Exchange suppliers asked to sign 'money back' deal

19 September 2001
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20 September 2001 | David Arminas

A government-backed public-sector trading exchange is asking suppliers to sign a "John Lewis" type agreement to guarantee purchasers using the online service of the lowest prices.

Suppliers will lock themselves into a price structure that will see them having to pay buyers the difference if they can find the products cheaper elsewhere.

"It's being 'never knowingly undersold' where your supplier agrees that if they sold the same product on the same basis and number at a lower price somewhere else, the supplier will compensate our clients the difference," David Court, chief executive, told SM.

The exchange, an executive agency of the government's procurement advisory agency the Office of Government Commerce, was launched last April. It offers public-sector bodies access to catalogues and contracts for general low-value, high-volume products as well as IT, catering, office furnishings and facilities management.

Court expects to announce the policy officially next month after all the "many hundreds" of suppliers on the exchange have received a letter explaining the details of the policy.

"It is really self-monitoring where the people making the purchases, like shoppers in John Lewis, can take their receipt back and be refunded the difference if they see the same for £10 less."

Court believes the agreement will mean many purchasers will forego competitive tenders if they can be assured that the site offer the lowest prices possible. Suppliers have been "cautious but generally positive", Court added. "I believe that if it can be done in the retail sector, why not in the public sector?"

The Northwestern Universities Purchasing Consortium (NWUPC) operates a similar agreement among some of its suppliers. Paul Tomany, its head, believes the OGCbuying idea is a good marketing tool.

"But you must keep monitoring it," he said. "Otherwise, it will stop being the benchmark and suppliers beating its prices."


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