Written evidence submitted by Sodexo

 

 

 

 

 

 

 

 

 

ABOUT sODEXO

 

 

 

 

rESPONSE

Sodexo’s view on achieving value for money and effective delivery of public services through strategic suppliers, and government’s approach to ensuring this is achieved.

  1. Sodexo has been a strategic supplier to government in the delivery of public services since 2011, and holds 156 public sector contracts to deliver services in Defence & Government Services, Justice, Benefits & Rewards, Healthcare, and Universities & Schools.

 

  1. Sodexo believes that a competitive mixed provider market, which includes public, private and charitable providers, with social enterprises and SME’s in its supply chain, is the right model for government, and is supportive of the work currently being undertaken by the Cabinet Office to improve the procurement and contract management processes in place for strategic suppliers.

 

  1. Sodexo is actively participating in the industry work streams to assist in development of future solutions and improvements to procurement and contract management and the Supplier Partnering Programme to improve current contracts.

 

  1. It is important that companies providing services to the public sector have a public service ethos, and we are supportive of the new mandatory social value requirements in the updated Crown Commercial Service framework. In line with this, Sodexo recently launched its second Public Service Pledge (see Appendix), outlining its approach to delivering ethical contracts and working to achieve outcomes for the people we serve and the communities in which we operate.

 

  1. Sodexo is keen to work with government to ensure that the procurement process puts more emphasis on value, and focuses on outcomes and the needs of the end user. This is central to ensuring that the outsourcing model works effectively.

 

Sodexo’s assessment of the Government’s understanding of what it wants from contracts, and whether any particular department or area of government is better or worse.

  1. Sodexo is supportive of the ‘One Government’ approach to the procurement and contract management process, and benefits from a good working relationship with its appointed Crown Representative and Markets and Suppliers team.

 

  1. We are supportive of the government’s aim to ensure value for money for its services, transparency, operational efficiency, resilience, and accurate performance reporting.

 

  1. However, government departments have different procurement and contract management processes in place and are not necessarily joined up. They have different skill sets within their teams both commercially and operationally. This means that, in some cases, there can be a lack of clarity over what is required and a lack of detailed information regarding their assets/resources (in commissioning and then into operation).

 

  1. To address this, Sodexo is keen to see the development of consistent standards to be applied across all departmental procurement and contract management processes and ways of working with strategic partners.

 

  1. It is also vital that there is open and honest communication between government and suppliers in which suppliers highlight the challenges and pressure points, and identify solutions, ahead of the conclusion of the procurement process. This includes a discussion around the transfer of risk to suppliers.

 

How strategic suppliers work with supply chains and how government monitors this activity.

  1. Sodexo is committed to delivering services in partnership with its supply chain, and works with a range of small and medium sized businesses to achieve this. As part of its Public Services Pledge, Sodexo has committed to increasing its SME spend from 24% to 32% of its total spend in the UK and Ireland by 2025 across our public and private sector contracts. Within that, a total spend with SMEs on public sector contracts accounts for at least 33%.

 

  1. Sodexo has a Supply Chain Inclusion Programme to bring diversity into our supply chain and to help participants understand how a large organisation such as Sodexo operates and how to overcome the barriers, which enables participants to successfully bid to become a Sodexo supplier. Harnessing the strong relationships Sodexo has with government and NGOs, we identified diverse businesses that could be mentored within this internal programme.

 

  1. Sodexo also hosts ‘Meet the Buyer’ events where we meet with SME’s that are keen to supply Sodexo and has been focusing its buying team to work more with SMEs that we already use to increase their spend and distribution across our portfolio.

 

  1. We are also looking at ways that we can get our clients more involved to increase the exposure of SMEs and assist our clients with their own corporate social responsibility targets. Using our annual Salon Culinaire event in September to showcase SMEs.

 

The benefits or disadvantages of Strategic Supplier status and the proportion of Sodexo’s business involving public sector contracts. How its approach to public sector procurements differs from private sector procurements?

  1. Sodexo delivers a high volume of public services for the UK government, with 52% of its UK business with the public sector, in addition to 30% of its UK Benefits and Rewards business.

 

  1. The Strategic Partnering Programme provides suppliers with a mechanism for assisting government to make improvements in relation to existing contacts. Sodexo would like to see this mechanism extended to wider public sector.

 

  1. However, there are some continuing challenges that Sodexo feel need to be addressed in order to ensure effective procurement and contract management from individual departments. It is important that these issues are addressed to ensure the ‘One Government’ approach to strategic suppliers can be achieved.

 

  1. Sodexo would recommend the following would be more in alignment with private sector procurement

a)      Complex solutions are developed ahead of procurement activity within the private sector and also with some public sector organisations internationally, procurement activity is therefore quite a short process;

b)     The private sector treats Facilities Management as a service to support and achieve the aims of the organisation rather than a commodity;

c)      Timescales for tender responses provided in the public sector are a lot tighter than in the private sector. The public sector appears to spend a lot of time approving its business case internally which nearly always reduces the tender response time. Sodexo has pulled out of bids due to unreasonable timescales;

d)     Suppliers do not have enough clarity on the pipeline of the whole of the public sector activity to enable us to have our resources ready to respond;

e)      The focus should be on outcomes – what is the organisation aiming to achieve from the service – within this cost and quality will both be factors with appropriate weighting. Previous activity in government has focused on purely cost - this results in a poor quality service that does not meet the needs of the end user;

f)       Private sector tendering activity is usually led by technically qualified Estates/FM/Workplace and supported by commercial teams. In the public sector commercial teams lead procurement sometimes with very little input from end users and technically skilled operational people; and

g)      The private sector has better data and information on its assets and resources which enables far better due diligence and less assumptions taken by the supplier.

 

The impact of greater transparency on Sodexo’s relationship with government and impact on future contract negotiation.

  1. Sodexo is committed to operating in a transparent and ethical way, and regularly reports on the required financial and operational data.

 

  1. Sodexo would welcome the introduction of an independent regulator to audit outsourcing activity and to improve transparency in the relationship between government and strategic suppliers, particularly in relation to contract negotiations and identifying risk.

 

  1. We think there is merit in publishing performance data, in the form of a dashboard that compares supplier performance with other strategic suppliers and internally run public services. This would lead to greater transparency and would enable government to better demonstrate the value for money of outsourcing.

 

  1. It is vital that efforts to improve transparency in the sector are balanced with ensuring commercial confidentiality.

 

Sodexo’s view on the Crown Representative approach to engagement, whether it is better or worse than previous arrangements, and what information flows between our company and our Crown Representative about individual contract performance and our company’s business overall.

  1. Sodexo UK & Ireland has a good working relationship with its appointed Crown Representative, following a change in the appointment in 2016, and is supportive of the principles behind the model.

 

  1. Since 2016, Sodexo’s appointed Crown Representative has attended site visits and face to face meetings with Sodexo’s Chief Executive Officer, and has shown an active interest in Sodexo’s operations.

 

  1. Prior to the current appointment Sodexo had limited access to its Crown Representative.

 

  1. Sodexo’s Crown Representative regularly attends the monthly Strategic Supplier meeting where we provide our monthly report and has been available and active in addressing any contractual issues that have occurred.

 

How Sodexo’s relationship with its Crown Representative differs from its relationship with individual departments, and our assessment of the commercial skills in individual departments with which we work and in the Cabinet Office.

  1. Crown Representatives have more strategic oversight and understanding of running a commercial business at a high level, and Sodexo believes this support is valuable to strategic suppliers. However, this requires a different set of skills from those who are involved in the day to day management of contracts by individual departments, which is delivered by the Strategic Supplier team.

 

  1. Sodexo has a close working relationship with the Markets and Suppliers team and our appointed main point of contact, who has invested time in establishing a good understanding of how the business operates, our business model and our key points of differentiation from other strategic suppliers. This has included on-site engagement to establish an in-depth understanding of individual contracts.

 

  1. Sodexo is supportive of this function and sees it as central to ensuring a joined-up approach from across government. The Markets and Suppliers team is key to managing the relationship between the supplier and central government departments and we would like to see this broadened into the wider public sector. 

 

  1. There continues to be a skills deficit within wider government in terms of specific facilities management technical and operational expertise, and it is vital this is addressed in order to ensure the effective delivery of contract and services design, procurement and management.

 

The information provided to Crown Representatives about the performance of Sodexo’s business

a)      In relation to government contracts; and

b)     Overall.

  1. Sodexo submits monthly reporting to the Crown Representative and Markets and Suppliers team on our public sector segments (Defence & Government Services, Justice, Benefits & Rewards, Healthcare and Universities & Schools). This report was developed voluntarily by Sodexo and has been well received.

 

  1. The report includes operational performance and any issues/concerns, business development activity, stakeholder activity, and aged debt of our public sector clients, along with general news stories that are of interest to the public sector regarding our organisation.

 

  1. Additionally, we submit Strategic Supplier Annual Review information, which started last year.

 

The extent to which we are made aware of the government’s view of our aggregate performance across contracts and the extent to which we are aware of the Cabinet Office’s risk assessments of our company.

  1. We are aware our annual review information is summarised and aggregated against our strategic supplier peers – we have received the anonymised Strategic Supplier Annual Review Summary from last year’s review. We have not been made aware of the risk assessment regarding our organisation.

 

Sean Haley, Chair UK & Ireland, Sodexo

 

6 June 2018