Government procurement innovation (2)

By : Pierre-Antoine Ferron

M.P.A., D.P.A., B.A.

The author has been a civil servant in the federal, municipal and provincial sectors in Canada for 40 years.

Note : My opinions are personal and do not reflect the opinion of my employer in any way.

Special thanks to my friend Aimee Withcroft who helped me with the English version.

__

Introduction

Government procurement currently faces numerous challenges throughout democracies and the current article reviews some of them and suggests some possible solutions.

While procurement challenges are, as I said, common, I will rely on my Canadian experience and examples which I know best.

The following table shows common challenges both from the government perspective but also from the contractoring point of view.

Government challenges

Proper problem definition related to procurement

Very often, procurement fails because initially, the definition of the problem to solve is not adequate and centers immediately on solutions.

Problem definition does not generally entail discussions with stakeholders or citizens.

RFP size and project planning

Too often, the scope and size ($$$) of the RFP (request for proposal) is too big.

Projects and related procurement actions (especially in IT) should be sliced into the smallest possible doable units.

Project planning is often based on respecting project methods instead of delivering incremental results over a defined time period.

Lack of accessibility to public markets

Contractors are often forced to pay to access government RFPs, which constitutes an unnecessary barrier to public markets.

Furthermore, no government (to my knowledge) offers bidders the possibility to answer RFPs through online forms.

Unsolicited proposals and lobbying

Most procurement initiatives rest on the acquisition of goods and services that are, basically, commodities most of the time.

Therefore, control of unsolicited proposals and direct lobbying should be greatly improved and, essentially, systematically discouraged to favor in-house market watches and RFIs (requests for information) to properly prepare an RFP.

Disconnect between public policies and procurement

Too often, public policies are not complemented by mandatory procurement standards/criteria (for example security, interoperability, language, accessibility, etc).

Very few governments state those requirements in a public document (for example an Interoperability framework), or fail to enforce those standards, let alone devote sufficient efforts to maintain them.

Lack of standards

Very few governments make efforts do disclose required standards (especially in IT).

Lack of sufficient transparency

Transparency in procurement is supposed to achieve several goals : disclosing that public markets exists and are fair; ensure financial accountability of spending of government funds.

Very few governments (though some claim it) follow the Open Global Contracting standards, especially on RFP outcomes and project overruns.

Special consideration should be given to avoiding - as much as possible - signing NDAs (non-disclosure agreements) with contractors.

Encouraging local industry

Everybody wants to (or claims to) encourage local industries growth through government procurement.

This is difficult to achieve when most free-trade international agreements impose a high, expensive ceiling to such practices.

Checks and balances

Implementing independent control of government procurement through independent institutions such as Inspectors General and/or public markets watchdogs can further reduce corruption and collusion risks.

Proper problem definition related to procurement

Even before going forward with a public procurement initiative, governments often forget to put enough effort into properly defining the problem to solve and jump fast to solutions, with sometimes less than-desirable results.

Generally, finding the problem should involve all stakeholders, sometimes researchers in certain fields and, for public needs, citizens.

In defining the problem, careful consideration should be given to value assessment and for governments, value should never be measured solely (or even predominantly) in traditional ROI (return on investment) terms.

Instead, value measurement should be first and foremost appreciated along non-monetary terms:

1. linked to the application of laws;

2. linked to public policies;

3. linked to properly-defined problems with stakeholders;

4. improving citizens quality of life (environment, security, health, etc);

5. linked to government services improvement;

6. promoting standardization/interoperability, etc.

For further reading: Civic Value in Open Smart Communities. Open North (2021)

RFP size and project planning

RFP size is often a major problem for governments, who tend to publish mammoth RFPs with sometimes catastrophic results (for example deployment failures and massive cost overruns).

Best practices suggest following the motto: Elephants are best eaten in slices. This means that projects should be divided and reduced to their simplest possible unitary components before publishing an RFP.

This practice reduces numerous types of risks and ensures the incremental delivery of results. It also allows strategic changes to projects facing unforeseeable events. Note that numerous ‘’slices’’ can advance concurrently.

Lack of access to public markets

One of the pillars of public procurement is the ability for vendors to know that there are requests on which to bid. Typically, those RFPs are published on centralized platforms.

In Canada, RFPs are published at the Federal level on Buyandsell.gc.ca and provinces like Québec also publish their RFPs in a centralized manner, including for their cities.

Despite this practice, there are still significant barriers to bidders:

1. Bidders often have to pay significant fees to access bidding documents.

2. Answers cannot be completed online, and bidders often have to complete numerous forms that need to be deposited;

Since governments rarely do structured market watches before launching bids, they do not alert potential bidders to potentially interesting RFPs after their publication;

Governments do not publish mandatory standards in a centralized mannerlike, in IT, Interoperability Reference Frameworks or Security Frameworks, nor are they are linked to relevant laws. Governments who do, fail to maintain them properly. So commercial bidders always ‘’discover’’ those within RFPs.

Too often, government RFPs are directed specifically by name, or indirectly through technical criteria, towards particular vendors, instead of being based on more neutral standards. This unnecessary practice (since most goods and services are commodities) restricts public market access.

Unsolicited proposals, lobbying and market watches (countering the shiny trinkets syndrome)

As said before, procurement pertains to acquiring commodities 98 % of the time, whether we are talking about goods or services. Furthermore, an incredible amount of those are ruled by international standards, from cars to appliances to IT.

Yet, governments are subjected to a constant and relentless barrage of demo or meetings demands by vendors.

In my experience, this is time consuming, reputation risky, useless and often leads to catastrophic results (deployment failures, massive cost overruns, failure to deliver meaningful value, etc.) and loss of trust towards public administration.

Better to implement an in-house market watch process (described in the schema below) whereas one tries to ascertain, in advance, the possible market response to defined functional and/or technical criteria and standards.

This method has numerous advantages:

1. neutral (standards-based);

2. reduces the risk of non-compliant bids because you know what contractors can do;

3. allows deep knowledge of business models to evaluate costs in advance and to make ‘’business’’ decisions accordingly ;

A few tips include:

1. that all discussions with bidders should be conducted solely by procurement civil servants (backed with technical resources);

2. prohibiting RFP writing by consultants, to reduce risks of collusion and corruption (plus they generally don’t have a sound understanding of the regulations);

3. avoiding relying on market research firms, which tend to have numerous methodological biases and are usually ill-suited to government needs;

4. never accepting or conducting ‘’Swiss challenges’’ and the like;

5. avoiding demos by IT vendors unless absolutely necessary, as most are available on YouTube…);

6. instead, focusing on verifying certain critical vendor claims with some scenarios during the RFP evaluation process (vendors do, yes, sometimes they inflate their capabilities).

Disconnect between public policies and procurement

Surprisingly, while governments constantly churn out new policies, laws and regulations, they almost never systematically link those to procurement strategies and translate them into requirements.

This results in sometimes embarrassing situations for governments (meaning lack of coherence). For example: a) the government enacts laws framing the use of facial recognition and AI (artificial intelligence) while the Customs ministry buys software that uses those technologies but does not follow the law, b) a provincial government enacts a directive stating that all software interfaces must be in a given language and somebody goes and buy software that doesn’t allow said language, and so forth.

As I noted before, effort should be dedicated to linking policies to procurement standards, and making those public.

Lack of sufficient transparency

Most democratic governments practice basic transparency in procurement for the following reasons:

1. being fair to markets;

2. maximizing vendors competition;

3. reducing risks of corruption and collusion;

4. accountability about how public money is spent.

This form of transparency often translates into procurement websites such as those referenced above.

Of course, there are several procurement transparency standards out there, the most well-known being the Global Open Contracting Principles. Some governments even claim to follow them but in practice rarely do, especially when it comes to disclosing documents like:

1. related pre-studies, bid documents, performance evaluations, guarantees, and auditing reports;

2. information related to performance and completion of public contracts, including information regarding subcontracting arrangements, such as:

3. general schedules, including major milestones in execution, and any changes thereto;

4. status of implementation against milestones;

5. dates and amounts of stage payments made or received (against total amount) and the source of those payments;

6. final settlements and responsibilities;

7. risk assessments, including environmental and social impact assessments;

8. assessments of assets and liabilities of government related to the contract;

9. provisions in place to ensure appropriate management of ongoing risks and liabilities; and

10. appropriate financial information regarding revenues and expenditures, such as time and cost overruns, if any.

Encouraging local industry through procurement

Who has not heard people from all corners claim that through procurement or laws, local industries will benefit?

Easier said than done. First, a lot of democracies have signed free-trade agreements that specifically limit the amount of money for subsidizing a local company; second, one has to define what a local company is. For me, that means locally owned, not a subsidiary.

In Canada, a recent study ( Breaking All the Rules: Information Technology Procurement in the Government of Canada. Boots, Sean; Clarke, Amanda; Brousseau, Chantal; Lajoie, Anne-Michel (2024).) demonstrated that of the top ten Federal government IT vendors, only two were Canadian-owned.

But some democracies have developed clever ways to achieve this. For example, for the IT industry, the European Union chose, about a decade ago, to invest heavily in Open Source Software, simultaneously encouraging local industries, interoperability and digital sovereignty.

Checks and balances for better governance

As with democracies in general, checks and balances are always a good practice to put in place. While auditors are often used, there are better independent organizations that can be put in place and have proved their usefulness against corruption and collusion in public markets, such as Inspectors Generals and Autorité des marchés financiers.

Conclusion

Public procurement is notoriously both complex and complicated, for a range of reasons (both good and bad). However, with sufficient will, and learning from / implementing proven methods put in place elsewhere, there are numerous ways to significantly improve it.