Grieving the loss of a public contract: De La Rue and the Brexit passport
| DOI | https://doi.org/10.1108/JOPP-06-2019-0035 |
| Published date | 21 November 2019 |
| Pages | 20-37 |
| Date | 21 November 2019 |
| Author | Anthony Flynn |
| Subject Matter | Public policy & environmental management,Politics,Public adminstration & management,Government,Economics,Public finance/economics,Taxation/public revenue |
Grieving the loss of a public
contract: De La Rue and the
Brexit passport
Anthony Flynn
Department of Business, Cardiff University, Cardiff, UK
Abstract
Purpose –This paper aims to examine how firms react to the loss of a major government contract.
Reactionsto contract loss are yet to be properly studied in public procurement.
Design/methodology/approach –The hypothesis is that contract loss triggers a five-stage grieving
process, as predicted by the Kubler-Ross model. The hypothesis is tested using the recent UK passport contract in
which the British supplier, De La Rue, lost to the Franco-Dutch supplier, Gemalto. Secondary data from corporate
publications, news reporting, parliamentary debates and trade union press releases is used to compile the case.
Findings –The findings show that De La Rue and its supporterspassed through the five stages of grief in
response to their loss.De La Rue initially exhibiteddenial by vowing to appeal the decision. Next came anger
directed at the UK Government.An attempt to bargain was made during the standstillperiod. Depression set
in after De La Rue admitted it would not appeal. Finally,acceptance was indicated by De La Rue pursuing
new opportunitiesin the product authentication market.
Research limitations/implications –The study is based on a single case. Further case research is
warrantedto test the external validity of the results.
Practical implications –By debriefing unsuccessful bidders and listening to their viewpoint, public
buyers can help to assuage the angerthat accompanies contract loss.
Social implications –Elected representatives,the media and civic society groupshave vested interests in
the outcome of contract competitions. Moreover, they use their agency in pursuit of their own interests,
whetherthrough political bargaining, lobbyingor editorials.
Originality/value –The paper demonstrates that the Kubler-Ross model of grieving has utility for
understandingreactions to loss in a public procurementcontext.
Keywords Contract loss, Grieving, Kubler-Ross, Brexit passport
Paper type Research paper
Introduction
Public contracts represent a sizeable revenue stream for many private sector firms. Some
firms in sectors like defenceand facilities management even count government as their main
corporate client. The benefits to suppliers from securing public contracts go beyond cash-
flow and profitability to include commercialisation opportunities, reputationalenhancement
and network access (Möller and Törrönen,2003;Purchase et al.,2009;Walter et al.,2001). By
the same token, losing public contracts can imperil a firm’sfinancial position and reduce
their marketplace standing. We see evidence of this when a firm’s share price drops after
announcing that it has failedto secure a targeted contract. It is public contract loss thatis of
interest in this paper. Specifically, the paper sets out to answer the question of how firms
react to losing a major government contract. Aside from quantitative assessments on the
incidence and outcomes of bid protests (Arena et al., 2018), there has been little attempt to
address this question. Yet it deserves attention as academic and practitioner interest in
public procurementcontinues to grow.
JOPP
20,1
20
Received28 June 2019
Revised26 September 2019
Accepted15 October 2019
Journalof Public Procurement
Vol.20 No. 1, 2020
pp. 20-37
© Emerald Publishing Limited
1535-0118
DOI 10.1108/JOPP-06-2019-0035
The current issue and full text archive of this journal is available on Emerald Insight at:
https://www.emerald.com/insight/1535-0118.htm
There are many ways to conceptualise responses to public contract loss. One is to view
the phenomenon through the lens of organisationallearning (Levitt and March, 1988). This
would have firms critiquing their performance, identifying areas for improvement, and
revising their tendering strategy to maximise future chances of success. Another is to take
public choice theory from the economics field (Buchanan and Tollison, 1972) and examine
how the self-interests of the focal firm and its politicalstakeholders play out in response to
the loss. An alternative approach, and the one taken here, is to understand contract loss in
psychological terms where firms enter into a period of grieving. Relevant in this regard is
the Kubler-Ross model (Kübler-Ross, 1973). It explains reactions to loss through five
emotional stages: denial, anger, bargaining, depression and acceptance. While synonymous
with how patients and their families deal with terminal illness, the Kubler-Ross model
conceivably has validityin accounting for reactions to loss in an organisationalcontext.
To test the applicability of the Kubler-Ross model to public contract loss, we use De La
Rue and the UK passport contract as our “instrumental case study”(Simons, 2014). In 2018
De La Rue, a UK firm, lost out to Gemalto, a Franco-Dutch firm, on a ten-year contract to
produce the next generation of UK passports. The case was highly publicised, not least
because it became enmeshed with Brexit[1] and its promise of “taking back control”.To
examine how De La Rue responded to the loss of one of its flagship government contracts,
we analysed over 100 pieces of text data from a wide range of secondary sources. These
included reports and press releases from De La Rue and Gemalto, newspaper articles,
parliamentary debates, trade union statements and tweets by members of the public. The
result is an in-depth, comprehensivecase study of De La Rue and its supporters’reaction to
a devastating contractloss.
The study has a number of contributions to make to the public procurement field.
Empirically, it provides among the first evidence on behavioural responses to public
contract loss. While there is data on legal challenges to contract award decisions –see, for
example, Arena et al.’s (2018) assessment of bid protests by US Department of Defense
(DoD) contractors –in-depthcase analysis of how organisations and their stakeholders react
to loss is missing from the literature. Theoretically, the paper is novel as it utilises
psychological perspectives on grieving (Kübler-Ross, 1973;Kübler-Ross and Kessler, 2005)
to predict and make sense of corporate reactions to contract loss. Novel theoretical
application of this kind is needed because systematic reviews show public procurement to
be under-theorized (Flynnand Davis, 2014;Patrucco et al., 2017). Apart from these scholarly
contributions, there are learning points forgovernment officials and corporate stakeholders
on how to effectively manage the aftermathof high-stakes public contract awards.
Literature
Since Thai (2001) publishedhis “state-of-the-art”on public procurement nearly twenty years
ago, various lines of inquiry have opened up. Some researchers have explored how public
procurement acts as a policy lever for sustainability, public value and social justice
(Arrowsmith, 2010;Erridge, 2007;McCrudden, 2007). Others have interested themselves in
buyer-supplier relationships, with particular emphasis on partnerships and collaboration
(Bovaird, 2006;Erridge and Greer, 2002;Sanderson, 2009). The role of the public procurer,
and the knowledge, skills and attitudes that underpin this role, has also been subject to
scrutiny (McCue and Gianakis, 2001;Ntayi et al., 2011;Prier et al., 2010;Roman, 2015). A
separate body of literature has adopted a supplier view on public contracting. Much of its
output is “barrier-centric”in that it concentrates on the systemic barriers that small and
medium enterprises (SMEs) face when competingfor public contracts (Ancarani et al.,2019;
Grieving the
loss of a public
contract
21
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