Government’s proposed changes to procurement show that they are in the right room but haven’t turned the lights on . . . yet! by Jon Hansen

Posted on February 18, 2013

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“What makes what you do so exciting Andy is that you not only see the process beyond the actual procurement but that you have also created a model that incorporates the relationship factor into the buying equation itself.   In essence you have created a methodology that goes beyond experience or gut feel (things that while important are not scalable and often leads to charges of favoritism), that identifies and weighs the importance of key relationship characteristics up front thus ensuring ongoing and long-term initiative success.”

Click to check out Andy's Relational Contracting Intelligence Blog

Click to check out Andy’s Relational Contracting Intelligence Blog

I made the above statement during an interview with Andy Akrouche regarding his soon to be published book “Relationships First: The new relationship paradigm in contract management.”  More specifically his emphasis on sourcing relationships as opposed to sourcing deals.

The timing for the interview was fortuitous in that it was scheduled well before the news broke that the government was “mulling” the viability of a new procurement agency for the expressed purposes of procuring “ships, planes, trucks, and all the other extraordinarily expensive and frequently controversial gear required by a modern military.”  Especially since the shipbuilding contract referenced in the newspaper that was awarded to Irving Shipbuilding Inc. and Seaspan Marine appeared typical of contracts he discussed in his book.

Recognizing that I could utilize this news to better understand Akrouche’s model in the context of a real-world present day challenge, I obviously could not resist asking him what all of this meant in terms of the government’s contemplation of two possible options.

For those of you who may not yet be familiar with the recent developments, the article published in the Ottawa Citizen stated that the government is looking to either; a) roll out individual “secretariats” for each successive military procurement, as was done in the fall of 2011 for the Royal Canadian Navy’s new fleet of warships or b) consolidate an estimated 10,000 bureaucrats from three federal departments – Defence, Public Works, and Industry Canada – into a “single huge new agency, under the aegis of a single minister.”

However, when I asked Akrouche the million dollar question – which option do you think is the best, his answer was unique and quite enlightening.

“Well I will tell you,” started Akrouche whose authoritative manner reflects the experience of someone who over the past 25 years has held senior positions with some of the planets largest IT and electronic publishing organizations, “either option has a degree of logic to it.”  While the government’s thinking clearly shows that “they are in the right room,” he continued, it also “highlights the fact that they have not yet turned on the light in a manner of speaking.”

“Right room” . . . “haven’t turned on the lights?”  I have to admit that he got both my attention and interest.

“The biggest problem with both considerations” Akrouche explained, “is that they do not go far enough in that they do not put into place a framework for managing the post-acquisition relationship.  It is like giving someone a new car without any gas in it.  It will look good while promising you a good ride but in reality won’t get you out of the parking lot.”

This is an important disconnect according to Akrouche, because awarding the business is not the same as realizing (or managing) the desired outcome.

So how do you manage to achieve the “desired outcome?”

Referencing Akrouche’s in the room with the lights off analogy, here is what he had to say:

Both of the options presented in the Citizen article propose an approach that continues to disconnect the procurement of a long-term business relationship from the very operational or fulfillment considerations that are essential to achieving sustainable success.  With complex procurement these considerations include factors such as the impact on our economy as a whole, foreign policy as well as other strategic national objectives.  Specifically, it is not just about building a ship or buying fighter jets.  It is about meeting the seemingly disparate yet undeniably interconnected interests of different stakeholders simultaneously and consistently.  In their efforts to address these relational challenges the government is in the right room from the standpoint of acknowledging that there is a problem.  The light will come on so to speak when they realize that the framework or model for managing the relationships between these various stakeholders must be incorporated into the process at some point.  Ideally this relationship model would be introduced as part of the initial procurement process.  However, and as demonstrated by past successes, the model’s introduction can be facilitated by a willing group of stakeholders at any point in time.

The fact is that until a viable relationship model is put into place success, as demonstrated by the secretariat framework that was established for the current shipbuilding initiative, will continue to be an elusive quest in terms of realization.  These very sentiments were expressed in an Atlantic Business Magazine article by Jon Tattrie which was published under the heading “Ships will start here (eventually).”  Tattrie deftly pointed to the fact that for Irving, the biggest challenge in the wake of the $25-billion contract win is “managing expectations.”  Unfortunately you cannot manage stakeholder expectations from the confines of the individual silos associated with the project-oriented approach that is commensurate with the present TBS approval process.

Taking into account the above, I would be in favor of individual secretariats as opposed to a consolidated centralized organization under the following guidelines:

  • Each individual secretariat would include representatives from all stakeholders to ensure that collective interests are understood and properly managed on an ongoing basis
  • There would be a defined focus on specific types of procurement
  • The creation of a built-in flexibility to adapt to yet unseen changes in areas such as market conditions or stakeholder capabilities to ensure that the end result represents the best outcome
  • Finally, and similar to the U.S. Veteran’s Health Administration’s VISN structure, each secretariat would be held accountable for achieving the expected outcome.  Of course to hold them accountable they must be given the tools to effectively manage the stakeholder relationships associated with complex acquisitions.

While each of the above guidelines is important the ability to adapt to unforeseen changes is particularly critical.  You cannot put yourself in the position to identify let alone respond to the inevitable changes that will occur over the life of a contract if you source long-term relationships with a project mentality.  The reason for this is fairly obvious . . . past experience is no guarantee for future success.  Nor can you adequately address future or unanticipated contract/relationship risks through the typical financial inducements or increased oversight of a project-centric approach that ends with the procurement itself. 

This is why we have to start sourcing relationships as opposed to transactions or deals.

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