Compaq Computer Corp is in a unique position to secure government contracts in Poland, after signing a ‘preferred supplier’ deal with the Polish Council of Ministers office. The arrangement sprang out of Compaq winning a contract to supply hardware, which was used to manage the 1991 national elections. Negotiations for the deal took more than 14 months. While market research in Poland is scarce, International Data Corp estimates that the total information technology market there is worth approximately $200m a year. As 30% of this is generated from the public sector, Compaq has, at a stroke, become the front-runner for contracts worth tens of million dollars each year, especially given the local preference for Unix server-backed personal computer networks. Although the terms of the deal are confidential, deputy director of the Computer Science Bureau at the Council did say that Compaq provided him with a list of prices, lower than those charged by Compaq dealers. The Council and every other government department for that matter will pay the list price for all computers supplied by the company. Compaq Europe vice-president, Zelimir Ilic, said the group will not sell systems direct and emphasised that the agreement applied to all authorised Compaq resellers. The Council has not signed an exclusivity clause, however – indeed, it seems keen to strike as many deals with as many different vendors as it can. According to Glinski, it is close to signing up ICL Plc, has spoken to Hewlett-Packard Co, and has been approached by IBM Corp and Ing C Olivetti SpA. The Council’s ultimate aim is to buy all its hardware from those companies with which it signs contracts. But this policy has three major drawbacks if it wants to make the most of its money. Firstly, Compaq’s rivals are afraid that because the company was the first recruit, it will have the competitive edge. Some are even arguing that it’s not worth their while joining the scheme. The Warsaw Voice quoted an anonymous representative of a large foreign personal computer supplier as saying, ‘It takes a lot of negotiating to draw up that kind of thing. Even if we sign a similar agreement, Compaq will still have the advantage in the market’. Second, the Polish government may now have difficulty attracting new personal computer suppliers into the domestic market, unless it first promises to provide similar access to government business. So, to attract foreign investment, it may well have to negotiate unfavourable deals. Third, if Compaq bases its prices on those set out in the list mentioned above rather than offering the usual percentage discounts, regular negotiation of rates may well be necessary should personal computer prices continue to fall. Also, if the number of major suppliers does swell, it is unlikely that pricing will remain as favourable as it is now for the Council. If competitive tendering is replaced, the situation could result in ever-more complex and time-consuming bulk-for-discount negotiations with the government’s various suppliers.
