Rami Ranger MD of Sunmark. Dolar Popat CEO of Holiday Inn Express Hotels and Kamel Hothi, Asian Markets Director of Lloyds TSB, one of the major sponsors of the London 2012 Olympic games.

£9.5bn London Olympics Budget

London's 41,000 Asian owned firms represent 13% of enterprises in the Capital, employing some 210,000 people and generating 10% of its income. In his presentation, Mr Mulvey outlined the structural breakdown between the ODA (Olympic Delivery Authority) that is charged with building the Olympics infrastructure and LOCOG, which is charged with staging the games. Of the £9.5bn Olympics 2012 budget, £6bn has already been allocated to construction projects with a further £3.5bn available to large companies under the Public Sector procurement process. LOCOG, a commercially funded organisation, has a budget of £2bn with an available spend of £1.2bn for a range of activities from the handover event, licensing, venues, technology, sports and equipment through to culture and education. "The London Olympics 2012 offer an unrivalled opportunity, especially for skills training and apprenticeships" said Mr Mulvey "and we have a £23.4m programme in place to ensure that a proportion of the available spend goes to SMEs".

CompeteFor

He outlined how normal public sector rules apply to major contracts, namely a ratio of 4:1 (your enterprise has to have a turnover four times the value of the contract sustained over 3-5 years) and other common practices such as the need for three years audited accounts. He was keen to stress, however, that these rules did not apply to supply chain contracts such as those published on the CompeteFor, LOCOG's free online procurement service.

CompeteFor acts as a brokerage service between buyers throughout the London 2012 supply chain, and potential suppliers and provides access to business support services; building skills and capacity. The minimum requirements for businesses using the service are that they must have a Health & Safety Policy, Equality and Diversity Policy and a written quality management statement. The sign up process takes about 15 minutes and has been approved by the Federation of Small Business according to My Mulvey.

"26% of London businesses have signed up on CompeterFor and we have 71,000 registered businesses on the site today. 30.6% of these firms are led by women, 2.5% are run by disabled owners and I am pleased to say that 26% are BME-led businesses" stated Mr Mulvey "I urge you to take the time to sign up today. The opportunities are there, you should seek them out."

Dr Rami RangerDr Rami Ranger, MD of Sunmark Ltd highlighted the concerns the Asian Businesses have in relation to the CompeteFor platform. He said, "Companies started by new arrivals to Britain (immigrant-owned businesses) cannot compete with older, established businesses. We do not have the connections, resources and means to pay back favours. Small firms generally work more efficiently and cannot afford to employ those who can fill in contracts".

Mr Mulvey countered this by stating that Asian businesses should look to forming syndicates and consortia to bid for larger contracts whereby they could afford to pay for professional help in tendering. He also stressed that a number of CompeteFor contracts had already been awarded to SMEs and ethnic-owned businesses - a process monitored by CompeteFor.

EMBG Research on London Olympics 2012 Contracts

Alok Mitra, Chair of the EMBG outlined the results of the group's research among its business members and highlighted the key concerns about the tendering process for London Olympics 2012 contracts, namely:·

  • A large proportion of Asian businesses are non-IT literate and not able to take advantage of the CompeteFor online system

  • SMEs find it difficult to search out contracts and being flat, lean organisations, often don't have to time.

  • Pre-qualification on the CompeteFor site had created a few problems, particularly for start-ups

  • The requirement for 3-year and 5-year audited accounts

  • The need for Trade References

  • The lack of feedback and guidance on the process

  • The lack of support for the 'Fit to Supply' mandate

  • Competitors providing false data and the validation process used by CompeteFor to check on accuracy of the information provided

  • The perception that the system was "rigged" in favour of larger companies

  • The business scoring mechanism used by CompeteFor

  • The perception that buyers would still favour companies that they had previously done business with.

My Mulvey countered many of these concerns and highlighted that the CompeteFor process is anonymous at the initial supplier selection stage. He countered Baroness Sandip Verma's statement that "large scale public sector contracts were still not available to many Asian-owned businesses" by stating that public sector purchasing rules still applied to infrastructure projects, although LOCOG was working extremely hard to ensuring that the same did not apply to supply chain contracts."

Fit to Supply

According to the Business Link, "Purchasing decisions are increasingly based on whether suppliers can demonstrate their ability to deliver services and products to consistently high levels of quality, efficiency and competence. As well as private sector companies, central government and local authority bodies are particularly attracted to businesses with management systems standards in place."

Standards such as ISO 9001 for quality management, OHSAS 18001 for health and safety management and ISO 14001 for environmental management provide these assurances, as well as a framework to monitor and control business processes and risks. As a consequence, BSI and Business Link have created the "Fit to Supply" scheme, which offers a "simple, structured and cost-effective way for businesses to demonstrate competence through official certification". The scheme helps identify what is compliant and whether there are any gaps in a company's practices and procedures. Certified companies will be able to "confirm to existing and potential customers, investors, shareholders, employees and suppliers that they are officially Fit to Supply.

Alok Mitra stressed problems with the Fit to Supply mandate. "If a contractor fails to get a contract because they are not 'fit to supply' then the promise was that Government, through Business Links, would step in to help ensure that you can improve standards and become 'fit to supply'. Unfortunately, based on evidence from EMBG members, the system does not work and the people who are supposed to help don't really help very much."

EMBG is currently working on articulating the problems with CompeteFor, the eTendering process and engagement with UK's SMEs. " We are working on a proposal for LOCOG to ensure that they engage fully and provide access for all SMEs, BME and non-BME businesses."

Links

Vvisit the London 2012 business forum
Visit and sign-up for the CompeteFor service
Visit the Ethnic Minority Business Group (EMBG) website

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