contract management blog

In the wake of the ever repeating cautionary tales of poor probity, conflict of interest, and lack of visibility and auditable process in all levels of Government sourcing, I wish to highlight the still under-recognition of the benefits of good system support of these processes.

The lack of good systems and reporting means there is still poor transparency in government tender and quoting processes, which leads to the failure to identify and highlight conflicts of interest early enough in processes to prevent inappropriate contracts being signed, or at minimum the declaration and correct handling of such interest early in the process.

The lack of good IT systems for post award contract management boasts a long list of Government project poster children to highlight the need for close governance of IT and capital projects post award.

But the inability to enforce visible and value driven processes in technology sourcing prevents the correct procurement and contract management systems from being implemented to enforce those very processes.

This presents a kind of confusing conundrum.

There are two fundamental reasons why technology sourcing is failing in this area.

Many technology purchasing decisions are still being driven by processes that fail because of too heavy a weighting on price, instead of informed value driven processes awarding contracts to vendors capable of delivering the appropriate outcomes for Australian Government sourcing and contract management, which sometime comes at greater price.

It is proven that a formula that appropriately weights price with other capability and experience based criteria drives a process to a better outcome than to be more heavily influenced by price. The old adage of paying peanuts to get monkeys is well cautioned by many who have gone before us, paying peanuts. There is a certain level of capability, experience, functional and technical compliance that must be met prior to evaluating price in a well governed sourcing process. Even after the recent publicity in the sector around improper process, there are still Local Government agencies that award contracts on the basis of price, and write and pre-pay open-ended purchase orders for unspecified works and services. When will they learn?

Additionally many technology purchasing decisions are being made outside appropriate process and at inflated prices because Government agencies are still being led by Global systems integrators who have partnerships with Global software providers inside of existing Government services arrangements. Multiple millions of dollars are spent annually on sole sourcing unfit for purpose technology solutions from incumbent vendors who have been proven uncompetitive against Australian best-of-breed solutions. Yet small local firms without the same senior relationships are being made to compete through multiple public tender processes for the same goods and services to the same Government agencies, even when existing arrangements are in place.

So because of the inability of governments to put in place systems that drive visibility and value selection, the end result is more failed projects at all levels of Government, even in efforts to implement systems that would enforce the proper process for all future sourcing events (the conundrum again).

Having said all that, there are some State and Local Government agencies implementing good systems for sourcing and contract management, seeing the benefits and cost savings year after year, and delivering the process improvements that drive visibility and better value for rate payers. These are the ones you don’t read about in the paper.