Wholesalers react to public sector plans

A government decision to centralise public sector food provision to a single supplier is based on false assumptions and poor consultation, and risks creating a monopoly which could see expert regional distributors exit the market

The Crown Commercial Service (CCS) is preparing a tender for a four year £100m contract for a single wholesaler or consortium to supply 14,000 food and drink products to public sector bodies across the country. Members of FWD say the plan demonstrates poor understanding of the complexity of public sector provision and may lead to diminished service for school, hospital and local authority catering contracts.

Regional wholesalers say the proposal is based on the flawed assumption that a single national operator could offer lower prices and better service than the current network of both large and SME wholesalers. They also say the scheme overrides the government’s own targets for supporting SMEs and local producers in public sector food supply.

One family-run public-sector specialist distributor described the move as “a potentially catastrophic, landscape-changing, monopoly-creating, arguably illegal, overly-simplistic single-supplier framework agreement that CCS appears to be determined to push through regardless of our concerns.”

Another wholesaler, Tom Mathew of Dunsters Farm, who supply schools as half of their business, said: “It is deeply concerning that they think this is a good idea. Commercially, it’s flawed.” He went on to say that viewing “bigger is better in wholesale” was “too simplistic” and “very, very unlikely to secure an advantageous price.”

FWD Chief Executive James Bielby said: “It’s extraordinary that CCS has gone this far without consulting the companies that keep the public sector fed and watered. It has shown a basic misunderstanding of the complexity of public sector contact fulfilment, and of distribution to thousands of outlets with individual needs.”

The framework also appears to undermine the government’s own buying standards, as it implies that an SME supplier’s products could be transported to a central distribution hub, then back to public sector services close to where they came from. It works against Defra targets for public sector food supply which require 50% of product to be locally produced.

Bielby explained: “There is currently a diverse landscape of businesses supplying the public sector, where regional SMEs and larger wholesalers happily coexist. The creation of this scheme raises a very real danger that SMEs could find themselves excluded, and their customer knowledge and distribution expertise will be lost.

“Public sector food distribution is not a ‘one-size-fits-all’ supply chain. Regional and specialist wholesalers bring invaluable efficiencies and experience. We believe there should be a fair environment which reflects the diversity of the sector and supports growth for businesses of all sizes.

“Since 2010 the government has consistently underfunded the public sector food supply chain, and from what we have seen of the CCS Framework, this is not way to improve the service. Delivery of nutritious, cost-efficient food and drink to schools, hospitals and other local authority contracts is best maintained by realistic investment in the current structure.”

Crown Commercial Service Government James Bielby public sector Tom Mathew