05 Apr

“There’s no such thing as a free lunch”

“There’s no such thing as a free lunch”

(or “free” frameworks or “free” buying organisations/clubs)

A “free lunch” is believed to refer to the nineteenth-century practice in American bars of offering a “free lunch” to entice drinking customers. The more unhealthy, salty and fatty food the customer eats for “free”, the longer he/she stays at the bar, the more thirsty he or she becomes, and the more alcohol consumed.

This saying could also be regarded as relevant when procuring school services:

Clearly, “Free School Meals” are a good thing for the children who benefit from them, but they are not “free” as the tax payer picks up the tab.

Public sector frameworks

Frameworks enable institutions to complete compliant tender processes with a list of pre-qualified companies who have already been through a listing process. Such frameworks are owned by public sector organisations and their infrastructure funded by charges levied.

Using a framework can seem attractive as they can appear to be “free” for a school, college or multi-academy trust to use for tendering though there is usually a levy -payable by the winning bidder to the framework/purchasing organisation- throughout the contract period.

Despite bidding companies being encouraged not to show the cost of this levy in their tender submissions, they do have to allow for this cost somewhere, so the client organisation pays for using the framework one way or another. How much an academy or other institution pays will depend upon what the percentage levy and annual turnover is for a framework and should your school or academy also need specialist support and advice to run a tender process you will have to pay for this on top of the framework.

An indicative example would be a secondary school requiring a 5-year service contract with a projected annual turnover of £250,000. A .75% framework charge -which the school ultimately pays for- would be £1,875 per annum or £9,375 over the contract term. Additionally, should the school also need specialist support to effectively manage the process, there may be a charge in the region of £5000 meaning the school funds £14,375 over the life of the contract.

Commercial buying organisations/clubs

Some of these organisations boast about not charging direct fees as their costs are paid by the successful supplier. On the basis “there is no such thing as a free lunch”, contractors have to allow for these costs in their tender price. From our experience, the fees -also levied as an annual % to winning bidders and ultimately paid for by the client-can be significantly higher than public sector frameworks.

In summary, when considering how to get best value from services such as school meals and cleaning, there is an extensive menu of options available to the buyer. Picking the right way to tender services is about clear fixed pricing and working with a specialist, trusted partner who works for-and is paid directly by- you our client.

Please get in touch if you would like a clear, affordable quotation for partnering with Matriculate Consulting to tender your services. One thing for sure-we won’t be including a “free lunch”!