The other day I posed a question in a number of LinkedIn groups based on a post by Ian Burdon (Risk Aversion, Bad faith and Scams , November 13th, 2013).
The question was fairly straight forward; Should governments be compelled to re-tender contracts if the incumbent supplier is doing a good job? (refer to today’s post title).
So far the responses have been quite interesting, although one in particular stood out.
Barry Walker who is now retired from the Department of National Defence wrote:
In the past, I have re-tendered support contracts when they expired. Each time, only the incumbent supplier answered the RFP, and I really had to wonder why I had gone through the lengthy process and why I had expended internal resources that could have been put to better use. In one instance, the existing contract had to be extended twice to allow the RFP to make its tortuous passage through PWGSC. Perhaps an internal review of contractor performance, coupled with an quick reference to industry to see if another supplier is interested in providing the service, is needed before deciding on a full RFP or an expedited contract renewal.
What I appreciated as both a procurement professional as well as a taxpayer was Walker’s suggestion that “an internal review of contractor performance, coupled with an quick reference to industry to see if another supplier is interested in providing the service, is needed before deciding on a full RFP or an expedited contract renewal.”
In reading the above, I cannot help but wonder why there continues to be this compulsion on the part of the government – regardless of the value being delivered by the incumbent supplier – to arbitrarily retender contracts based on a set period of time?
To me, and this is taking the premise of Walker’s comment to the next level, it would make far more sense to utilize a relational model such as the one that was originally developed and successfully implemented by Andy Akrouche in both the public and private sectors, to continually and progressively monitor and manage vendor performance and capability within an existing relationship. Only under circumstances where it is determined that the existing vendor is not delivering the best value, that an RFP process would commence.
In his new book Relationships First: The New Relationship Paradigm in Contracting, Akrouche talks about the creation of a Relationship Charter that would serve such a purpose. The “Charter” as he explains it, would enable stakeholders to establish both the trust and resulting transparency that is necessary for ongoing success. And let’s face it, with the vast majority of complex acquisitions failing to deliver to expectations, it is time that we accept the fact that the present tendering system doesn’t work.
What are your thoughts? Should the government look at forming relationships or continue down the transactional path associated with a current process that repeatedly misses the mark?
Could the Atyeo fiasco been avoided using a process based on relationships as opposed to transactions?
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Procurement Insights 
John Brooks
December 3, 2013
I have not been fully following this discussion, but am prompted to ask why the current ACAN process of Canada/PWGSC cannot be used to recheck market interest? Secondly, having spent most of my career in the private sector, I am well aware of the benefits of relational contracting – aka ‘supplier alliances’. However, rule #1 was always, what are risks from putting ‘all eggs in one (or limited) basket’…and how to treat new entries to the market…Perhaps all these are addressed in the book referred to and I plan to read with interest. John Brooks
Relationalblogger
December 3, 2013
Hi John, Although the ACAN is a rather effective competitive process, it has been abused by both sides of the contract divide. All you need to do to challenge an ACAN is send a 2 line email to the procurement officer.
Notwithstanding, incumbents win or lose because of one and only one reason irrespective of how well they are currently doing in terms of product/service delivery. The state of the relationship!! If the relationship is good, executives find ways to address issues, turn things around and re-win – they get used to working together, in this case, the new RFP is usually stacked in favor of the incumbent. On the other hand, if the relationship is sour and there is complete mistrust, the RFP process becomes the tool to replace them at any cost.
Sourcing a relationship means that you are sourcing a partner that will deliver the known deliverables but also strategically positioned to satisfy your known-uknowns and unknown-unknowns. So you have to do two things: initially your selection process has to look beyond the surface and examine the strategic fit in an objective analytical way. Secondly and once you have selected the optimum partner you need to make sure you have the mechanisms within your governance to gain the insight needed to continually assess and measure such a fit. The relationship should go on unless the fit starts to decay in which case action should be taken to re-source. Think of this continuous fit assessment as an internal sole source or re-source assessment. The ACAN can be an effective process in this case.
Also John, I don’t recommend having all your eggs in one basket, that wouldn’t be good risk management approach. You always need to have what we call executable off ramps that does not take back to procurement, Relationships First does not mean only one Relationship. The right Sourcing strategy needs to be developed based on in-depth industry and competitive analysis.
Andy Akrouche