ENG7146 - Analysis of JDPi Automotive Manufacturer A Case Study

Assignment Task

Summary

For the given scenario, you will evaluate with reference to law and legal aspects, the challenges faced by JDPi automotive manufacturer and their respective supplier for the project in question.

Once the evaluation is complete, you should be able to suggest appropriate measures to resolve existing challenges and mitigation, for successful completion of the project and organisational success.

Description JDPi Automotive Manufacturer

JDPi is an automotive manufacturer and it has been operating a particular IT system for the past 5 years for some of its administration and payment arrangements. More recently though, it has been hit by an increasing frequency of system breakdowns and consequent periods of down-time. This has led to increasing loss of data and de-motivation of operating staff.

JDPi has decided to replace the existing system with the latest version. A business case was produced and approved at the appropriate levels of management. The supplier who had sold JDPi the existing system (Capgemini UK PLC) was asked to provide a feasibility study to assess how the system could be upgraded with a view to several objectives being satisfied, namely:

• Significant (and measurable) improvements in its general efficiency/effectiveness
• Response times being speeded up considerably
• Integration with other IT systems operating within the company to allow for sharing of information internally and externally with several suppliers and customers

The head of procurement, Ben Clegg, has formally stated that a competitive tendering exercise should be done to create a competition for the new software in accordance with JDPi’s procurement policy. A dispute between the head of human resources and Ben has arisen as the head of human resources was unable to understand why JDPi cannot negotiate a deal with Capgemini UK PLC and why there is a need to delay things so that other quotes can be received.

Ben replied that ‘It is our normal policy for purchases costing in excess of $5,000, which this will be on a yearly basis, to run a competition between suppliers. This ensures we have a proper, fair competition in accordance with our procedures. I will need your help in developing a plan for sourcing this service from interested suppliers as we will need to create appropriate selection criteria that prequalifies interested suppliers. We also need to create award criteria as we should consider other factors in addition to the price for licensing the software. We should then operate a competitive tendering process in our normal way and ensure compliance with any necessary technical standards such as data protection issues’.

The stakeholders of JDPi have indicated that they will support the new tendering exercise as they have heard about an e-auction (reverse auction) system which is used to obtain bids on line and believe that this could save valuable time.

Task

Discuss the benefits for JDPi of using a competitive tendering approach (as well as the use of e-auction) to source the IT system. What common challenges faced by procurement and supply chain managers can be overcame? What other ways/strategies can be used to minimise those challenges?

Capgemini UK PLC compiled a report basically confirming that the system could be upgraded to meet the new requirements. JDPi then issued a formal invitation to tender for the work involved. This invitation to tender (ITT) was issued on the basis of JDPi 'Standard Terms for IT Services'. These included the following clauses:

Standard Terms for IT Services

• These terms are binding on both the Customer (JDPi and the Supplier and can only be varied with the consent of the Customer.
• The Customer shall provide such information and facilities as the Customer considers necessary for the Supplier to carry out the services.
• The Customer shall be responsible for ensuring that the necessary operational and environmental conditions are maintained for use of the System.
• The Customer agrees to comply with all the Supplier's reasonable instructions concerning the usage, modification, control and testing of the System in addition to ensuring that the Customer's employees are adequately trained in the correct use of the System.
• The Supplier shall take reasonable care to ensure that, in the execution of the work, which is the object of this Contract, it does not unnecessarily interfere with the operations of the Customer, its employees or any other contractor employed by the Customer.
• The Contract Charges for the Services shall be completed by the Supplier. The Charges shall be fixed for the Term of the Contract
• The Supplier notes that timely performance of the Services is of the essence and warrants that the Services shall at all times be performed in a timely and professional manner by appropriately skilled and qualified people; and in compliance with all applicable laws, enactments, orders, regulations, standards and other similar instruments; and in accordance with all applicable provisions hereof. The Supplier also further warrants that it will obtain all licences, consents and permits required to comply with such laws, enactments, regulations, standards or other similar instruments.
• The Supplier warrants that all software supplied and/or used in connection with the Service shall be virus free and contained on write-protected media at the time of the initial installation of such software or whenever any software is used by the Supplier in the course
of the provision of the Service. Where and to the extent relevant to this Contract and for the avoidance of doubt the installation of patches and new versions will be treated as initial installations the first time they are installed. In the event that the Supplier either wilfully or negligently causes or permits the introduction of a virus into the Customer's computer network, the Supplier shall, without prejudice to any other rights the Customer may have, be liable to the Customer for all costs, losses, expenses and damages incurred by the Customer (including the cost of any remedial work required) as a result of the introduction of such virus.
• In the event that the Supplier fails to perform the Services, or any part of them, in accordance with the Contract, and such failure is not caused by the Customer, its employees or agents, then the Customer may elect, in addition to any other remedies that maybe available to it either under the Contract or otherwise, one or more of the following remedies: The Customer may require the Supplier, at the Supplier's expense, promptly to remedy any default or re-perform any non-conforming Services, or
• The Service shall include advice, fault analysis, inspection, modification or replacement and such other work as is necessary to maintain the System in good running order.
• The Service shall be provided in accordance with the Contract and with the care, skill and diligence required of an expert in the performance of the Services.
• Time is of the essence in the performance of the Services
• The Customer may either remedy any default or re-perform any non-conforming Services itself or have them remedied or re-performed by a third party on its behalf, and in either case, the Supplier shall pay the reasonable costs so incurred by the Customer.
• Capgemini UK PLC produced a tender in March which detailed their solution. It 'anticipated' a programme of 6 months duration for a cost of £750,000 based on a programme of 750 man days. Capgemini UK PLC 's tender made several modifications to JDPi 's standard contract terms for IT services. Clauses 3, 4, 5, 8, 10, 11, 13 remained the same but the following clauses are modified by Capgemini UK PLC :

A formal notification of contract award was issued to Capgemini UK PLC in June. It included a reference to JDPi 's standard terms of contract for IT services. Three days later, Capgemini UK PLC acknowledged the notification of award of contract by a letter reproduced below: "We have pleasure in receiving your letter of confirmation dated 24th June and confirm that work is underway on the project. We anticipate that the work will be completed by the end of December and look forward to working with you in full cooperation on the project. Please be assured that we will use our best endeavours to achieve the completion date, and you will note that work is already underway. You will note that the project is in accordance with our tender submitted to you in March."

Half way through the six months period for performance of the above contract, JDPi take the decision to upgrade their computer operating system from the MSV3 to the X2014. The formal business case was approved and specifications for the work to be done are now being drawn Capgemini UK PLC has been informed of this development. However, Capgemini UK PLC argues that this represents a significant variation to the scope of the upgrading of the specific IT system originally contracted for. This specific admin system was designed to operate under the system. Capgemini UK PLC argues that all the data and their integration will need considerable re-design. It will take several additional months to realign the admin/payment system it was upgrading with the X2014 operating system and, therefore, the envisaged completion date of December will not now be achievable unless JDPi agreed to increase payment by a further £100,000. After a bitter argument JDPi reluctantly agreed to pay the increased sum in order to ensure that the job was done on time. After completing the work on time JDPi refused to make the additional payments to Capgemini UK PLC outside the original contractual price.

Consider the above situation arid respond to the following issues:

• Whose terms and conditions govern the contract?
• What does this mean to the legal rights/obligations of JDPi?
• You are required to advise Capgemini UK PLC whether he has any rights in law to enforce JDPi r’s promise to pay the extra £100,000.

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