Ron Burgess of BiP Solutions is confident about the future
RON Burgess looks very pleased with himself as he surveys the waterfront views from BIP Solutions new headquarters in Glasgow's Pacific Quay.
As founder of the procurement and business intelligence information providers, Burgess is naturally very protective of the company he launched 25-years-ago to a company generating s13m in turnover last year.
The view from the boardrooms floor to ceiling glass is breathtaking, with panoramic views down the former ship yard sites on the Clyde and across the way, the Glasgow Science Centre and the BBCs imposing Scottish headquarters.
For Burgess the new building - a s6m, 26, 000 sq. ft office development the company has now purchased in full although part owned by its pension scheme - is a statement BIP has truly arrived.
Far removed from the woes so many companies currently face in accessing finance he has the luxury of entertaining a long lists of banks and venture capitalists willing to discuss huge sums to help realise acquisition ambitions at home and abroad.
However he is wary of borrowing, and warier still of diluting his control of the company, preferring instead to enter into licensing deals with existing operators who find themselves in perilous financial positions.
He said: Weve come a long way to get to this point, but now were here, the world really is our oyster and I predict the recession will be very good to us.
This company is doing very well in both the UK, across Europe and the United States and is well placed now to go on the acquisition trail over the next two years.
In the last year this company has grown from 150 people in June 2008 to 205 now, and I have no doubt we will fill this building to its 495 capacity within three years.
Our ethos is at the moment is buy and build. We are very cash rich, despite the fact we have bought the new building, and we have millions in the war chest and a long line of venture capitalists and banks more than willing to give us money to grow.
We have been toying with the idea of entering AIM as a route to market, but were waiting to see how things develop in the AIM markets first because none of our competitors are anywhere near us or as secure financially, so were looking at a series of acquisitions, not just in the UK, but overseas as well.
Were currently looking at two companies in Europe at the moment, one with European-wide coverage and the other is operating in five European countries.
There is also an American company we are in discussions with at the moment but there is no guarantee any of these deals with come off.
Regardless, we will get the growth we anticipate for the company.
For Burgess, the road to becoming a public service contract procurement specialist was a long and winding one an idea launched from a laundrette business he had built up in Glasgow and Edinburgh.
He said: I was always thinking what else I could do with the laundrette and dry cleaning business, because the back door ideas make the real money.
I put some vans of the road, collecting dry cleaning and laundry from 40 collection points in Glasgow and Edinburgh, which then led into getting cleaning contracts for security firms.
One of the uniform collection points was the Glasgow city halls, and that contract was my first taste of contracting with the public sector.
Part of that contract was cleaning the uniforms for the staff of the Kings Theatre, and they then asked if we could do costume cleaning.
This ended up being a very lucrative side business, and I then started to look into other contracts I could get into in the public sector, and in those days all public sector contracts were announced locally in the papers.
I saw a contract for 2000 hand dryers for schools in Renfrewshire, and since cleaning and equipment are dry-cleaning are actually not that far apart, I decided to bid for the contract with the idea of me acting as an agent for a supplier company to service the machines.
I slept on it, and by the next day I had changed my mind and thought what is really needed is a publication listing all of these contracts so companies all over the UK would know these contracts exist and could then bid on them.
I thought there must be a directory of these public contracts but I found there was nothing in Scotland, nothing in the UK and nothing in Europe.
In fact there were only two publications in existence globally, one in Australia and another is South Africa, both owned by the Thomson organisation, a Canadian publishing house.
So I started thinking there was money to be made in this because it must work because the Thomson organisation wouldnt be running it otherwise.
Burgess set to work collecting contract information from every local Scottish newspaper and began compiling the data into a single resource.
The advent of the word processor and photocopier made things a lot easier.
He said: I couldnt just take the contract as it was laid out in the paper because of copyright issues, but Amstrad had just launched its new word processor, but it couldnt do column layouts.
I dug around and found a direct program which cost me I think s15 which could lay out columns in the word processor package, so I had the formatting in place.
The cost of printing was going to be astronomical because everything was still printed in hot lead a that time, but technology came to my aid again, this time with the launch of the first photocopiers.
So I got a photocopier machine in on trial, laid out the booklet in A3, and would then turn over the page to print on the other side of the paper to make the magazine.
I never bought a photocopier in the first 18-months of operation, because I would take a machine on a trial basis and milk it until they realised I had no intention of buying the machine.
I think we got away with that for nearly 18-months without paying a penny for photocopying, which was enough to get the company up and going from its first print run of twenty odd procurement magazines to getting into the hundreds.
As the procurement publication business grew, Burgess was looking for new ways to generate revenue.
BIP had won a significant contract with the MOD to publish all of its pubic service contract information, and as the digital age dawned, a simple solution to a smudged faxes from the MOD to a digital template system opened up more contract work.
Burgess said: Before e-tendering we used to get fax notices from the MOD but often we couldnt read them, so we developed an electronic template for them to send it back to us.
From that we developed a service for the European Union where all due notices could be created electronically, and today we are the largest providers of contract information into the private sector in Europe.
There are now around 5,500 people in the public sector in the UK using our system to input their contract information, which all came out of us finding a solution to illegible bits of paper coming from the MOD.
The growth of BIP was assured in 1991, when the then Conservative government began to look towards the market to find best value for its contract business.
From 1991 onwards we developed from a contract information publisher to a provider of a range of tools and services to facilitate the procurement process to optimise value in supply chains.
Obviously we run a lot of portals for the public sector to facilitate the opening up of the supply chain for tenders, and were now dealing more with the private sector to help them allocate new contracts as primary contractors to sub-contractors for tenders on the Olympic Games work.
This works on a three tier concept, where by well advise the primary contractors on opening up their sub-contract work to tender, and then well approach the tier two contractors from that process with a view to opening up their tier three contract work to smaller firms.
And the process works right down from the billion pound primary contracts right down to who supplies the light fittings at the end.
Our other arm is the supply to government service we provide for contracts under the primary tender threshold, which when we tendered for it, we were told the government wanted to provide this information for local, low threshold contracts for free.
So we built the service and it now has 163,000 subscribers, which gives free email alerts for all contracts in their area.
The offering has only just been extended to now offer users contract information for anywhere in the country, and this means we are now giving away more than we have ever done before.
Burgess does not believe moves to open contract and procurement information to all businesses is wise.
He predicts problems for local authorities being inundated with bids from companies which simply dont have the capacity to offer the tax payer best value on public sector contracts.
"Our ability to improve the buyer engagement experience is another big growth area for us, and I think the recession will be very good to us on that basis.
"We really understand the market we are in, and we can build in capacity to deal with the opening up of contract information across the UK.
"But the more you expose an opportunity into the marketplace, the more responses the awarding authority is going to get, and that increases the costs to the taxpayer considerably.
"Before, a company would bid for a contract along with maybe 20 other companies, whereas now, with everyone chasing public money to see them through the recession, you might have 300 companies bidding for the work.
"You have to ask yourself where is the local authority capacity to deal with opening up the information to the tendering process?
"We wont help small businesses by implementing a buy local policy.
"What it means is local small companies in say Glasgow might have a better chance of winning local, small contracts in the Glasgow area, but have no chance of working in say Edinburgh or London because everyone is playing the same game.
"Long term growth wont come from offering companies the opportunity for local companies to take on big contracts without the infrastructure to meet the demands of the contract.
"Over the long term, we will only improve these businesses if we improve their capability and capacity to deliver, and that way theyll be winning contracts not just locally, but nationally and internationally too.
"If the government wants to spend its money wisely, it will help the SMEs to improve their capacity and capability to deliver and stop selling the promise that if they have published the contract notices for free and the information is readily available, then they have done all they needed to do.
"The Scottish government, to be fair, seems dead against the buy local policies, but its the local authority level contracts currently driving this mindset, but those businesses wont supporting employment and long term opportunity by just keeping things they way they are.
"It's not helping the situation, and its utilising valuable resources having to filter out the companies who simply cant deliver on the terms of the contract.
"What happen is we go from companies being one in 300 bidding for a contract because the information is now free, to becoming one of 3000 as the idea of bidding for contracts really catches on?
The Scottish government will say the success of the tender portal is the number of companies registered on it, but this will mean having to look again at the capability of the local authorities to process those applications.
Standards will invariably slip which means the tax payer is not getting the best value.
The other side of this in the local authority opening itself up to litigation, because when its dealing with thousands of applications, how will it prove conclusively it has taken all the necessary checks and balances in coming to a decision?
Publishing a free advert may sound politically clean, but the millions of pounds it costs in dealing with the additional admin in processing those bids is making the system in the long term a significant burden on the tax payer and not providing the best value the procurement process is designed to do."