A January 25th, 2013 article in the Ottawa Citizen by Kathryn May titled “The trial of his life” reports how “Bruce Atyeo has battled the federal government over a multi-million dollar contract he says bureaucrats steered away from his company.”
While I empathize with Mr. Atyeo, he is misguided in his efforts to sue the government. The problem isn’t one of corruption but with a system that is based upon the false premise that government contracts are awarded on a level playing field basis.
Of course they shouldn’t be as I wrote in a February 2010 article because people deal with whom they know, like and trust . . . here is the link to that article which expands on my point; Latest Government of Canada Procurement Scandal Belies the Very Principles Associated with Effective Purchasing Practices. Please be sure to read it because it tells the Royal LePage story in a light that many may not have considered.
The fact is that until public sector purchasing evolves from a politically-driven, everyone deserves a shot because it is a government that is buying mindset, we will continue to have these kinds of situations come up. They are needless to say a waste of time for everyone involved. (By the way, if Mr. Atyeo is deserving of anything it would be based on the fact that this inefficient everyone is welcome to play procurement process caused him to waste his time on bidding on the contract in the first place.)
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Procurement Insights 
colincram
January 27, 2013
This is a difficult issue. My view is that the need to create and maintain a competitive market over-rides the preference to deal with suppliers one knows. The latter is very short term. Unless there is genuine competition, potentially very good and competitive suppliers will not bother to bid. Hence the sitting supplier would have little need to bid at a competitive price or of offering improved services. Bidding is very expensive for suppliers. If there is no intention to run a genuine competition, bidders who were not aware of this do have a legitimate grievance.
piblogger
January 27, 2013
As always Colin a great perspective but . . . what are your thoughts regarding the fact that relationships are a key part of any successful initiative such as the one referenced in this post. It seems that the current tendering system does not take this into account. In fact it would seem that existing relationships open the door to the kind of lawsuits being pursued by Mr. Atyeo.
colincram
January 28, 2013
Jon, you have raised important issues by starting this ‘blog’. Relationships are a key part of any successful initiative, but that is not the same as continuing with existing relationships without giving others a chance. Can one tender for a relationship? I think one can as long as the specification/requirement is drawn up in the right way, the required relationship is defined properly and how the tendering process will work in order to achieve the right outcome is made clear. This is a rather more sophisticated approach than the normal tendering process. Private sector organisations can operate on a self interest basis. It could be argued that public sector organisations have wider responsibilities, which include fairness to all potential suppliers. However, this should not necessarily lead to reduced value for money; nor should it prevent partnerships. The incumbent will understand the requirement better than any other potential bidder and therefore has an advantage. If the incumbent doesn’t win, that may sometimes be through complacency or that there is another organisation that is genuinely better. It is issues like this and nuances of judgement that make procurement so interesting.
Relationalblogger
January 29, 2013
I think all comments made in relation to this topic are correct or rather grounded in reality in one way or another. I mean people do business with people. Unless it is a pure commodity transaction and despite of best efforts to have open competitions, a certain degree of subjectivity and bias to one vendor or group of vendors will eventually crepe in and in most cases you would be wasting your time and creating animosity with your potential client if you sue them. However, in complex relationships we have central issues and added complexities that the industry has not addressed. For example, in large initiative, you don’t know what your requirements are and they may include items that nobody delivers or produces at the time. You may have a strategic outcome you want to achieve which is about all you know. So how can one run a competition based on “requirements” like this. At the Center for Relational Outsourcing and Strategic Management we say relationships achieve outcomes and they need to be established before contracting for specific deliverables within those relationships. But how do we source relationships in a competitive process? How do we evaluate vendors ability to perform in a relationship? This is really the crux of the issue – the Public Sector and even the industry as a whole rely on personal connections and preferences as well as prior experience as key vendor selection drivers . They simply don’t have the tools to objectively procure relationships.
So what happened is that the industry, taking what they know and applying it to what they don’t know, started to source relationships using commodity acquisition rules and practices. The result is lawsuits and broken procurement regimes. A team from Strategic Relationships Solutions Inc. (SRS) and Telfer School Management have conducted extensive research and have developed an objective, predictive, analytic-based model for evaluating relationships in a competitive procurement process. This model removes the subjectivity and brings fairness to the same level as that applied or experienced in commodities. SRS offers in-class and online training program to provide people with the knowledge and tools to source relationships – not transactions or deals!!
piblogger
January 29, 2013
Well said Andy.
The commoditization of reationships is at the heart of the problem with the present bidding process. I like the source relationships – not transactions or deals approach.
Buyers Meeting Point (@BuyersMeetPoint)
February 5, 2013
If we are to achieve a truly open/competitive marketplace, I think regulations put in place – even those that are intended to level the playing field – need to be carefully considered. As Mr. Atyeo learned the hard way, the public bid he participated in was not truly open. It may have been because of sloppy sourcing (through the wrong demand level provided for property management) or malicious intent but either way the laws in place did nothing but allow him to engage in a lengthy, painful and costly lawsuit that he has yet to benefit from.
piblogger
February 5, 2013
Thank you for your input Kelly. Perhaps it is time that the laws be changed to reflect achieving the best outcome as opposed to creating an unattainable and untenable level playing field?
Kelly Barner
February 6, 2013
I do think so Jon. The fact of the matter is, we’ll never reach a totally open bidding situation. Suppliers need to be aware, as they are when bidding for private sector business, that they are taking a risk and may not win the contract – even with the lowest price. I would love to know if public sector procurement professionals are really more likely to award the business based on preference than in companies. Anyone that has spent time leading sourcing projects knows how difficult it is to get internal stakeholders to leave an incumbent supplier, particularly when they have been around for a long time and the sourcing process is relatively new. My inclination would be to believe that people are behaving as people do regardless of where they work. However in the private sector, the stakes are higher – companies will fail and disappear – while government entities are saved, often at significant cost and inefficiency to taxpayers.
piblogger
February 6, 2013
Well said Kelly!
piblogger
February 7, 2013
By the way . . . here is an interesting revelation from an article I wrote in 2011 titled “Government purchasing expert confirms that 90% of RFP winners decided before RFP is actually issued . . . with an important caveat!.” Any thoughts as to the assertion made by this government purchasing expert? (http://wp.me/p4HrB-2ne)
Mohammad Bakhsh
February 9, 2013
There is no level playing field in political driven purchases.This is only possible if suppliers force the government to draw need based specifications and compare every bid in juxtaposition. Suing the government is not a business friendly initiative.
piblogger
February 9, 2013
Politics is indeed a factor Mohammad. Like the know, like and trust factor, until we acknowledge this reality as opposed to creating rules that attempt to deny or limit its impact, the system will remain broken.
Mohammad Bakhsh
February 10, 2013
I agree. The system of governance works on fringe boundaries. This feasts on balance of political advantage or number game. The culture will remain broken as you rightly described.
Nadine Lumley
March 13, 2013
Contract KickBacks:
Lessons on How Harper’s Reform Party is Run:
A “Fat Cat Businessman” gains the trust of a government official. Soon “Fat-Cat Businessman” gives government / politician guy wads of cash in exchange for unfettered access to all the good juicy untendered / no-bid contracts.
If politician man can not find willing and corrupt businessman, in a pinch, the politician will use one of his family, friends or mistresses to start up a company. Then politician man gives them the contract, and then those two start issuing inflated invoices, bam, split the difference, done.
Everyone else in society is left scratching their heads trying to figure out why politician guy makes such weird and crazy policy decisions that make nO SeNsE.
http://www.ipolitics.ca/2012/12/14/secrecy-surrounds-federal-suppliers-with-links-to-crime/
piblogger
March 13, 2013
Thank you for your comment Nadine. As indicated, I am not saying that corruption does not happen – and along the lines to which you have referred. However, given the number of transactions that occur and the number of contracts that are awarded, I believe that we lose more money as a result of a poorly designed process than we do to corruption. Thoughts?
Mohammad Bakhsh
March 14, 2013
I agree with Mr pIblogger,the poorly designed contractual terms and conditions derail the whole process of purchase or procurement.
piblogger
March 14, 2013
Thank you for sharing your thoughts Mohammad.