The basic idea of a procurement contest — sometimes called a prize or challenge — is to set out a performance requirement for a capability that needs development work and offer a prize, usually money, for the first or best entity to produce a product or capability meeting the requirement.
from the Contracting Education Academy at Georgia Tech August 15th, 2011 article Procurement contests pooh-poohed by an unlikely source
Inspiration comes in many, many forms.
Having just concluded this past week, the incredibly popular Dangerous Supply Chain Myths Series, I must admit that I once again found myself wondering about what I would write next. It didn’t take long as a new debate is rising on the supply chain horizon that is centered on purchasing contests.
No, I am not talking about a game show with an Alex Trebek-type host testing purchasing professionals’ knowledge with such titillating answers such as scrapped after 7 years and $650 million. The question to which said answer belongs for those who are for the first time reading a Procurement Insights Blog post is, what are the Veterans Health Administration’s failed Oracle and J.D. Edwards e-procurement initiatives. Although, and from a public awareness standpoint, making a simple reference to the Bay Pines facility in Florida and the subsequent congressional hearings may be a more readily remembered question.
What I am talking about is a way for the government to pass on R&D costs to vendors in a quest to solve a particular problem without having to adhere to the existing core procurement procedures associated with the Federal Acquisition Regulation (FAR), and agency procurement processes. This is also it is worth noting, the red flag that detractors of the contest approach to public sector innovation are waving.
Of course the Contracting Education Academy at Georgia Tech to whom I had made reference in the opening paragraph of today’s post, is not the only one covering this story, as a wellspring of articles have come forth from multiple sources including a August 26th, 2011 post in Washington Technology by Stan Soloway.
Aptly titled Let’s argue procurement. It’s healthy Soloway,who at times gushes about the friendly but spirited combatants Steve Kelman and Alan Chvotkin in the for and against debate regarding procurement contests, still manages to raise a salient point regarding the importance of balance in terms of practical application.
As you know I have always maintained that the broad application of any strategy or technology driven approach across all areas of an organization’s spend is a recipe for disaster. You merely have to consider the VHA misstep as well as the countless other failed government initiatives to quantify the veracity of this position.
That being said I am an advocate for procurement contests on many levels, and for many reasons, subject to a clarification of key elements of the process including who ultimately owns the intellectual property of the developed innovation.
Of the countless reasons for my endorsement (if you could call it that) it is the propitiation of what I believe is the myth of having to create a level playing field in the government tendering process that has, in my humble opinion, led to increased costs for diminished value. I am not alone in my thinking here as demonstrated by a 90 minute roundtable discussion I hosted from the 3rd Annual Business of Government conference in Washington back in April 2010.
Featuring a guest panel that included the former CIO for the Federal Government under the Bush Administration Karen Evans, IACCM’s CEO Tim Cummins, 30 plus year UK public sector purchasing expert Colin Cram and expert author Judy Bradt, who has helped more than 6,000 clients win in excess of $300 million in contracts over the years, the discussion on transparency in the government procurement process was both interesting as well as for some perhaps a little surprising. By the way, here is the link to the on-demand broadcast What is Transparency in Government?
What I found most compelling about the roundtable session was the fact that there was a prevailing belief that the very processes that Chvotkin stressed should not be inappropriately ignored or sidestepped as they are the basic tenets of federal procurement, are in reality the artificially induced standards that often times lead to unimaginative and ultimately ineffective purchasing decisions. A just following orders mindset is what I recall Colin Cram as saying, that provides nothing more than an excuse for less ambitious purchasing professionals to push paper rather than roll up their sleeves and drive taxpayer value.
Over the balance of this week I will examine the procurement contest concept in greater detail citing actual case study examples such as the one involving Denver, Colorado-based Alpine Energy Group which spent four years and I am certain a great deal of money to walk away empty handed from a government incineration project right here in my own backyard.
30
Procurement Insights 
Kelly B. & Cindy A.M (@BuyersMeetPoint)
August 31, 2011
In today’s environment of content overload, we spend most of our time frantically reading fact and opinion just trying to take it all in. It’s amazing how hard it is to decide where you stand on an issue. Stopping long enough to think about a single topic, like I’ll do this week with Jon’s procurement contest posts, makes me sympathize with the neighborhood kids that had to wait at the bus stop this morning for the first day of school. Where did I put my ‘thinking cap’ after I used it last?
Here’s what I’m going to do – in order to give myself a chance to think, and also to benefit from the full week of Jon’s posts, I am going to give you my initial reaction to the procurement contest idea now, and then this weekend I’ll check back in to let you know if I have changed my mind or altered my opinion on what they mean to procurement. Fair? Good.
Here is the contest scenario as I understand it:
You are a government procurement professional and you have a problem or a need that you haven’t been able to resolve with the vendors currently available to you. Or, to be more specific, you might be able to find a solution but the process is so onerous that by the time you are lucky enough to get yourself through it, the solution will be smashed right back into the same old shape that you started with.
But what if you could have a contest to find a solution? You state the problem with detailed requirements. Companies compete, using their own R&D resources (at their own expense) to find an answer. If they are chosen as the contest “winner” they get prestige, maybe a contract, and probably a financial “prize”. The government saves money, a problem is solved, business is driven to innovate, marketing people get to put out those press releases they love so much. Everybody wins. Or do they?
Know who I am worried about in this scenario? ME. Not the real Buyers Meeting Point Co-owner me, but the hypothetical government procurement person me. I was either not strategic enough to come up with a good answer or justification for change in the first place or I was willing to accept that my job came with such regulations that I would be punished for having a creative thought AND STILL TOOK THE POSITION!
I fear that I was already a bit of a weak link, and this solution doesn’t give me any opportunity to add value. My best bet is to get really really good at articulating problems for other people to solve. Forgive me for being particular, but that seems like a very negative existence.
Now let’s extend the same scenario into the private sector – hopefully this situation is one you could imagine yourself in: Your company has a need and none of the suppliers in the market seem to have a solution. So you put out a contese announcement just like your public sector counterpart above and wait for the solutions to come rolling in. How long do you think it will take your manager to realize that you aren’t adding any value at all?
The only answer in this case is for you to actually collaborate with your suppliers and become a partial contestant yourself. You may end up working with more than one supplier in the hopes that you’ll find an answer from one of the competitors, but hopefully by helping them define and then refine their proposed solutions you will end up with a better result sooner and you will be able to claim part of the victory yourself. At least at the end of that journey you would have an impressive story to tell, to your boss and anyone else willing to listen.
There is no question that the expectation of private sector procurement professionals is that we will continue to upskill ourselves and strive to add measurable value to our organizations. We know what the alternative is: outsourcing. Shouldn’t our public sector counterparts want the same for themselves?
So that is my first reaction to the procurement contest idea – good for government, problems, companies, marketing geeks, but a big old thumbs down for procurement. Unless we find a way to roll our sleeves and jump right into the middle of the mess, because…
“You’re either part of the solution or part of the problem.”
– (Leroy) Eldridge Cleaver (1935-1998)
http://buyersmeetingpoint.com/the-point-blog/entry/innovation-through-procurement-contests-part-1
John Tracy
September 1, 2011
In business there are forms of procurement contests every day at least in the IT industry. IT suppliers will share their new product roadmaps with their key customers and buyers will share their product roadmaps and future needs with the Supplier. That sharing of what’s needed for the future with multiple suppliers creates a form of contest with the prize being the future business.
Where I would be very concerned about procurement contests is when they would not allow all the potential competitors adequate to evaluate and develop something on their own. The shorter the period the higher the probability that someone may have know about one of the companies status and developments and used the short time period to eliminate competition so they could award the business to a preferred supplier. Not much different than writing specification in a manner where they are so restrictive that one one company can meet them.