Re-evaluating government procurement

To be fair, procurement has steadily evolved and matured over time, and during that time has delivered substantial value.

However, government needs are changing and technology itself is changing at an increasing pace. Can procurement as we know it, continue to deliver good outcomes for government through evolution alone?

Advances in technology are creating greater expectations. Virtualisation, cloud computing and increasingly sophisticated COTS solutions are offering expectations for more agile and predictable business solutions.

If, for example, there is an off the shelf SaaS solution can already satisfy 80% of business needs, how much additional cost and risk should an organisation accept, just to hold out for the last 20%? This may be good news for some governments already weary of long running bespoke development projects that fail to deliver required outcomes.

But the hope of greater agility comes at a price. Traditional approaches to gathering business requirements must change to something built more around outcomes. Business owners, accustomed to calling the shots about traditional business requirements must give way to a more flexible approach built around dialogue with the vendor.

Interoperability is becoming a pivotal consideration. In the days of home-grown bespoke solutions, interoperability was not much of an issue. Purpose built interfaces between systems could be designed and constructed as needed. As the number of COTS solutions increased, the problem could still be reasonably well contained through the use of mainstream suppliers and standard solutions.

But today’s good ideas are tomorrow’s legacy nightmares. Vendor commitments change over time, while mergers and acquisitions further muddy the waters. Suddenly that cheap solution that looked so good during the tender evaluation now starts to look much more problematic.

“Panel contracts cannot be the whole answer as they tend to limit opportunities for innovative solutions, nor do they provide the right environment for more complex, outcomes-based relationships that can deliver real change.”

Interoperability is much more than technical interfaces. It is much more about market directions, vendor strategy, and a Plan B. Over the long term, interoperability is likely to be far more important than today’s product cost estimates, or even today’s product functionality.

Software is fast moving from traditional engineering models to a much more adaptive approach built on an evolving biological model. Today’s software tenders ask for features and functions based on today’s requirements. We then go on to install, construct and deploy the system as if it were an invisible piece of machinery.

Future systems must be more adaptive to a world of evolving requirements. Government software implementations must also take a more adaptive approach if agencies are not to paint themselves into a technological corner.

In most jurisdictions, panel contracts form an important part of today’s government procurement strategies. Panel contracts have an obvious appeal by leveraging government buying power to save money. As individual technologies mature and standardise, there is a natural attraction toward commodity contracts.

But panel contracts cannot be the whole answer as they tend to limit opportunities for innovative solutions, nor do they provide the right environment for more complex, outcomes-based relationships that can deliver real change. Unfortunately the panel contract structure tends to support the position that if you always do what you’ve always done, then you will always get what you’ve always got!

The business of government is becoming increasingly complex, particularly as boundaries blur between a government and an increasingly capable digital society. There is a growing need for vendors relationships that can not only deliver particular products and services but can also understand the complexities of government and offer alternate solutions.

Traditional distinctions begin to disappear between consulting-based “above the line” and delivery-based “below the line” work. Such distinctions can lead to finger-pointing and missed opportunity. A better approach may be to structure contracts based on complexity of relationship.

There is never a good time to discuss government procurement. For both government and industry, competitive tendering and contracting is often seen as something shrouded in mystery.

Part art, part science, winning companies often see the status quo as entirely reasonable while losing companies eagerly scan the horizon for some indication of change.

On the other hand, many government procurement managers are just happy to make it out the other end unscathed. In the high stakes of winner takes all, it’s hard to have a dispassionate discussion. – Kevin Noonan, Ovum