Public AdministrationWritten evidence submitted by MSQ Partners (PROC 17)

This document relates to the experience of responding to the tender for Communications—Creative Service Delivery RM988. OJEU Ref 2012/s 156–260800.

This evidence is specifically in response to the question “Does the Government have the right skills and capabilities to procure effectively?”

This document is written jointly by Roger Parry and Peter Reid, Chairman and Chief Executive of MSQ Partners, respectively. Both of the respondents have considerable experience of procurement, both within and outside the marketing communications sector, and Peter Reid conducted a number of procurement-related projects during his time as a consultant at McKinsey & Company, prior to joining MSQ Partners.

MSQ Partners [MSQ] is a UK-based marketing communications group which operates eight specialist agencies each with specific communications skills including design, digital marketing, advertising and public relations. MSQ applied for selection to be one of 10 agencies to be selected to undertake integrated communication campaigns (called “Lot 1” in the tender) on behalf of Government bodies. The tender process is due to be completed in February 2013 (after several delays). A number of MSQ agencies are still being considered. The holding company itself, MSQ Partners, was eliminated on a technicality on the basis of a “pass/fail” question on the subject of relevant case studies. MSQ Partners comments on the process are laid out below.

(1)MSQ Partners is a UK based marketing communications group which is owned by its own employees. It has offices in London, Birmingham, Glasgow, Leeds, Manchester and Belfast. It employs some 600 people and has a turnover of some £100 million. MSQ would be regarded as a classic British SME and is, in theory, exactly the type of company the Government want to see selected for procurement of Government work.

(2)The MSQ approach is to own specialist agencies which are leaders in their own fields and then offer integrated campaigns by combining the skills of the proven specialists which are under common ownership and where all senior staff are shareholders. This structure encourages the maximum degree of inter-agency co-operation.

(3)Various individual MSQ agencies have done work for the Government for many years and several of the eight MSQ agencies were on the old COI roster (and several are still in consideration for appointment under the new Communications tender process). As a new entity (MSQ Partners was created in December 2011) has not been on the COI roster in its own right.

(4)The abolition of the old COI obviously presented a challenge for the Government Procurement Service (GPS) as the COI has built up considerable experience of the communications sector and had enjoyed many years of managing tender processes for professional services in the area of communication. Although the generic aspects of all tender processes are similar, significant sector-specific skills are required in designing a relevant questionnaire particularly for the procurement of professional services.

(5)The experience of MSQ is that, in the design of the tender process, the GPS went out of its way to try to ensure that the tender for Communication Services (RM988) agencies was transparent and fair. However, the overall approach and specific content was not sufficiently tailored to the requirements of procuring marketing communications services (vs. procuring tangible “goods” or the delivery of “outsourced processes”). Moreover, this lack of a tailored approach meant that the tender process contained certain flaws from the outset, which ultimately made the outcome of, at least Lot 1, less than transparent or fair in some areas.

(6)As a result, it is our combined view that, despite a significant and diligent up-front investment, it is highly unlikely that the tender process will ultimately deliver value for money to either the government or the tax payer.

(7)The tender process seeks to appoint 10 agencies in a framework structure so that these 10 agencies (and no others) would then be eligible for consideration by a wide range of Government departments and bodies. Thus the key objective for an agency competing in the tender was being picked as one of the 10.

(8)The tender document contained a large number of questions some of which had a pass/fail structure and some which invited the writing of detailed proposals which would then be scored on the basis of the degree to which they met the tender’s objectives. The implication was that it was the detailed proposals that carried all the marks and that the “pass/fail” questions were simply a screening process. In practice, it turned out that some of the pass/fail questions were in fact judged on complex, subjective criteria not simple pass/fail. This was not made clear.

(9)Specifically, one of the “screening” questions asked respondents to provide three case studies which provided examples of where the Group had delivered certain of the services listed within the Lot Requirements. A number of apparently well qualified agencies/groups (including MSQ) subsequently failed to progress beyond the screening stage since it was deemed that they had not demonstrated experience of the full range of services being procured within the Lot. It was neither made clear that demonstrating the “full range of services” was a requirement, nor, in our opinion, would it have been possible to do so, given the breadth of services specified. Equally, had this been clear in the question we would have obviously provided different case examples, which focused on more multi-disciplinary campaigns and sought to demonstrate as far as possible the breadth of our capabilities.

(10)MSQ (like other agencies) invested hundreds of hours in the submission process—the vast amount of which time was spent on the detailed questions about the approach to integrated communication which we were led to believe would be the main criteria for selection. None of these detailed and carefully considered answers would have been even read because of the “fail” on the ambiguous pass/fail case study question which was presented in the tender as a relatively unimportant hygiene factor, rather than a key aspect of making the selection.

(11)It is, moreover, ironic that UK based and owned groups like MSQ which have been created specifically to do integrated work by combining the skills of specialist agencies have been excluded from the process, whilst foreign-owned consortia, that in some cases have no common ownership and no track record of integrated work, are being considered by an accident of the process. It would appear that the Government objective of favouring domestic SMEs is not being served by the procurement process.

(12)The tender also requested pricing information which, in simple terms, was based on hourly rates for specified roles the GPS assumed existed in communications agencies such as “Account Director”. This approach will have led many agencies to “game” the system by putting down unrealistically low hourly rates for the specified roles (to gain maximum tender points) in the expectation that, if selected and appointed, they would bulk up their fees by putting in more hours, or by agreeing with the actual client extra work from individuals not on the specified role list—ie, the pricing matrix screen in the tender would be meaningless in terms of what the ultimate client actually paid (not least since ultimately projects will probably be awarded based on the total estimate supplied by the agency for a given project and not with reference to hourly rates submitted in the tender).

(13)In practice, therefore, the final selection of the 10 agencies is likely to exclude some of the best qualified candidates either because they did not realise the pass/fail questions would be subjected to subjective assessment and/or because they submitted realistic hourly charging plans which made them look expensive.

(14)The language used in many of the detailed questions was ambiguous and in some cases repetitive and mutually inconsistent. It is likely this happened as the individuals writing the questionnaire had limited experience of the way communications agencies operate and the questions were modified from other tender processes. The result is that some of the questions ask the same thing in different ways which will make them very difficult to score effectively. This will lead to even more weight assigned to the scores of the pricing matrix mentioned above which will further, potentially, exclude agencies which would have made ideal partners for various Government campaigns.

(15)Additionally, the detailed questions failed to focus on the key skills or areas that truly differentiate between marketing communications agencies and their suitability for a public sector roster. None of the detailed questions requested information around the skills and capabilities of the respondent group, nor did they rigorously test the expertise and experience of agencies in delivering public sector work. Instead, the bulk of the questions were either related to “process management” or focused on how groups would theoretically address conceptual marketing problems, such as the generation of a “Big Idea”.

(16)The practical suggestions that flow from our experience are listed in the paragraphs below. These are obviously specific to the communications tender, but are probably relevant to other tender processes.

(17)A draft of the application document with all questions should be pretested with several of the types of agency that are likely to apply. This would instantly have shown up those questions which were ambiguous.

(18)The pricing matrix question should be removed and replaced with a question about actual operating costs of the agencies submitting—ie, salaries paid, rent paid etc. This would allow assessors to select a range of high cost and low cost operators. The final choice of which agency to pick from the 10 (the choice made by the actual Government client) will always be based on the real price quoted for the work and the creative ideas suggested. The pricing matrix of the tender would be irrelevant and will only have served to exclude agencies which did not “game” the process. To have excluded an agency from the chosen 10 on the basis of a theoretical pricing matrix makes no sense at all when selecting professional service firms. Equally, “value for money” is often better delivered in these circumstances by negotiating a “volume discount” or incorporating an element of “performance related remuneration” into the contracts of successful applicants rather than focusing on “hourly rates” as a key tender criteria.

(19)Because appointments are made for three years the flawed process shuts the door to Government work on many agencies which might actually be very well qualified for particular campaigns but which have been excluded because of the ambiguity of the questions. To address this it might make sense to appoint two extra agencies each year to the integrated framework to allow Government clients maximum choice.

(20)An alternative approach may be to have a larger number of agencies pre-qualified but to select them with a much simpler, quicker process. For example you would keep in all the questions about financial stability; lack of criminal records, having the relevant insurance policies etc. which are obviously valid for pre-qualification. The pricing matrix would be dropped and replaced by a statement of costs. The numerous and repetitive questions about approach to integrated communication could be replaced by a single 1,000 answer (perhaps focused on the challenges of delivering value for money in public sector communications and the respondent’s experience in this area) which could be assessed by a panel.

(21)If a larger amount of resources were available, a further alternative would be to ask agencies, in the screening phase, to submit their credentials in the relevant areas of expertise, provide details of some relevant case studies and answer 1/2 questions linked to the specificities of doing public sector work and the group’s suitability to be included on the Government roster. Following this screening stage, approximately 25 agencies might be invited to deliver an in-person presentation to a GPS team (including marketing professionals from key departments) exploring the topics in more detail and providing the team with a potentially richer flavour of the quality and the positioning of the individual agencies, following which the roster agencies would be appointed.

January 2013

Prepared 18th July 2013