Howard Grant - PPI Consulting Limited - 1/1/2008

The Way Forward initiative, sometimes referred to as 10-10-50, is a much needed, greatly heralded ongoing process to improve the design, management and delivery of procurement across the federal government.

The 10-10-50 badge originates in the goals for Public Works and Government Services Canada (PWGSC) to:

1. save 10% in the costs of goods and services procured while
2. save 10% of the actual procurement costs
3. reduce the time to complete the procurement by 50%.

All of these goals are to be achieved while maintaining the key commitments of:

1. ensuring increased transparency and accountability
   in the procurement process
   
   
2. making it easier and less costly for suppliers to do
   business with government
   
   
3. improving access for small and medium enterprises to
   compete for procurement
   
   
4. considering economic and social impacts (Aboriginal,
   regional and environmental)
   
   
5. consulting with affected industry sectors.

(These points are taken from PWGSC slides from a 24 November 2006
Conference Board of Canada report.)

These are challenging objectives, as illustrated by a few recent examples. We will refer to these numbered points as we look at these examples.


A.T. Kearney
Early in the Way Forward process, A.T Kearney was awarded a contract, following competition, to provide consultative expertise in analyzing, and modifying, the government procurement processes in accordance with the 10-10-50 ideals. While the results of this engagement are not yet known, the contract history is interesting. A Government of Canada site provides a history of the contract award and extensions.

The process proceeded rapidly and Kearney's selection was not in dispute for the initial award in November 2005 – full marks for all of the ideals. But as of July 2006 there had been six extensions, none open to competition, which increased the value to $24 million. This may meet objectives 2, 3 and 5 (at least from Kearney's and PWGSC's perspectives) but probably falls short on the others.

Doubtless there are good, accountable reasons, but given the subject matter of the contract – procurement reform with huge government savings – observers have been upset and bemused by the process.

Some subsequent examples suggest the ideals are still sometimes hidden in the fog, mists or myth of 10-10-50.


TBIPS procurement
The Task Based Informatics Professional Services RFP, issued in mid January 2007, stated: "This solicitation is part of the first wave of the 'Way Forward' strategic sourcing initiatives to be issued by PWGSC in fiscal year 2006/2007. The Way Forward is a wide-ranging, Government of Canada strategy, led by PWGSC to find innovative ways to deliver services smarter, faster and at a reduced cost."

Though there is no doubt that this was one of the results of reform, how did this procurement process compare to the 10-10-50 ideals? The RFP's main feature was an easy-to-complete response format, which used a hard-coded, unalterable, spreadsheet. Ten months from issue and the standing offers are still not awarded. It's hard to believe that objectives 2, 3, 5 and 6 have any chance of being met.

The original RFP totaled 271 pages, including the inevitable 80 pages of mandatory contract conditions and security requirements. But the response, using the spreadsheets provided, was to be a simple, fill-in-the-blanks, idiot-proof approach. Unfortunately, the spreadsheets were not included with the RFP. These key documents were reissued five times during the procurement, resulting in re-keying and verification each time.

The revised RFP, now slimmed to 205 pages, was reissued in May 2007 and resulted in 16 RFP amendments and 540 clarification questions from potential bidders. PWGSC must be commended for responding to each question, but the sheer number of clarifications needed by a very well informed supplier community speaks to the clarity of the process.

After several closing date extensions, the RFP is now closed but contracts have not yet been awarded (Nov '07). The process is not yet complete, but it is hoped that some lessons will be learned.


THS procurement
The Temporary Help Services RFP is another tortuous story. In The Way Forward, PWGSC committed to consultation with the private sector and improving access for small and medium enterprises. The original RFP, issued in 2006, met widespread and vociferous objections from medium and small businesses concerned they were locked out of bidding – an indication, perhaps, of the failure to meet the consultation commitment. There was concern also that it reduced the procurement process to a cutthroat rate auction in the final stages.

The RFP was withdrawn and consultations with affected parties followed to produce an RFP that would meet PWGSC ideals and was capable of eliciting responses from the supplier community. The final RFP has not been released. Again, it is hard to see how a 10% reduction in procurement costs and a 50% reduction in procurement time can be met by this long running procurement project.


Accountability
In September 2007, PWGSC made some significant amendments to the Supply Manual – the Bible for federal government procurement. To quote: "There is one governing postulate for all PWGSC: integrity. Supply activities will be open, fair and honest. Subordinate to this are five principles, which provide the framework for PWGSC supply activities. Whenever a PWGSC contracting officer must act in a way not clearly set out in this Manual, integrity and its supporting principles provide necessary guidance."



The guiding principles are:

• Client Service: PWGSC will make every reasonable effort to satisfy the operational requirements of its clients, while obtaining best value in each procurement process.
  
  
• National Objectives: PWGSC supply activities will advance established government national socio-economic policies, within the limits imposed by international trade obligations.
  
  
• Competition: PWGSC procurement will be competitive,
  with specific exceptions.
  
  
• Equal Treatment: PWGSC will ensure that all pot
  
  
• Accountability: PWGSC is accountable for the integrity of the complete procurement process including all actions taken within the process: this also applies to actions originating from the client that are not in compliance with the Treasury Board or PWGSC policies or applicable legislation.

The accountability principle has subsequently been diluted, resulting in a flurry of press activity denigrating PWGSC for abdicating its accountability for procurement.

In reality, a balance has to be struck between PWGSC accountability for the "process" of procurement and the accountability of federal departments and agencies for "results" – delivering on their mandates. The way forward must find this balance.

When process outcomes dominate at the expense of enabling effective and efficient business outcomes or when the push to deliver on business results comes at the expense of circumventing the process, we all lose.

Achieving this balanced approach will not be easy. Simplistic applications of private sector supply chain models are neither appropriate nor effective in the public sector. The range of suppliers involved in public procurement, from sole contractors to global corporations, and the wide range of products and services procured by government demand a correspondingly flexible portfolio of procurement approaches.

Let's hope The Way Forward achieves its objectives and does not succumb to the web of rules. And let's guard against it becoming the way backwards, with increased prices, increased transaction costs and longer procurement cycles.