Washington Dispatch No. 3: Roundtable Discussion on Transparency Eye Opening

Posted on May 11, 2010

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What is Transparency in Government?

In my keynote address “Contracting To Win: Buyer and Seller Responsibilities in 21st Century Government Procurement” at the D.C. Summit, I made the statement that “transparency is not holding fast to the illusion of a level playing field, but to a clear understanding of the layout of the field itself.”

Reflecting on Part 6 in our 7-Part “Seven Steps to Success: Jump Start Government Contract Series” with Washington-based expert author Judy Bradt (which aired earlier today on the PI Window on Business Show on Blog Talk Radio), we broached the subject of relationships in terms of their importance in the government contracting process.  I will expand on the specifics of what Bradt means in terms of early involvement shortly.

Being based in Canada, one thing that I found interesting was Bradt’s assertion that while the U.S. government is viewed as being openly accessible, there is an absence of the same degree of transparency in Canada where the details of a bid outcome can be somewhat obfuscated.

While we touched on many key areas in this sixth segment, Judy’s point that “the process for winning government contracts is truly based on the ability of a supplier to legitimately and transparently win preference with government buyers,” continued to resonate as a key element for success.

What the April 27th Roundtable discussion that tackled the question “What is Transparency in Government,” which aired as part of our Live Event coverage of the 3rd Annual Business of Government Summit did, was add a depth of insight and perspective into the world of government procurement that could only have been gained through the expertise and combined experience of the panel we had assembled for a memorable 90-Minute Special.

I am of course talking about Karen Evans, the former CIO for the United States Government, Tim Cummins who is the CEO of the International Association of Contract & Commercial Management (IACCM), Colin Cram, a 30 year public sector veteran and author of the seminal Towards Tesco – Improving Public Sector Procurement paper, as well as of course Judy Bradt, principle of Summit Insights.

As the lead-up to the release of a white paper that is being written about the observations and revelations from the Washington Roundtable discussion, this is the first in a series of excerpts that will be posted here on the Procurement Insights Blog, as well as in the Official Event Blog Essential Connections.

Providing both an overview of the key highlights from the April 27th broadcast, as well as a corresponding commentary, I can say with great certainty that regardless of your interests relative to the world of government procurement, these excerpts and ultimately the white paper itself will become required reading for anyone doing business with and in the public sector.

So what is transparency in Government?

When I first posed this question to the panel, the preliminary responses ranged from Bradt’s experience earlier in the day when at a speaking engagement one of the attendees complained that a particular government solicitation was “wired” which can lead one to conclude that the individual was voicing a concern that the bid was fixed.

Judy Bradt

Judy Bradt, Summit Insight

The critic was silenced when Bradt asked if they had become involved early in the process or, merely responded to an RFP?  This is a powerful question, the answer to which we will touch on in greater detail later in the paper.

Joining the PI Window on Business for the first time was Karen Evans, the former CIO for the United States Government who over the expenditure of close to $70 billion related to Information Technology during her impressive tenure with the Federal Government.

Karen S. Evans, Partner at KE&T Partners, LLC

Succinct in her opening comment, Evans indicated that there are many factors that impact and affect the procurement process in the public sector, a point she would expand upon as the discussion progressed.

Rather than defining transparency in general terms, IACCM’s Tim Cummins referred to what he called “bad” transparency in his opening comments.  Specifically, and more related to mindsets and environments, he talked about the negative impact of a program that accomplishes the exact opposite of the intended outcome by preventing openness and honesty.

Tim Cummins, CEO IACCM

Tim Cummins, CEO IACCM

Citing his position that the “more we develop openness and fairness in transparency,” the better it is in terms of both domestic interests and given the expanding global marketplace, international trade.

The discussion then took an interesting term, when I posed the question “is there a difference between the private and public sectors relative to transparency in the procurement process?”

Referencing a conversation I once had with a senior executive from Colgate-Palmolive who made the observation that the only difference between the private and public sector is that when a program goes awry within the private sector, “it is not likely going to end up on the front page of the local paper.”

While IACCM’s Cummins expressed the opinion that there are parallels that can be drawn between the public and private sectors when it comes to transparency, the “big problem” as he put it is that within the public sector there is a greater tendency to “avoid” accountability versus “accepting” accountability.

Given the Cummins response, Evans highlighted the fact that one of the key differences between how transparency is viewed in the private sector versus the public sector originates in the reporting hierarchy.  The fact is that within the private sector your board is a known quantity that share common interests such as market share, profitability and stock value.

In short, and while opinion regarding the best route to achieve this results may differ, the goals are ultimately much clearer and less convoluted by partisan or regional interests.

This of course is a factor in the public sector as the board is the 535 people in the House of Representatives in the Senate, where jurisdictional interests and competing priorities contribute, at least in part, to the risk averse lens through which transparency is viewed.

This aversion to risk, in essence exposing oneself to open criticism in the pages of say the “Washington Post” according to Evans, prevents people from the taking the kind of necessary risks that are required to improve services.

Joining in on the discussion, Colin Cram, who is a 30 year UK-based public sector veteran and expert whose “Towards Tesco – improving public sector procurement” paper provides a clarity of perspective that has actually led to my rethinking of the shared services strategy that has been unsuccessfully pursued by many governments, introduced the idea of “apparent” transparency versus “real” transparency.

Colin Cram, Towards Tesco

More to the point, Cram indicated the critical need for governments to find a better balance between the appearance of transparency and, actually delivering real value for money in what he referred to as a “commercial way.”  This is one of the important parallels between the public and private sectors to which the Towards Tesco paper is referring.

Expanding on Crams comments relative to the private sector attributes that should be incorporated into the public sector mindset, Judy Bradt talked about the fact that the real definition of transparency should be based on “everybody knowing the rules, where all suppliers have fair and open access to opportunities to pursue and win government business,” while maintaining the right to make “inquiries regarding the outcome” through for example, “the Freedom of Information Act in the United States.”

I think that it is important to stress the fact that the fair and open access to which Bradt had referred should not be confused with having an attitude of entitlement relative to getting or being owed “a piece of the government pie” so to speak.  Recalling her opening comment relative to the vendor in the audience who expressed the opinion that a particular government bid was wired, Bradt has often talked about suppliers getting involved early in the game in terms of building relationships with key stakeholders both within and external to the government.

By building relationships prior to an RFP being issued, affords a vendor the opportunity to “legitimately and transparently win preference with government buyers.”

As a Canadian, one of Bradt’s comments I found most interesting was her assertion that while the U.S. Government is one of the, if not the most open in terms of bid result disclosure, Canada was somewhat less accommodating in terms of subjecting its decisions to scrutiny.  This is certainly a topic I will have to pursue at greater length in another forum, but I think that it is important to stress that a more limited access to bid results is a far cry from a process being truly wired of corrupt.

In fact, referencing the Procurement Insights October 30th, 2008 post titled “New Zealand Public Sector eSourcing: Transparent Procurement encourages Competition & Investment,” Canada was actually ranked in the Top 10 at the number 9 position, in terms of the overall confidence in the veracity of the procurement process by Transparency International, the “global civil society organization” which leads  “the fight against corruption, by bringing people together in a powerful worldwide coalition to end the devastating impact of corruption on men, women and children around the world.”  The 2009 results from the organization’s  “Corruption Perceptions Indexes” or “CPI,” the year for which the latest statistics are available, saw Canada move up to the number 8 position, tied with both Australia and Iceland.

In line with Cummins’ earlier statement regarding the importance of transparency in relation to international trade, this same post discussed the “positive” correlation between transparency and Foreign Direct Investment, and in particular a 1999 paper by Z. Drabek and W. Payne published by the World Trade Organization titled “The Impact of Transparency on Foreign Direct Investment.”

The following Abstract for the paper, drives home the point that Cummins so astutely presented:

“Non-transparency is a term given in this paper to a set of government policies that increase the risk and uncertainty faced by economic actors foreign investors. This increase in risk and uncertainty stems from the presence of bribery and corruption, unstable economic policies, weak and poorly enforced property rights, and inefficient government institutions. Our empirical analysis shows that the degree of non-transparency is an important factor in a country’s attractiveness to foreign investors. High levels of non-transparency can greatly retard the amount of foreign investment that a country might otherwise expect. The simulation exercise presented in the statistical part of this paper reveals that on average a country could expect 40 percent increase in FDI from a one point increase in their transparency ranking. Pari passu, non-transparent policies translate into lower levels of FDI and hence lower levels of welfare and efficiency in the host country’s economy. A nation that takes steps to increase the degree of transparency in its policies and institutions could expect significant increases in the level of foreign investment into their country. This increased investment translates into more resources, which in turn increases social welfare and economic efficiency.”

Ironically, and despite the ability to easily access bid results through the Freedom of Information Act, the United States held the number 19 position in 2009 in terms of perceived transparency, which was one position lower than its number 18 ranking in 2008 where it shared that position in terms of world opinion with both Belgium and Japan.

At this point in the discussion I presented the concept that regardless of whether a supplier is dealing with either a public or private sector client, the axiom that buyers invariably deal with someone “they know, like and trust,” was not met with disagreement by Evans.

The basis for her agreement was tied to the fact that dealing with a known entity, the buyer has confidence that the vendor is going to perform and deliver on their contractual obligations.

That said and in line with the above referenced October 30th, 2008 Procurement Insights post, Evans stressed the importance for government buyers to “put out has much information as possible to remove any barriers or perceived barriers for suppliers.”

While Evans stressed the importance of reaching out and engaging as many suppliers as possible, especially with large IT acquisitions, as it is virtually impossible for a buyer to “know what all the technologies are in terms of what is out there (in the market), the need for greater clarity in terms of articulating what service the government wants to provide and how it is different from what is currently in place or is known is crucial.

This according to the former US Federal Government CIO, provides vendors with the ability to clearly state and demonstrate how their solution is going to get the job done.

The clarity to which Evans referred also extends to providing a meticulous outline as to how vendor solutions and capabilities are going to be evaluated by the government, as it can reduce the potential for challenges or protests of contract awards down the road.

Ultimately this takes us back to the primary question of what is transparency in the government procurement process, in that maintaining an open dialogue between the government and its vendors can potentially circumvent the problems associated with miscommunication.

Based on Evans’ comment that “now being on the other side,” she can see “why people have challenges with government procurement” because “it is not as clear as you think it is,” may at least in part explain the United States’ lower ranking in the 2008 and 2009 Transparency International CPI.

Tomorrow’s White Paper Excerpt: Perceptions, Relationships and Supplier Value

NOTE: The following post came from the new Essential Connections Blog. For complete summit information including additional articles, visit the Essential Connections Blog

About the Summit:

The PI Window on Business took its show on the road on April 27th and 28th thanks to sponsor Elcom and the tremendous work of the 2010 Business of Government Summit’s organizer, Shared Services and Outsourcing Network (SSON).

"Building Bridges"

It was a first rate venue that saw us broadcast “live” 5 incredibly informative sessions centered on “Building a Transparent, Collaborative and High-Performance Government Capable of Addressing the Challenges of the 21st Century.”

Uniting Practioners, Providers & Advisors

The attendees of mostly senior officials and executives from the public sector world were exposed to an incredible array of thought leaders, whose shared insights and experiences provided much needed (and welcomed) perspectives on both the challenges and potential strategies for effective government practices in the 21st century.

PI Window on Business Show . . . Radio Has Never Sounded Better!

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