I hate buying things. To be more exact, as a state administrator, I hated buying services. My problem wasn’t with the complexities of the state procurement process – I was a bureaucrat after all and figuring out how to do paperwork was half the fun of the job – but I found determining what to buy, how much to pay, and how to hold a contractor accountable to be exhausting.
Here is one procurement basic I learned through the mistakes of others: know your business.
It seems self-evident, but some very smart people didn’t grasp this concept that you need to understand what your business does to know what services you need to buy. Once upon a time, in an administration far, far away, my agency wanted to radically change how it provided services to the public. The individuals running the agency had no background or knowledge of the programs they ran and came in with the mantra that big business knows best, so, instead of learning what the agency did, they decided to ask the business world on how to fix things.
The core concept they believed was that the private sector is more attuned with cutting edge concepts and business process ideas than the state, and as such the private sector knows best what the state needs. Missing from this concept was that big business (as well as the agency leadership) didn’t understand the nuances of federal funding and reporting or what exactly my agency did.
Instead of figuring what services the state needed or wanted to buy, the agency abdicated its responsibility and issued a Request for Information (RFI) asking the private sector for suggestions on how to change the status quo. The RFI lead to a Request for Proposal (RFP) which lead to a contract, and things went downhill from there.
The new vendor implemented streamlined, modernized systems with call centers, document centers, and other needed structural updates, but the overall results were bad. The new set-up had problems processing benefit applications timely, and the structure of the contract undermined the state’s ability to draw down federal funding.
The contract gave the contractor more oversight of its subcontractors and simplified the billing process. The problem came when those on the project assumed the federal funding would remain constant throughout the life of the contract. But no one took into consideration that a sizable amount of the funding came from annual requests that required detailed information the state could not produce because the simplified billing process didn’t require the vendor to provide a breakdown of its expenses.
Because things were going so poorly, the state halted the implementation halfway through the roll-out and ultimately canceled the contract leading to suits, counter-suits and lots of lawyer fees.
The main lesson to learn from this is that the agency wanted to buy services from a third-party but failed to understand the basics of how its business operated or what its business needs were.
Whatever means you use for procurement, be it RFP, RFI or anything else, it should clearly define what services you want to buy based upon your business needs. Vagueness can be disastrous. It can (and will) lead to confusion between you and your vendor about the services you bought.
The consultants at netlogx work to completely understand your business so that our procurement services can be as successful as possible. Contact us today!