Obtaining services by deception

In the comments under this post, Bloke in North Dorset shares an anecdote:

When I was consulting we were bought out (by a French company) and I was instructed to place a dummy recruitment add in the trade press and use the resulting interviews to find out what was wrong in the various mobile companies. I was then expected to go back to their management with “solutions”, leaving those who’d come for the interview hanging around having wasted a day’s holiday. I told them to fuck off and resigned.

Over the course of my career I have every now and then been asked to invite a contractor or supplier to submit a proposal purely so my own organisation can get a handle on the scope of work and the cost for their own budget. As a supplier of services, I have also been approached by client companies who were after the same thing.

Often an organisation will have no idea how to outsource a project because they can’t even write a scope of work. They need a scope of work because their internal policies compel them to launch a competitive tender, rather than single-source the job. They also need a budget price for the work for internal approval. So they’ll invite a known supplier to submit a proposal on the pretext that they are actually bidding for the job, which will often entail a site visit and preparation of documents at the supplier’s expense. When the client company receives the proposal they fiddle with it, rename it “Scope of Work”, and put it out to competitive tender. More often than not the original supplier who did all the work will lose the bid, usually because their price has been leaked enabling competitors to undercut them, and because there was always a favoured company lined up to do the work in the first place: they just didn’t know how to do it.

It’s a shitty way to treat suppliers, yet I have seen this practice encouraged by managers whose arrogance doesn’t allow them to see how unethical it is. To a lot of people working in client companies, contractors and suppliers are expendable pieces of shit who are beneath contempt. If the supplier is half-smart they’ll twig pretty quickly that they’re being given the run-around and simply decline to participate. Client companies get awfully pompous when a contractor does this, and it’s fun to watch. They don’t quite say “How dare you? Do you know who we are?” but they come close.

There is a better way of doing this, and it’s what I insisted on doing last time I was in such a situation. I went to a known supplier and asked them for a quote to conduct a site visit and prepare a full scope of work document. They would be paid for their efforts, and the document would be used for the competitive tender of the job proper. The amounts in question were trivial but it meant the supplier could not complain about unfair treatment, and I could tender the job with a clear conscience that I’d been completely transparent. In the end the project got cancelled and with the approach I’d taken the supplier didn’t feel aggrieved that they’d done all that work for nothing.

Obtaining “free” services from contractors or suppliers by pretending their submissions are part of a tender is something that happens way too often in my industry and I suspect many others. It’s a practice that does no good whatsoever regardless of how clever a manager thinks he is by “saving” his company money, as it undermines trust. Companies should quit doing it.

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30 thoughts on “Obtaining services by deception

  1. I wonder if there’s a way to spin that situation round back in your favour?

    Write a “scope of work” document that overestimates the amount and cost and complexity of work involved?

    Use Bloke in North Dorset’s situation to headhunt consultants?

    “Actually, we’re not really here for an interview for that position… just like you. Would you like to work for a company that doesn’t make you do this?”

  2. Edit: in case it’s not clear, you’d be scaring off your competitors, and you’d be able to place an accurate bid that still undercut the remaining competition. Then you’d do the work and lo and behold you’d find that there was an easier, cheaper and simpler way to do it.

  3. I work for a contractor and it goes on all the time, not only that but even if it was legit clients often shop your price and your smarts as well. Not much can be done as a contractor is always going to quote for work, they have to. Wont change in my view.

  4. Mate of mine who used to be a partner for Retail Clients in a major consultancy, ‘retired’/’was retired’ and set up a consultancy dealing with the Spanish supermarket chains.

    He refuses to deal with one. That one contracts you once, asks for details again and again at every stage, puts spies all around you and then do it all in house, probably not as well but good enough.

    We get requests for budgets all the time, no information just a price per hour request, obviously we are not in line for any work, they just want to use us (we are, of course, a premier provider) as a check on what they are paying to others.

    Once you realise what’s going on, it is no problem to handle. We got caught out once, doing all the needs audit/diagnostics/design for a training plan free on the understanding the big plan would vcome to us, only to have it handed over to cheaper competition for execution. Once and once only. Spat blood over that one.

    Yes, there are some pretty immoral people out there.

  5. That one contracts you once, asks for details again and again at every stage

    Ah yes, the endless requests for “more information”. The Oilfield Expat wrote about this.

    We get requests for budgets all the time, no information just a price per hour request, obviously we are not in line for any work, they just want to use us (we are, of course, a premier provider) as a check on what they are paying to others.

    Yup, I once stopped quoting work to a major client because we were obviously just making up the numbers on a bid-list.

  6. My personal favorite is always the realization that you were “checkbox fodder” and your work was just there to highlight the pre-chosen vendor.

    -XC

  7. Decades ago I was subcontracting to a company doing a prototype attraction for the Mouse. Apparently they were absolutely notorious for that kind of stunt and companies that dealt with them more than once insisted on being paid for every stroke of work on the assumption that what they were being asked to do was the only thing they would be doing.

  8. Interviewing people for a job that there is no chance that they will get – either because the job does not exist or (as often happens, particularly in government and academic jobs) because the job has already been promised to someone else and it is necessary to go through the “process” of interviewing multiple candidates – is a really, really shitty thing to do. I’m very pleased to hear that Bloke in Dorset resigned over it.

  9. I’m not surprised. Big companies have hired stupid people.

    My brother in law twice removed is a big cheese in IT. Cost of preparing a bid for some imbeciles (i,e, the govenrment) who don’t know what they want. Roughly £2 million a time.

    No wonder that when they actually get a job they milk it for contract variation etc.

  10. In my early days you could fit everything on a single page of A4. Then the suits moved in and tender docs morphed into shelves of ring binders. To the best of my knowledge no one ever read the technical and commercial evaluations beyond my Executive Summary, the binders being filed away for when one of the non-operator partners questioned project costs some two or more years later.

  11. They would be paid for their efforts, and the document would be used for the competitive tender of the job proper.

    Most of them would just look at you and grin.

  12. james
    “I’m not surprised. Big companies have hired stupid people.”

    Prices Law; The square root of the number of employee’s produces half the output.

    Competence grows linear, incompetence grows exponentially. In other words. the bigger the company, the higher the percentage of incompetence.

  13. David Moore
    I’m not that good at maths but I think you may have a point.
    What’s the square root of 19,321?

  14. In my early days you could fit everything on a single page of A4. Then the suits moved in and tender docs morphed into shelves of ring binders. To the best of my knowledge no one ever read the technical and commercial evaluations beyond my Executive Summary, the binders being filed away for when one of the non-operator partners questioned project costs some two or more years later.

    One thing that used to drive me nuts was you’d spend months preparing a tender, submit half a dozen ring-binders full of “essential” technical and commercial info, and the very day of submission you’d hear Company X has won the job. Either Company X was always going to win the job or it came down to a straight price comparison I don’t know, but nobody even so much as looked at the actual submissions.

  15. My brother in law twice removed is a big cheese in IT. Cost of preparing a bid for some imbeciles (i,e, the govenrment) who don’t know what they want. Roughly £2 million a time.

    No wonder that when they actually get a job they milk it for contract variation etc.

    Yes, exactly. Companies factor in the cost of preparing tenders when fleecing a client on the jobs they win.

  16. “Companies factor in the cost of preparing tenders …”

    You’d certainly think so wouldn’t you? It can be tricky getting some people to understand it, even harder to get them to understand that each tender you might win needs to cover the costs of the ones you don’t.

  17. Matthew;

    “Write a “scope of work” document that overestimates the amount and cost and complexity of work involved?”

    Not really seen that work; reason being that a quote that appears to be wildly over the top, for no apparent reason, gets ignored in the first place. Second reason is that if the scope does get used as the basis of a tender, and you come in low, you’ll probably get ignored simply because of that low price, with the added bonus that your scope now looks suspect.

    There’s a slightly different way of playing it, which does at least allow you to walk away early, particularly if the thing doesn’t smell right from the off. Just ask a load of questions of the buyer (hopefully the actual decision maker), aimed at seeing if they understand their own spec, what the delivery structure might be, typical contract terms and the like. With any luck, you can avoid disappointment when it goes to the incumbent, projects that are likely to become death marches, and utterly obnoxious or otherwise incompetent management.

  18. you’ll probably get ignored simply because of that low price

    I’ve never seen that happen. What I have seen is three tenders come in:

    Reputable Company 1: $20m
    Reputable Company 2: $19m
    Del Boy Inc: $8m

    And everyone running about congratulating each other on “saving” the company $11m. Nobody stops to think they’ve not understood the scope of work. Final cost to complete once Del Boy Inc. has mangled it: $40m.

  19. “Final cost to complete once Del Boy Inc. has mangled it: $40m.”

    Seen it too often to find it funny. I nicknamed it the Management for Failure system, everything is done to the letter of the said process or contract and nothing good ever comes from that.

  20. Just lost out on a big tender in Darwin this week, even though we had a conforming bid and our price was 3.5% lower than the winning contractors, which are a far larger firm than us. The client is providing us a debrief on Tuesday where I expect them to tell me that the winner had a far bigger local presence (we have none) and a larger balance sheet than us, meaning that they are easier to sue if the project goes bad. The project included lots of open excavation in the Darwin swamp over two wet seasons, so maybe the big guy is better for it than us.

    This also puts a bit of pressure on me now to make forecast this year.

  21. I don’t know, but nobody even so much as looked at the actual submissions.

    Yep. Life’s too short; and I’m not sure a client necessarily has the technical expertise to understand what he’s reading. He wants someone to lay out his options; and more often than not, which way to jump – wants to be reassured that if he signs off on something it won’t come back to bite him. Of the countless tender invitations I’ve been involved in there was often as many as 30+ potential bidders. On a good day, 20 would respond; 10 of those wouldn’t make the first pass; and out of the 7 real possibilities, 3 would stand out. The ultimate choice is often subjective.

  22. “I’ve never seen that happen.”

    Different industry, different type of project?

    Where I’ve seen it has been in supply/configure IT kit with support services attached, normally replace something that’s died within 3 hours, say. This means that we know what the market price of the kit is, and can make reasonable guesses about what volume discounts might be available. So “ignore” might mean a quick phone call to discover that the kit’s dirt cheap because it’s refurbished or something.

    Software development can be slightly different, but you can get the same effect.

  23. Just remembered, closest to the false economy type of thingy that I’ve seen;

    New software selected, needs to be rolled out to about 800-1000 workstations. Decision taken to replace all the workstations with new ones from the off, rather than upgrade each existing one piecemeal. Which is fair enough, saves a lot of arsing around with screwdrivers. So, each new machine is expected to have a life of getting on for 5 years, because it’s a big hit. Evaluation of the software and application has shown that it’ll work with 8Gb of RAM, but runs like a salted slug. Techies specify a minimum of 16Gb RAM, which goes in the spec, but they’d much prefer the 32Gb boxes due to price points and configurations and stuff, given the anticipated 5 year life.

    Spec goes out, vendors respond. Several give the option of 12Gb machines. Business unit notices associated drop in price, queries spec. Under pressure, techies admit 12Gb will do. Business unit complains to IT Director that IT have over specified the kit and are wasting money. IT Director (a complete pillock, BTW) promptly drops everyone in it, sucks up to the Business by signing off on the 8Gb machines and proudly announces he’s saved even more.

    Roll out happens, business complains about performance within about two days. Fix is to install additional 4Gb in each of 1,000 workstations, out of hours, which starts to happen about 3 months later.

    Unfortunately, many of the experienced and capable techies have either already left or are in their notice periods by this point, basically because they’ve finally had enough of this pillock, and were only hanging around to get the rollout onto their CVs anyway. Amongst the leavers are several of the guy’s own personal, senior hires.

    Oh, and a fair few noticed that the vendor had also cut back on various other elements of the kit, because of the new, lower, price point, meaning there wasn’t much scope for further upgrades. About 90% of the machines were out the door within 18 months.

  24. DuckyMcDuckface,

    I’m sure this sort of stupidity is commonplace in most large organisations. I once worked at a swanky hotel in Manchester (or rather, in a hotel that was about as swanky as could be for Manchester). It was a fairly new place and when they built it they didn’t install air conditioning in the rooms – probably to save money. As soon as the place opened, customers complained noisily that the rooms were like ovens. I heard the cost to retrofit the AC was the same as to build the entire hotel.

  25. Yeah, come across a few, but seen some corkers at quite small firms, and small teams as well. The one above happened at a firm that wasn’t *that* large, as far as it goes, but it could afford it (at the time, anyway). There was a fair amount of history behind that project, and several other completely unrelated cock-ups as well, including having to actually buy both the software vendor and a hardware distributor to get a project to complete, and sort of cocking-up on the IP of another such that it ended up with a relatively unknown software house, that went on to be acquired by a major global firm that promptly refactored their main product line on top of the technology. Though by that point, the firm had blown up in a pretty nuclear way, a couple of years previously.

  26. McDuckface – happy to concede that I don’t know what I’m talking about, but I thought, in the situation Tim described, where a manager who doesn’t understand the technical issues himself will…

    invite a known supplier to submit a proposal on the pretext that they are actually bidding for the job, which will often entail a site visit and preparation of documents at the supplier’s expense. When the client company receives the proposal they fiddle with it, rename it “Scope of Work”, and put it out to competitive tender.

    …if the competitors are basing their own quotes off the scope of work document, then I thought maybe the “known supplier” could rig things in their favour by overstating the work involved, thus forcing up their competitor’s bids. Their own bid would appear suspiciously low to a clued-in manager, but if this manager were then he could presumably do his own scope of work document.

    Having thus won the contract, they then come in ahead of schedule and under budget, and impress the client with how surprisingly efficient they were – or, they faff about, secure in the knowledge that the client thinks they’re undertaking something difficult and time-consuming.

    I have no experience with this sort of thing and so don’t know if it would be possible to pull off at all; it’s just a thought as to how a supplier finding themselves in the above situation could turn it to their advantage.

    And speaking of stupidity at small businesses…

    Me: Hey boss, I notice you’ve put out a bargain bin with a “Special offer: 2 for $5” sign on it. How much are we selling one book for?
    Boss: [thinks about it for a moment] $2.50

  27. Morning Matthew,

    Up above Tim and I (sort of) agree that different things happen in different industries, for probably much the same underlying reasons; I’ll agree that such a thing can happen, but, IME, any single person trying it will, in the words of Michelle “of the Résistance” Dubois, get away with “zis onlee wuurnce”. However, many individuals will try it, so the general situation will probably repeat across sectors, firms and time.

    So, given that I’m now going to take “happy to concede that I don’t know what I’m talking about” as a sign that I can freely wibble away, probably in a highly condescending manner;

    “invite a known supplier to submit a proposal on the pretext that they are actually bidding for the job, which will often entail a site visit and preparation of documents at the supplier’s expense.

    You, the Management, have an existing relationship with a firm, that you lie to, such that they spend money and time. You’ve got a couple of problems here; the first is the assumption that suppliers don’t talk to each other, and that staff don’t talk to pretty much everyone. The biggie tho’ is that you lied to the vendor. Word will get around quick, and all your suppliers will start becoming very wary of you, and basically a) become difficult to deal with and b) ultimately jack their prices up.

    (There is a scenario where the lie can be a good thing; you’re somehow bound to the supplier via some sort of framework agreement, but it’s become apparent that they’re absolutely useless, and there’s a bloody good chance that their competitors knew this anyway. If you can concoct a situation where *they* effectively walk away…).

    Anyway, turning it around to your scenario; you, the vendor, see through the buyer’s pretext quickly enough to come up with a plan, which is fine, but it doesn’t change the fact that you’ve been lied to, *and you know it*. The key here is that you have an existing relationship with the buyer; if you don’t, things might change a bit.

    One problem with the idea of padding the scope and then coming in under budget, lies in actually winning the subsequent tender, as (in price terms) your bid will have to be low enough to win, but high enough for you to out-perform to some reasonable level. Apart from that, *you’ve been lied to*, so why would you want to leave money on the table anyway, especially given that your competitors might well see through your padded scope, when they work up their bids? Finally, the bloke who lied to you has just managed a successful project that came in on-schedule and under budget. There is nothing to stop him doing it again, or dropping you right it at a much later date (if the guy is not merely inexperienced, but actually incompetent, he could turn out to be ambitious, venal and malicious as well. You might have created A Problem).

    The alternative is to under cook the scope. Again, your competitors might notice this when they work up their bids, but if the project goes ahead, and fails, then there is nothing to stop the guy dropping you in it, since you wrote the scope, and he has your documentation.

    The thing you really need to achieve is not recover the cash, but get the guy out of the loop. So, your best course is probably to do the best job you can on the scope, then when it goes to tender, a strongly worded letter to the guy pointing out your disappointment, and declining to bid. Definitely cc his management, and possibly higher, depending. In certain circles, it might be considered polite to call him, just to let him know the letter is on it’s way.

  28. Wow, that was longer than I thought it would be. Sorry.

    Unrelated;

    One thing that really drove me nuts as a permie, and still does to a degree, is a CYA variation, which is really a failure of courage or confidence.

    Senior management realise there’s A Problem, so they drop it onto Manager Bloke to come up with a solution. Manager Bloke is actually a pretty straightforward type of guy, so he comes up with a solution or two. Hell, he might even have asked his proles from some ideas.

    Solution goes upwards, but the decision comes back to hire a consultant to do A Report into The Problem.

    After six months, The Report recommends exactly the same solution, but of course it now gets taken seriously, simply because there is an invoice stapled to the front for a quarter of a million quid.

    At this point, the proles under Manager Bloke are mildly amused and bemused, prone to many comments along the lines of “I would told ’em that for a tenner”.

    They rapidly become rather less amused when the Contract built from the Report gets signed, and the initial flush of actually-pretty-likeable-apart-from-that-twat Senior Consultants recedes after about 12 days to a tide of fresh university graduates whose shoes still squeak and have difficulty understanding that the business day starts in the morning.

    Manager Bloke becomes slightly less of a decent guy with each subsequent resignation, particularly when he is informed that he is unable to begin the process of recruiting replacements, as the necessary cash is going to the Consultants.

    At this point, it doesn’t really matter whether the Solution is a success or not. Anyone who hasn’t left no longer gives a shit either way.

  29. Ah, yes.

    Been there.

    Customer wrote rubbish ITT document.

    3 short-listed suppliers. At least one was a dive-to-the-bottom cost-cutter, who cut costs by not reading the ITT. And under-bid. And was selected.

    I ended up called in to correct (i.e. re-write) their engineering architecture. The project was eventually taken out and put down humanely. After the idiots on customer staff had all left post.

    Still, it was a couple of years of regular billing. Couldn’t have done it full time, though.

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