I was perusing a blog on LinkedIn expressing frustration at the government for the tender process it insists on, and it wasn’t until I got three quarters the way through I realised it wasn’t an IT company, rather a civil engineering contractor. It seems us IT types aren’t so special after all!

That got me thinking about why the tender process is so frustrating and then I had cause to read the Government procurement rules from end to end. See https://www.procurement.govt.nz/procurement/principles-and-rules/government-rules-of-sourcing/.

It struck me that the overriding principles were reasonable, enlightened even, and all the rules and guidelines had some logic to them. So why are government agencies so often more difficult for vendors to deal with than the private sector?

I think its lack of trust.

It’s easier for the private sector to trust its decision-makers, because getting it wrong can get you fired. Trust in the public sector is reduced because it’s much harder to sanction poor decisions by firing people.

‘Getting it wrong’ in the private sector means getting the wrong outcome no matter what process is followed. In the public sector getting it wrong means not following a prescribed process. I wouldn’t be surprised if there are instances of a government agency gaining a high quality, cost-effective and innovative solution only to be chastised by auditors for not following process.

Speaking of auditors, the Auditor General’s recent report ‘Introducing our work about procurement’, see https://oag.govt.nz/2018/procurement/docs/procurement.pdf, makes interesting reading.

The sections discussing issues of principle make little mention of value for money being a core principle. As a taxpayer, I rate value for money ahead of all other considerations, except corruption.

This includes being fair!

In the private sector, purchasers give preference to vendors they trust, because experience tells them this gives the best outcome. When your job is on the line, being fair takes a back seat to getting the decision right. I don’t have a problem with this if the purchaser is transparent, thus enabling their preferences to be ‘market-tested’.

However, government procurement guidelines on fairness mean agencies can’t take this approach and so are incentivised to hide their preferences within the tender process, even though this conflicts with the transparency guidelines. So, on occasion, they ‘game the system’ by skewing the process to deliver a pre-determined outcome.

This can lead to the agency wasting money on an unnecessary evaluation process and vendors wasting time responding. But more importantly it prevents any bias being subjected to market scrutiny. This hides weak management, discourages ‘left field’ solutions and encourages poor outcomes.

We had a situation a couple of years ago where the choice of the ‘independent’ consulting firm and a flawed RFP, indicated a pre-determined outcome. However, because the agency wouldn’t be up front, we couldn’t highlight why the pre-determined outcome was the wrong solution. Thus, we declined to respond, as I’m sure did other vendors who, like us, could have delivered a far more appropriate and cost-effective outcome.

The result was a grossly overpriced and completely inappropriate choice. The good news is that eventually sanity prevailed, and the project was canned. The bad news is the agency and the vendors who responded all wasted considerable time and money.

Had the agency been upfront about its preference, it would have been subject to market scrutiny and its highly likely a good outcome would have been achieved at far less cost to all parties.

In short, I’m of the opinion that the government procurement process needs to place more trust in its people and allow for personal preference based on experience, while at the same time mitigating the risk of corruption by strengthening its commitment to transparency and value for money, both in process and outcome.

A simple mechanism would be to be encourage all vendors who download a GETS document, to quantify their reasons for not proceeding or succeeding. I suspect the aggregation will show patterns that will make life a little uncomfortable for some agencies, consultancies and individuals.