The Federation of Wholesale Distributors has expressed concern over the £100m government contract awarded to Entegra (owned by Sodexo) and how it will affect wholesalers across the UK.
It emerged this week that Entegra had been chosen by the government to fulfil its new Buying Better Food and Drink agreement for the public sector.
The contract forms part of a Defra and Crown Commercial Services plan to create a single supplier model to provide food and drink to schools, prisons and hospitals, and is worth £100m over the next two years.
Through the model the government has said it aims to “drive up standards of food and drink available to the public sector” including local authorities, health, police, fire & rescue, education and devolved administrations.
According to the framework description, the contract would be awarded to “either a single Tier 1 supplier” or a “consortium of suppliers” that “meet the minimum technical, ethical and policy requirements and government buying standards for food”.
The FWD said it was concerned about the lack of wholesale partners mentioned in the tender, and how the new single supplier model risked cutting access to public contracts for smaller businesses.
“At the moment it is unclear as to how Sodexo will carry out this contract as there is no named wholesale partner,” said FWD CEO James Bielby.
“We are very concerned that this contract is anti-competitive and will lead to the creation of a potential government monopoly on public sector food supply. In doing so, the framework is likely to keep local SME wholesalers out of this market.
“This is a direct contradiction to one of CCS’s key points and reasoning for creating this framework. The framework goes on to further contradict government policy in that it will also go against the Defra target for public sector food supply, which requires 50% of product to be locally produced.
“We are also deeply concerned about the impact that the framework will have on the quality of food and fear it will create a race to the bottom in price and reduce the availability of specialist products which the public sector currently enjoys.”
Sodexo said the agreement would “shorten supply chains by simplifying the customer journey” and provide an easier access point “for public sector customers and small businesses by offering a simplified route to market”.
To fulfil the requirement set by the CCS to provide a simpler customer journey, Entegra is required to set up a single online access portal, which has to be accessible 24/7 by public bodies.
Entegra’s platform “provides real-time stock checks and consolidated invoicing with automated digital payments” and uses “AgileChain technology [to] connect every part of the food supply chain efficiently”.
“Entegra’s solution combines a nationwide network of distributors, producers, farmers, growers and manufacturers with innovative technology and efficient processes which has the potential to transform public sector buying and create value for many SME businesses,” said Stephen Beech, managing director of Entegra UK&I.
Crown Commercial Service CEO Simon Tse said: “We’re delighted to be working alongside Defra to introduce better quality, seasonal and nutritious food into schools, hospitals and prisons.
“As we continue to grow the economy, this food solution will support public sector bodies in purchasing good quality food and help local and small businesses compete for public sector contracts for the first time, opening up economic opportunities across the country.”
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