Been doing a quote for about £10k worth of work with a Plc recently. All going well, we had the best price and a purchase order was being done… until the legal department stepped in and informed my contact that they only used Company XXX – even though their quote was almost twice as much for exactly the same service 😐
How the hell can that happen???
So my contact at the Plc is a angry as he did a load of work gettng prices, etc all to no avail, I’m pee’d off as we’ve lost a nice contract for no good reason while another [much bigger] company is making a massive profit.
I am officially in a grump for the rest of today 😥

Preferred supplier syndrome; they will have an arrangement. The buying company is supposed to benefit from stable prices and delivery quality. Your contact should have known this before starting the purchasing process.

Don’t give up just yet: there’s lots of penny pinching going on at the moment so if your price is really attractive, they might find a way of wriggling out of their arrangement.

Some time ago we had a bid on a contract for approx. £45k all inc. We lost it to somebody else who charged £75k+VAT and still managed to make the project collapse. Why did we loose? “You’re great but too cheap.” – got told off the record. “Best business practice.” – officially.

“You’re great but too cheap.”

I’m not saying you were, but you could have been. Its in nobody’s interest to let a contract where there isn’t enough in it for all parties.

To the OP – that sucks. I’d be providing them with an invoice for generating the quote. They may tell you to stick it, but its got to be worth a punt. Also, don’t feel too sorry for your contact in the company. If what you say is true, he wasn’t doing his job properly.

I’ve never understood this. On a totally different scale, but when I used to order stuff for the Uni office I worked in – we were told we HAD to use one supplier, who were crap and expensive – even though we could get the same stuff much cheaper elsewhere.

I suppose the rationale is that dealing with one company keeps things simple?

This happened to a friend who used to do trackside clearance for Railtrack – their small company lost the contract to a national company who had quoted almost twice as much. The national company then approached him and asked if he would subby to them at a price lower than he had initially quoted. 😯

Basically the national would be principal contractor managing subbies but not doing any of the actual physical work, just skimming a huge profit off the top.

One of the reasons train tickets have gone up I suppose!

I’ve never understood this. On a totally different scale, but when I used to order stuff for the Uni office I worked in – we were told we HAD to use one supplier, who were crap and expensive – even though we could get the same stuff much cheaper elsewhere.

I had a potential customer who told me that our prices were better, that our service as an international rather than local company was probably better and he was sorry that he couldn’t do business with us. He was buying from his brother in law.

I’ve never understood this. On a totally different scale, but when I used to order stuff for the Uni office I worked in – we were told we HAD to use one supplier, who were crap and expensive – even though we could get the same stuff much cheaper elsewhere.

This is often the case in universities, however it’s done that way because generally they don’t pay the book price for items, they pay way less and get free delivery etc. On top of that, the supplier may be naff pricewise or at delivering what you’re looking for but if another department is a major user of X and this company does that well and cheaply, the sting for you may be the tradeoff of significantly larger gains in other departments.

You just have to hope the purchasing team are on top of changes. Our policy means we have to go with preferend suppliers for every day stuff but have free reign over odds and ends, upto 6K value, beyond that it has to go to a purchasing team or be signed off by higher staff.

if another department is a major user of X and this company does that well and cheaply, the sting for you may be the tradeoff of significantly larger gains in other departments.

Ah that might make some kind of sense then I suppose.

Basically the national would be principal contractor managing subbies but not doing any of the actual physical work, just skimming a huge profit off the top.

I know someone who works on the railways – apparently there are several layers of subcontracters with each taking a healthy slice for doing next to bugger all. Some of the tales of inefficiency and ‘non-jobs’ are absolutely staggering. As you say no wonder train tickets cost so much – wasn’t competition and the private sector supposed to bring an end to all this inefficiency?

Had a similar one recently…

We were called (by a charity) saying they had £10k they needed to spend before the year end and could we quote and subsequently invoice for £10k as an upfront to the actual work starting next month.

Of course we can.

Then she called back saying it had to be £10k INC. VAT not plus VAT.

Well okay then – but we will just do slightly less work.

Then she called back saying she actually only had £8k (inc. VAT)

Ohhhh…. fair enough – we will take out a couple of functional specs from the website build.

So we ask for a purchase order so we can invoice and all goes quiet. We call and chase several times and eventually she responds by saying she found someone to do it cheaper.

My business partner spoke to her on the phone telling her of our disappointment etc – and that we had by now spent several days specifying the project, putting quotes together etc. She was very rude and just put the phone down on him!

We had 12 guys working on the project, all local and enthusiastic. The company that won it were from far afield and had no local knowledge (paramount in that field). They offered me a subbie job for less than I get from letting my wife work. The project has collapsed, old clients still email me asking when we’ll be back.
I suppose this is the sign of today – nobody cares about anybody else.

Working in an IT company without a purchasing department (i.e. the technical teams do the purchase admin themselves) I’m usually quite glad of having preferred suppliers as it takes a lot of hassle out of getting several quotes, the main reason for it though is it makes life easier for our finance department when it comes to paying bills.

Ofc once a supplier learns they’re a preferred supplier then prices tend to creep up so I’ve often had to waste other suppliers time just to get a quote (that I’ve no intention of purchasing from as I’m not allowed to) so I can beat down the price of the preferred supplier. So the hassle factor for me goes up (and yeah I do feel guilty :p ).

My business partner spoke to her on the phone telling her of our disappointment etc – and that we had by now spent several days specifying the project, putting quotes together etc. She was very rude and just put the phone down on him!

Although she sounds like a PITA and perhaps someone you really don’t want to do business with anyway, I think your colleague’s call was one you could have done without. I guess you’re on the blacklist for any future work now (although as per first sentence perhaps not a bad thing).

Sometimes you have to take it on the chin, keep stummmn and move on.

sharkbait – dont suppose there’s any point in you offering to act as sub-contractor to the bigger company at your bid value, them making a clear margin on top based on their winning bid to cover any PI/marketing overhead?

dont suppose there’s any point in you offering to act as sub-contractor

Not really as I know they ofer the same [document scanning] services as us, so they may as well do some ******* work for their money!
Still annoyed 🙁

Not really as I know they ofer the same [document scanning] services as us, so they may as well do some ******* work for their money!
Still annoyed

Be careful not to cut your nose off to spite your face.

Seriously – Stoner’s suggestion is a good un.