Crown Commercial Service (CCS) says it has received a high level of interest in Technology Products 2 (TP2) following the deadline for tender submissions for the £3bn to £4bn framework.
Resellers had until last Monday to submit their bids for the monster commodity IT hardware and software framework, which includes a new Catalogue Lot and is designed to be more value-driven than its predecessor.
Suppliers we spoke to have praised the fact there is no longer a cap on the number of resellers in each Lot, but some complained of "stingy" margins, particularly on the hardware side.
In a statement sent to CRN, Kelvin Lee, Technology Products and Services category director for CCS, said the government agency will now commence the evaluation process, working towards the anticipated contract award in September 2016.
"We are really pleased with the magnitude of interest we have received in the recent Technology Products 2 procurement," he said.
Split into six Lots, TP2 boasts an estimated purse of £3bn to £4bn over two years. It will supersede Technology Products, which expires on 16 November 2016.
TP2 removes the cap on the number of suppliers that was present in Technology Products, whose launch was repeatedly delayed by legal challenges from unsuccessful suppliers.
'Learning from past mistakes'
Terry Betts, managing director of CCS Media, which is bidding on multiple Lots on TP2, said he felt the new system was fairer.
"I think they have learned from past mistakes. It is a very fair and well-constructed tender," Betts (pictured) said.
"In the past, they've always set the number. This time they've just put a score and if you get above it you go on the tender, and you don't end up getting rid of people on technicalities. That's what's happened in the past and that's what's caused all the disruption."
Jamie Burke, sales director at Softcat, agreed: "For me the biggest difference in the two iterations is the number of suppliers per Lot is not limited on TP2 and instead comes down to natural selection of those suppliers that meet the minimum requirements CCS have set out as part of the evaluation process."
CCS says TP2 is 90 per cent value-driven and only 10 per cent driven on price, compared with a 60:40 split for its predecessor.
"The way they've constructed it, it didn't just go on accreditations," Betts said.
"They put the accreditations they wanted but said 'if you didn't get the accreditations just because of your turnover then you can score as if you got the top one'. It gives very small companies, as well as large ones, a fair chance of getting on it."
The introduction of the new SME-friendly Catalogue Lot will also benefit smaller resellers that were unable to compete for previous tenders, said Chris Swani, divisional director for public sector at software licensing specialist Bytes, which is also bidding on TP2.
"I think the process has gone well and there was lots of reseller engagement running up to it," he said. "There was an opportunity for resellers to say what they thought was sensible and not sensible about the previous framework. Some of that was taken on board and some wasn't.
"I think there will be a plethora of resellers in the Catalogue Lot. It's more competition for us but it's good for smaller resellers as it offers them a route into the framework."
Although according to CCS just 10 per cent of TP2 is price driven, resellers had to agree to a compulsory 3.5 per cent margin on hardware and 2.5 per cent margin on software to even be considered for it. For Technology Products, in contrast, margins counted towards the overall score.
With the rebate suppliers must pay back to CCS also rising from 0.7 per cent to one per cent (amid wider plans to rise supplier levies), some suppliers grumbled that TP2 leaves them with too small a cut to make money.
"I'd like to know how they thought that was sustainable; I could not run my business on that margin," said one supplier, who wished to remain anonymous.
Another supplier, also talking on the condition of anonymity, expressed similar concerns.
"It is smaller margins [than Technology Products]. However, deal registration processes are available to resellers – although they may not be available to all resellers – and that's where we make a little bit of money back," the supplier said. "CCS has got to prove they are driving value out of the framework, and part of that is price."
Burke said: "It's essential that CCS use TP2 as an opportunity to improve the original framework, especially as the supplier levy is being increased by over 40 per cent."
CCS declined to comment further than its statement above, but talking to CRN in April, Lee said the new margin limits reflect supplier needs. The previous margin limit of five to six per cent on hardware "seemed too high", he said at the time.
Intention-to-award notices are set to be sent to successful and unsuccessful bidders on 19 September. TP2's six Lots are: Hardware, Software, Combined Hardware and Software Requirements, Information Assured Products, Volume Hardware Requirements (aimed at OEMs only) and Catalogue.
MSP plans to use new acquisition to expand its security offerings
Reseller also saw its operating profit fall five per cent in its financial 2017
Wendy Bahr to bring 18-year spell at networking giant to an end
AdEPT says latest purchase will push revenue beyond £50m