May 17, 2020

Report: 'Obscene' waste of money in UK IT procurement

Supply Chain Digital
Supply Chain
Supply Chain Problems
U
Freddie Pierce
1 min
Report claims that the UK wastes an ‘obscene’ amount of money on IT procurement
The UK government was blasted by a report that claims that 80 percent of the central governments IT procurement work is undertaken by just 18 suppliers...

The UK government was blasted by a report that claims that 80 percent of the central government’s IT procurement work is undertaken by just 18 suppliers, and that Parliament has “wasted an obscene amount of public money” on IT procurement.

The scathing report, titled Government and IT – A Recipe for Rip-Offs: Time for a New Approach, states that a monopoly of sorts has been created in government IT by a small number of large suppliers.

The report is good news for SMEs hoping to enter the market, as the report states that “too much power and money” has been committed “to a single suppliers.”

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Public sector procurement problems within the UK stem from a lack of benchmarking, according to the report.

“The poor benchmarking of central government’s IT expenditure is unacceptable,” the report read. “Without this information, it will not be possible for the government to advance effectively its cost reduction agenda.

“The government should investigate the claims of overcharging, and seek to identify reliable and comparable cost SMEs that by speaking openly to the government about innovative ideas they risk losing future business, particularly if they are already in a sub-contracting relationship with an SI," the report read. "The government should reiterate its willingness to speak to SMEs directly and commit to meeting SMEs in private where this is requested."

The report concluded with a call to action by the UK government to safeguard itself against unfair IT procurement practices.

"Without the ability to engage with IT suppliers as an intelligent customer – able to secure the most efficient deal and benchmark its costs – and to understand the role technology can play in the delivery of public services, government is doomed to repeat the mistakes of the past,” the report concluded.

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Jun 16, 2021

EU and US agree end to Airbus-Boeing supply chain tariffs

supplychain
Boeing
Airbus
tariffs
3 min
Supply chains embroiled in Airbus-Boeing dispute will no longer be impacted by $11.5bn tariffs imposed on food and beverage, aircraft and tobacco

The EU and US have agreed to resolve a 17-year dispute over aircraft subsidies, suspending tariffs on billions of dollars' worth of goods that have plagued procurement leaders on both sides of the Atlantic. 

Under an agreement reached by European Commission Executive Vice-President Valdis Dombrovskis and US Trade Representative Katherine Tai on Tuesday, the tariffs will be halted for a period of at least five years. 

It will bring an end to punitive and disruptive levies on supply chains that have little to do with the argument, which became embroiled in the trade battle. Businesses on both sides of the dispute have been hit with more than $3.3bn in duties since they were first imposed by the US in October 2019, according the EC. 

The US imposed charges on goods upto $7.5bn in response to a World Trade Organisation ruling that judged the EU’s support of Airbus, its biggest aircraft manufacturer, unlawful. A year later in November 2020, the EU hit back. The WTO found the US had violated trade rules in its favourable treatment of Boeing, and was hit with EU duties worth $4bn. 

In all the tariffs affected $11.5bn worth of goods, including French cheese, Scotch whisky, aircraft and machinery in Europe, and sugarcane products, handbags and tobacco in America. Procurement leaders on both sides of the fence were forced to wrestle with tariffs of 15% on aircraft and components, and 25% on non-aircraft related products. 

Boeing-Airbus dispute by the numbers  

  • The dispute began in 2004
  • Tariffs suspended for 5 years 
  • $11.5bn worth of goods affected by tariffs
  • $3.3bn in duties paid by businesses to date 
  • 15% levy on aircraft and 25% on non-aircraft goods suspended

Both sides welcome end to tariffs 

European Commission President Ursula von der Leyen branded the truce a “major step” in ending what is the longest running dispute in WTO history. It began in 2004.

“I am happy to see that after intensive work between the European Commission and the US administration, our transatlantic partnership is on its way to reaching cruising speed. This shows the new spirit of cooperation between the EU and the US and that we can solve the other issues to our mutual benefit,” she added.

Both aircraft manufacturers have welcomed the news. Airbus said in a statement that it will hopefully bring to an end the “lose-lose tariffs” that are affecting industries already facing “many challenges”. Boeing added that it will “fully support the U.S. Government’s efforts to ensure that the principles in this understanding are respected”. 

The US aerospace firm added: "The understanding reached today commits the EU to addressing launch aid, and leaves in place the necessary rules to ensure that the EU and United States live up to that commitment, without requiring further WTO action."

This week’s decision expands upon a short-term tariff truce announced in March this year. The EC says it will work closely with the US to try and further resolve the dispute, establishing a Working Group on Large Civil Aircraft led by each side’s trade minister.

Airbus last month signalled to suppliers that post-pandemic recovery was on the horizon, telling them to scale up to meet a return to pre-COVID manufacturing levels. “The aviation sector is beginning to recover from the COVID-19 crisis,” said Airbus chief executive Guillaume Faury, adding that suppliers should prepare for a period of intensive production “when market conditions call for it.”

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