Memories of Charlie Hurley – Negotiating with your Hero!

Charlie Hurley passed away on April 22nd at the age of 87. That name will mean nothing to most people but to football fans of a certain generation, and in particular Sunderland fans, he will be remembered with great affection and respect. I met him twice, once at the age of about six, then again many years later, as I described in my “Bad Buying” book. Here is the relevant extract.

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After I left the Mars Group, I worked for a smaller food firm that owned a dozen small to mid-sized businesses. I worked on acquisitions as well as looking to save money through “group buying”.  One firm supplied several of our businesses with plastic trays for frozen and chilled meals, so I wanted a meeting to discuss a central deal for all our firms – with the aim of achieving a substantial discount on current pricing, of course.

Their sales director came to see me. I didn’t quite catch his name on the phone, but he introduced himself as Charles, and after a few minutes, asked me where I was from – “I’m picking up a bit of a north-eastern accent”? Yes, I said, born and bred in Sunderland. Ah, he replied. I worked in Sunderland for a few years. What did you do? I asked.

“I played for the football team. I was Charlie then, Charlie Hurley”.

My jaw dropped as I processed this. Hurley, a skilful and imposing centre-half, was voted “Player of the Century” by Sunderland fans in 1979[1]. He was team captain and also captained the Republic of Ireland team. Some consider him the greatest centre-half of his generation, and if he’d been born the other side of the Irish Sea, would probably have won a 1966 World cup medal. He was also my boyhood idol, the first person to sign my little red autograph book, in 1964 when I first stood outside Roker Park players’ entrance with my father. 

When we met, he was by now in his fifties, and he told me that he now pretty much ran his father-in-law’s packaging firm. He’d been more successful than most of his old footballing mates, as well as still being in a happy first marriage, unlike many. Players were not highly paid in the 1960s, and many ended up working as taxi drivers or running small shops, or more sadly, drank themselves to death.

Of course, when we got back to business, my whole negotiating approach had disappeared completely. I seem to remember he offered me a 5% “group rebate” in return for making his firm a preferred supplier, and I accepted, still in a daze.

The message, which I will come back to later, is that personal issues can affect the outcomes in buying negotiations, and rarely in a good way.  The best negotiators keep emotion and personal feelings out of the equation, even if they know how to use “fake emotion” when it is appropriate. But generally, if you are looking to negotiate well, try and avoid coming up against your childhood heroes on the other side of the table!

[1] https://www.safc.com/history/the-roker-roar/charlie-hurley

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What Happened to Ethics, we ask “Professional” Services Providers!

Bad buying obviously covers every potentially sector and category, but I have had a long interest in professional services spend and procurement for many years, including as co-author of “Buying Professional Services”, my first published book.

A couple of recent stories highlighted that although most of the people working in that sector are highly educated and intelligent, they can still behave just as badly and even illegally as any petty criminal.

The first story was about a survey of lawyers run by the “rolllonfriday” website, anonymous of course given that 35.5% of the respondents admitted that at some point they have been guilty of adding time that hadn’t been incurred to their time sheets (which then means the invoices to clients are also inappropriately inflated). As the report said,

Thirteen percent admitted they did it regularly, 12.6% confessed to being “occasionally” culpable, while around 10% said it was something they had done, albeit “rarely”. 

Well, that probably won’t come as any surprise to most of us, but it was interesting to see our suspicions as cynical buyers confirmed. It reinforces the view that whenever possible, engaging professional service providers on some sort of fixed fee, outcome, output or success based basis is better than a simple “time and materials “ hourly or daily rate.

However, it can be difficult in the world of law, because we often don’t know just how much work will arise from a particular assignment, particularly if other parties are involved (litigation for instance). So it is hard for the parties to arrive at a sensible view of risk, which you need in order to agree a fair fixed price.

You should always look for where you can define some sort of clear work package and agree a price for that, but one thing buyers can also do is challenge their provider if bills look “padded”.  Many people feel nervous about actually digging into a statement and saying to their lawyer, “so did you really spend 30 minutes on that two-line email”?

Now they are unlikely to immediately back down and reduce that bill, but next time, they might just think “perhaps I’ll just put 20 minutes for this email” because they know you will challenge. So don’t be scared to be a nuisance and analyse billing carefully.

The second piece of news was even more shocking. Consulting and auditing firm KPMG was fined  in  the Netherlands for endemic cheating around professional examinations taken by their staff. As the Times reported, “The Public Company Accounting Oversight Board in the United States found that between 2017 and 2022 hundreds of KPMG workers in the Netherlands, including senior partners and managers, had shared questions and answers with one another. This included for exams that they had to sit to test their understanding of professional ethics”.

Cheating on an ethics test! You have to laugh really. But I don’t understand why it is the US regulator doing the fining though rather than the Dutch equivalent.  

To make it worse, KPMG lied to the investigators, saying they knew nothing at senior levels about the answer sharing – but it turned out two board members had indulged in these activities themselves! A $150,000 fine was also imposed on Marc Hogeboom, who used to run KPMG’s Dutch audit division, and he was banned for life from working for any firm that audits American public companies.

These people are auditing public companies and giving investors confidence (or otherwise) in those businesses – so having the right skills and training is critical beyond just KPMG’s own operations. The cheating means there may be incompetent people doing important work, which is not a good thought, and of course it means buyers have paid for people whose qualifications (which largely determine the level of fee paid) were bogus. Maybe some big clients should sue the firm now.

It seems that it isn’t the first time this has happened and KPMG is not the only firm that has transgressed. Last week the American regulator also fined Deloitte’s businesses in the Philippines and Indonesia $1 million each for answer-sharing on professional tests. And two years ago EY was fined $100 million by the US Securities and Exchange Commission, because a “significant number” of its American auditors cheated on the ethics component of their Certified Public Accountant exams.

The lack of ethics and morals of those involved is quite shocking for supposed “professionals”. Whilst the latest fine was substantial, it does not seem to be enough really to reflect the seriousness of the crime. I think it would have been appropriate to ban KPMG from all audit work in the Netherlands for a few years. I also think maybe a few jail sentences for the most senior people involved might have made others sit up and take notice.

So the advice to procurement people is this. As with the lawyers, don’t necessarily believe everything your consultants or auditors tell you, or everything they put on the invoice, just because you think they are ethical and trustworthy professionals. Not all seem to fit that description.

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Is UK Public Procurement Getting Confused About AI?

This is a big year for public procurement in the UK. In October (probably) the new Procurement Act becomes law, finally replacing the EU public procurement legislation with a new set of regulations designed by and for UK organisations.

Generally, I feel the Cabinet Office policy team did a good job steering the consultations and proposals into a set of new rules, although there are some issues that concern me. But the team has now tied itself in knots somewhat over a different issue that has suddenly leapt to the forefront of everyone’s minds – how AI might affect public procurement (and many other aspects of our life of course!)

A PPN (Procurement Policy Note) was issued the other day that has caused some controversy and confusion. I must say, PPNs are usually clear and helpful, whether or not you agree with the underlying policy they are communicating, but PPN 02/24 is a mess.  Having read it a few times now, I think the problem is that it tries to cover too many issues, all AI related but really quite different, in one note.  I can see the following all mentioned in the note:

  1. Concerns about the use of AI in writing tender responses and proposals, in particular whether AI responses are likely to be inaccurate in terms of reflecting the actual capability of the supplier or how they will deliver the contract. In other words, the risk of AI generated bullsh*t showing up in bids. 
  2. Confidentiality or even national security issues in terms of firms using government documents connected with the procurement process to train AI systems and models.
  3. Worries that AI becoming ubiquitous and cheap is going to lead to many more suppliers putting in bids in response to opportunities, putting stresses and strains on procurement (and other) resources in public bodies.
  4. Issues around the actual purchase of AI solutions.

It seems to me that these are totally different issues. For instance, even if there was an outright ban on any use of AI in developing bids (which would be daft), there would still be legitimate security and confidentiality issues around the use of government documents in “training” AI.  That needs to be considered, but really has very little to do with procurement.

Similarly, advising people how to buy AI technology well is fine, but that surely is no differ relay to “category-related procurement advice” around energy, laptops of anything else. It is not really a procurement policy issues.

The first point – on use of AI in writing bids – has probably gained the most comment and criticism. The PPN suggests that buyers should ask suppliers to disclose whether AI has been used in bid construction, but that the answer “should not be scored” as part of the evaluation process. However, if the supplier says “yes” , might that mean their scores for other questions will be reduced if buyers know AI was involved? This could be a legal minefield.  And as others have pointed out, asking questions “for information only” in tenders is not good practice, only increasing bureaucracy and cost for bidders and indeed buyers.

The PPN also mystifyingly mentions the “risks” inherent “if a bid writer has been used by the bidder”. Sorry? I mean, someone always writes the bid. I assume they mean an “external” bid writer, but in my experience such individuals usually take more care to reflect the organisation accurately than some poor sales person who gets landed with the task of writing the document! 

The key point surely is that any bid should reflect the organisation’s capability and experience accurately, and provide a proposal that is meaningful and realistic about the actual goods and service that will be delivered if that bidder is chosen. That applies whether AI was involved or not. Indeed, humans are just as capable as AI of making up nonsense to put into bids – in fact, I suspect humans, being more creative, are more likely to write lies or nonsense than AI.

Anyway, this is a badly thought-out PPN, written in haste I assume, and further clarification and development of the very different points discussed within it will surely be necessary.

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