Building a bid

Gardner Merchant had been in charge of staff feeding and executive dining at Newcastle Building Society's headquarters in the city centre for 17 years. The contract, worth £11,000 per year to Gardner Merchant, carries a "middle of the road" subsidy. It was familiar territory, and no one had ever questioned the operation.

Things changed when the society decided it needed a new purpose-built headquarters.

Along with the relocation to a nearby state-of-the-art building came the retirement of the person at the client company who was in charge of the catering.

In came a new point of contact who wanted to see whether the catering he was getting was the best in terms of value for money and quality. In July 1996, one year after moving into the new premises, the contract went out to tender.

Allyson Pickavance Catering Manager, Newcastle Building Society

When we moved from the old building we just assumed that everything would continue as normal. We'd specified our kitchen requirements and Lockhart [Design Services] had put it together.

Just as we thought everything was running smoothly, the news came through that the contract was going out to tender. It was a huge shock. I'd never been in a tender situation before, so I didn't really know how to react.

The first job was to tell the staff - one chef and three food service assistants.

I explained the situation, trying to reassure them that whatever happened their jobs would be safe under TUPE. Even so, they found it difficult to grasp.

They'd worked for Gardner Merchant for years, and so the prospect of suddenly having a different employer was daunting.

The worst part was having to carry on while people with clipboards were coming round with the client. We assumed they were the people who were bidding against us, though we weren't told anything about them.

You felt as if you were constantly on display, and that all the time you were having to prove something.

I also felt unsure about my own position. Although I understood that my job would be safe, I wasn't sure that I wanted to work for another company.

I've been with Gardner Merchant for 14 years. So had the contract gone against us I would have wanted to stay with the company, though it might not have been in Newcastle.

This all lasted about a month, the longest month I can ever remember. I was actually on holiday when Doug phoned to say that we'd retained the contract. The relief was enormous.

Doug Chapman, general manager, Gardner Merchant, North East and Cumbria

After 17 years in a relationship, I suddenly had to resell myself.

It was a shock. I didn't know where to start. I'd worked for Gardner Merchant for a number of years, but this was the first time I'd been in a tender situation. All the elements of running the business that you take for granted you've got to extract and try to highlight. You may think you're doing a good job, but suddenly it's about proving this to other people.

Chris, [the client] had told me he needed to know whether we were the most efficient on cost and quality. It sounded as if it should just be an exercise. Even so, we were worried. We felt that there was a very real possibility that the contract could go against us.

I decided to go into it fairly coldly and without emotion. If I were to get emotionally entangled it would seem as if I was trying to defend, rather than promote myself.

The basis of our tender was to make ourselves accountable according to our performance. Previously the contract had worked on a fixed management fee and retained discounts. Under the new proposals there would be a fixed fee plus a variable element which would be based on performance. Discounts would be returned to the client.

This put the pressure on us. If we drove up sales then we would earn more and also boost the building society's profitability. All meals are scheduled to make a 10% gross profit, which is returned into offsetting fixed costs. It's tempting in a tender situation to make promises on costs, but we didn't do this. We didn't make any claims we didn't think we could deliver and we didn't make any wild concessions on cost.

One of the worst aspects was the hush hush element of everything. The relationship with the client was outwardly fine during the tender period. But anything to do with the process was taboo.

At the formal presentation we had one hour in which to sell ourselves. The client had had the document for about a week, so all we had to do was to talk through it. I emphasised the quality of the process we wanted to deliver plus the flexibility of the new arrangement. I had some idea of who our rivals were, but I didn't know anything about the basis of their bids.

It was about a month later that we heard that we were safe. I would've been gutted if we'd lost. It just goes to prove that you can't assume that just because you're running a contract for years that it's always going to be yours.

Chris Jopling,Personnel Manager, Newcastle Building Society

The former point of contact for catering retired, and suddenly I was in charge of this area. I was new to catering and didn't really know what to expect. All I knew was that we were spending a sum approaching six figures on catering and providing services such as drinks. It just sounded a lot.

Gardner Merchant had been running the contract for a long time without being challenged. I would stress that we weren't unhappy with the job they were doing, but after a lot of thought I decided that we should review the operation and see what we were getting for our money.

I was aware that discussing any changes would be unsettling for Gardner Merchant staff working in the society. So we didn't say anything until it had definitely been decided that the contract should go out to tender.

Doug and his team took the news very well. They didn't even try and persuade me that I was wrong.

I invited bids from Gardner Merchant, Sutcliffe, Derwent Catering Services, and Eurest. There were good and bad points to all of them. Eurest was eliminated because it had just lost a contract at Northern Rock, one of our biggest competitors. Under these circumstances I felt uneasy about buying into them. Sutcliffe only came on the scene rather late in the day and didn't seem to have enough detail in their proposals.

I was really impressed with Derwent Catering Services, which struck me as a really professional company. They made some valid observations and gave a real indication that they would have a front of house management style which would respond to staff needs. It was their size that went against them. They're only a small company, and at the time I wasn't convinced that they had sufficient support to meet our requirements.

So we decided to go with Gardner Merchant. We felt any of the bidders were capable of handling the food operation. It was a question of finding a point of difference in the proposals. What impressed me about the Gardner Merchant bid was the flexible management fee and the proposal to return all discounts to us. This was a real way to put money on the bottom line. We couldn't fault Gardner Merchant on their executive dining either. They do that really well.

One criticism I would make of the bids is that there were some irrelevancies. They all seem to have top chefs consulting for them now, and this formed a part of the bid in some cases. Quite frankly it doesn't concern me who they've got working for them. We don't need Gary Rhodes or Albert Roux at Newcastle Building Society. I'm only interested in what the customer wants.

Going out to tender was hard on many people. But we had to do it. The results speak for themselves. I've cut costs by more than 10%, and our spend is now back to a healthier, five-figure sum. So for us it was the best outcome.