Can a company get the sack?
Wednesday, August 20, 2008
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I bet senior executives at ETS Europe wish they’d never pitched to win the contract to mark KS2 & KS3 SATS. Now they have been removed as a supplier to the contract. The press love it, and claim the ETS have been “sacked”...
That is an unfortunately turn of phrase. In practice, companies don’t get the sack. Employees can “get the sack”. But ETS Europe isn’t an employee - it is a company.
The ETS example is a useful introduction to the idea of a long-term contract, and how things can go so wrong.
As a supplier to QCA, ETS had a five-year £156 million contract to mark the SATS. However, after a disastrous summer of lost papers and erratic marking, the contract has been cancelled and various penalty clauses have been triggered.
The company will have to pay QCA back £19.5 million and £4.6 million for the cancellation of invoices and in charges. They were originally paid £35 million to carry out this year’s marking.
That means that ETS will keep around £11 million for their efforts. Probably not enough to cover the costs of the contract so far - but only they will know. More important from a marketing perspective is the possible (actually, probable) loss of goodwill and future business. The QCA contract was a flagship contract for ETS and they would have hoped to win many other contracts using that as a reference.
Now, unsurprisingly, there doesn’t seem to be any mention of the QCA contract on the ETS website.
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