Will your Reputation stand up in Court?


I read a very interesting article today in the Business Day called ”Tender fell victim to SABC’s internecine struggle, court told”.

The article covers the story that the SABC Board ignored management recommendations in awarding a R400m tender for the supply of broadcasting equipment to Japanese subsidiary Sony SA.

Apparently management felt that Sony’s SA design did not display any technological advances since the previous HD ODB unit. Court documents on behalf of other bids apparently show that the competition offered the best technical solutions.

Here is where it gets interesting. Advocate Peter van Blerk, for the SABC, argued that the award to Sony SA was proper and legitimate and that Sony SA has a reputation which the competition, Digital Horizons did not have.

Although judgement is only expected next week, there are a few lessons here for Reputation Managers, as follows:

1. Remember that your Reputation is always something to work on. This means ensuring that your products and solutions take into account not just tender specifications, but also changing environmental conditions and issues. Just because you were brilliant last year, standards may now be lagging.

2. Realise that reputation permeates everything. It will influence decisionmaking processes, problem solving and will even be mentioned in court. The perceptions that stakeholders hold against your organization and its services cannot be ignored nor should it be taken lightly.

In my Powerlines newsletter Number 67 dated the 1st December 2006, I wrote an article called ”Avoiding Reputation Risk when contracting with the Government” that has bearing on some of the points mentioned above as well as tendering processes in general.

AVOID REPUTATION RISK WHEN CONTRACTING WITH THE GOVERNMENT

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The so called “mutually beneficial symbiosis” or as reported “generally corrupt relationship” between Schabir Schaik and ex-President elect Jacob Zuma coupled with numerous tender maladministration exposes and court cases have illustrated the risks that companies face in doing business with any government department .

Not only can the government bring suit, but even competitors are now alleging tendering & procurement fraud based on violations of tendering requirements unique to the government. Fortunately, companies have ways to mitigate these risks.

Today, a vast number of suppliers and service providers try and do business with Government. But there are risks, as all the negative publicity shows.

For organisations and individuals that view their reputation a top priority, the lessons must be clear. Issues of noncompliance with tendering procedures can result in fraud allegations that although not true can be damaging as it creates an appearance of impropriety. With the key words in society today being openness, honesty and trust, an organisation will need to comply carefully with tendering procedures and the impressions created by their approach.

Behind the scenes conniving and leveraging can result in not only administrative sanctions, such as suspension or debarment, but also damage to a supplier’s reputation from publicised allegations. The Star newspaper of 7 November 2006 reports that the World Bank has blacklisted a German firm called Lahmeyer for seven years from deals financed by the World Bank because it bribed an official to win a Lesotho Highlands Water Project (LHWP) contract.

The bank said in a release that the ban might be reduced to 4 years if it “met specific compliance conditions and fully co-operated in disclosing past sanctionable misconduct”.

RISKS INVOLVED

Compliance Risks – There are various requirements that a vendor needs to comply with including various certifications. If a vendor omits or does not comply with requirements it can influence outcomes and impact negatively in the future.

Honesty and transparency in the tendering process is absolutely vital. An Organisation’s Reputation can be severely damaged by allegations made by a competitor that its rivals were hiding or manipulating information.

The clear message is that tender requirement compliance, is of primary importance to all companies tendering for government business. The lesson from all the negative publicity is that any supplier needs to understand that their application and delivery will be scrutinised by outsiders and that they will question its compliance with schedule requirements.

Moreover, noncompliance with schedule requirements poses a high risk that the vendor will be accused of fraud, which alone can generate unwanted negative media attention and damage customer relations.

The following list presents some guidelines to consider when pursuing Government business:

1. Analyse every one of your business relationships. Is there a potential for conflict of interests or a skewed perception? Decide on what you value most – short term gains or your intact reputation.

2. Understand all obligations and requirements for schedule contracts, including pricing disclosures and obligations, before submitting a proposal.

2. Establish and maintain department or unit dedicated to the tender and maintain a compliance and delivery program tailored to your contract.

3. Ensure that disclosure of commercial practices is accurate, current and complete taking into consideration both legal and public opinion, with all deviations and other qualifying information disclosed in detail in writing.

4. Ensure that the Service Level agreement states clearly what you can and cannot deliver. Choose words carefully. It is not enough to get legal experts to review the documents; you should get your communication experts to look at it as well.

5. Make sure that no finger can be pointed at you because of previous relationships based on prior knowledge, power or other forms of leveraging.

Remember that in the long run it is more important to have a succinct and intact reputation than to gain financially in the short term.

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