Agile Procurement for the Public Sector - A Primer

By Emilio Franco posted 08-20-2017 23:28

  

agile

TRADITIONAL PRACTICES VS MODERN-DAY REALITIES

Public sector procurement practices are based on the fundamental principles that procurement must be fair, open, and transparent. That you must say what you will do, say so in a public fashion, and do what you said you would do. This is founded on the premise that public procurement must be designed in a way to prevent corruption, ensure equality, and avoid bias.

Unfortunately, from these principles of fairness, openness and transparency rose a myriad of rules, processes, policies, and templates that became more and more complicated over time. Mistakes would lead to trade complaints and lawsuits, and so more rules would be added, more contingencies, more processes layering on top of one another to reach where we are today - a robust process that can be rigorously defended, but takes an enormous amount of time and resources to achieve results (that can sometimes be less than optimal).

Balance this against the world we live in, one of exponential change where new technologies are reaching critical adoption in record times, where governments are challenged to solve wickedly complex problems, and where disruption is a constant reality. We have shifted from discrete problems with fixed answers to holistic messes that require innovative approaches and collaborative solutions.


Processes that are based on rigidity serve a purpose, but innovation is not one of them. Increasingly the rate of change is outpacing procurement's ability to deliver relevant solutions to its clients. Staying competitive and relevant requires rethinking of how we procure and finding new ways to address persistent problems that traditional approaches are not equipped to solve.

Traditional procurement processes take so long that by the time you got what you asked for, it's already out of date.

IT'S MORE THAN COMPLICATED

Understanding the need for new approaches is rooted in unraveling the differences between simple, complicated, and complex problems.

With simple problems, the correct answer is self-evident and undisputed. Requirements can be easily defined, a recipe followed and the same result produced every time.

Complicated problems, unlike simple ones, may contain multiple right answers. Though there is a clear relationship between cause and effect, not everyone can see it. While the requirements are harder to define, a recipe can still be written and the results can be replicated. Sending a rocket to space is complicated - as long as the steps are followed properly, a rocket should go up every time.

Raising a child (or most organizational situations and decisions), however, is complex. There is no clear answer, no formula to follow that will produce a consistent result - there is constant flux. Complex by its nature means unknown, things will happen that cannot be predicted.

Traditional procurement generally works well for simple and complicated problems. However, when we apply similar approaches to complex problems, we can get less than favourable results.

Complex problems have lots of unknowns and potential for things to happen that we can't predict. They require adaptive action - things to be taken one step at a time. Assess what the first best step is given what we know now. Then stop, assess, and take the next step. Then gather more information and continue to take steps forward.

What this means, in a nutshell, is that complex problems require agility. So how do we bring agility into our public procurement practices?

APPLYING AGILE CONCEPTS TO PROCUREMENT

Agile is an approach (rooted in software development) that gives us a different way of thinking about procurement - one based on iteration, collaboration, and responding to change. From it, we can draw what Agile Procurement is all about:

1) COLLABORATION over CONTRACTS

Complex requirements cannot be fully identified at the beginning, so instead focus on continuous collaboration with suppliers to solve problems.

Let's face it - Contracts are ineffective approaches to managing relationships. There's just no way to easily and fully define the complexity and ambiguity of the interactions between clients and suppliers. Not only that, but in a complicated and exponential world, the nature of relationships can be unclear in the beginning and difficult to anticipate in advance.

Given this uncertainty, agile procurement works to set aside the heavy focus that traditional procurement places on requirements and contracts in favor of approaches that work in collaboration to develop a mutual understanding between the buyer and the supplier of what the client's needs are.

Rather than focusing on process and specifications, it moves the focus to outcomes, solving challenges faced, collaboration, and iterative learning. We learn from industry about what exists (or could exist), industry learns from us about what our needs are, and we work together to find a solution.

In the Canadian context, this means a move away from our traditional Contract A/Contract B competitive procurements to approaches that provide more flexibility for competitive dialog and negotiation, allowing for requirements to be discussed, clarified, further defined, developed and improved before awarding a contract.

2) INDIVIDUALS AND INTERACTIONS over PROCESSES

People have needs and people deliver products, services, and solutions to respond to those needs. As the procurement process became heavier, more detailed, and more rigorous, it became easy to lose sight of its purpose - to help people get the things they need to deliver services and fulfill their mandated objectives.

What this point means is that the focus should be on the people and the communication between them. The process should be a means to an end, not the end in itself.

As we've seen in procurement, the more robust a process, the more you spend on its care. On feeding the process, explaining it, deferring to it, and in the worst cases, hiding behind it.

With people front and center, however, the result is a leap in delivery and client service.

When you value individuals and interactions highly, you have better outcomes. Ultimately projects are successful not on the processes they follow, but on the interactions between people - in particular on the transparency and openness between parties that allows for clear understanding and addressing of business needs.

When we focus on process, we rely on the existing methods and tools instead of finding the best ways to solve problems. When the outcome is more important than the way we get there and when procurement professionals are given the capacity and capability to be involved, responsible, and innovative, communication becomes clear, effective and efficient, collaboration between parties becomes stronger, there are greater opportunities to innovate, parties develop a greater sense of person ownership, and a deeper sense of job satisfaction.

It's about procurement being awesome, not robotic.

3) RESPONDING TO CHANGE over FOLLOWING A PLAN

When we enter into contracts very detailed requirements, we often find ourselves tied to the detailed scope that was drafted. They're so detailed that they're difficult to modify, removing the flexibility for the contract or the relationship to evolve with the changing environment. This is most apparent in the period immediately following contract award where often critical clarifications and realizations come forward that would necessitate such flexibility.

What's great about agile procurement is that outcomes based challenges gives much more flexibility than traditional requirements-driven procurement, where the specificity often prevent us from adjusting projects as new needs are discovered.

Not only do they lack flexibility, but detailed contracts often reward work over rewarding delivery of working solutions, and so we find ourselves stuck without a way out if things go off-track (other than a termination). In contrast, Agile Procurement favors shorter contract periods with more off-ramps, with building solutions in a modular fashion that allows for change (of both the requirement and the supplier), and with taking a test drive to try before we buy. You don't pilot before you start the procurement, you pilot as a part of the procurement.

4) WORKING SOLUTIONS over DETAILED SPECIFICATIONS

Working solutions are more useful to clients than years spend writing requirements.

When we write detailed requirements, we end up defining the solution to our problem and let's face it, we are often not the best people to do so. It takes a long time to do it, we often get it wrong (asking for things that are out of date or impossible to do) and the traditional open Q&A process of public tenders is generally ineffective at raising and resolving these types of issues.

Get out of the business of trying to come up with the solution yourself

With agile procurement, we start with the problem and immediately take it to industry (no spending 2 years in a backroom writing a 200-page requirement). We abandon traditional statement of work templates and large, inflexible, and detailed specifications in favor of short problem statements. We focus on high-level outcome based statements that rely on working with industry to collaborate on potential solutions, test them, refine, finalize the details and move quickly to award.

Here is our problem, we want the most innovative solutions out there to solve it

A great example of this is the recently launched Government of Canada's "Open By Default" Portal Procurement Pilot. Instead of a detailed requirement, a half page challenge has been issued:

"Canada is seeking innovative concepts... to enhance and improve the user’s experience in finding and retrieving information housed on the Open by Default Pilot Portal. Proposed Solutions must also be able to be integrated into the Open Government website’s existing digital infrastructure...(and) must enhance the user experience of the Open by Default Pilot Portal..."

That's it! Innovators will submit their ideas and up to 10 of the best solutions will be invited to give a present their solutions. They will be evaluated not on lengthy proposals, but on the innovation, scalability, user-centricity, and functionality of what they propose. 

When we develop large, complex Requests for Proposals (RFPs) that require 100s of pages of text in response, what ends up happening is that we ultimately evaluate suppliers on their prose - their ability to write and document - and not on the strength and demonstration of their innovation, approaches, prototypes, or proof of concepts.

In his speech at the CIO Summit in June, Treasury Board President Scott Brison highlighted this point:

"In the past, we did old-style waterfall procurement. We wrote 200-page RFPs where we would tell vendors what we thought we needed. Vendors would respond with massive proposals wherein they would tell us what they thought they could do. Then we would enter into a blind marriage and 2 years into it, it was like a bad marriage, nobody’s happy, both parties misrepresented their capabilities... Agile means less tell and more show. Fewer 200-page RFPs and proposals and more working prototypes.

WE CAN DO THIS

Public sector procurement, at its core, is supposed to first and foremost be used to serve public good and be leveraged as a driver for civic outcomes. It may have gone slightly off track as lore gave way to rigid process, but Agile Procurement takes us back in the right direction while still holding true those core fundamentals of fairness, openness, and transparency.

We see this happening in all sorts of approaches from across the public sector:

While not a specific process itself, Agile gives us a frame, a way of thinking differently about procurement. One that allows us to stretch our creativity outside of our traditional bounds to come up with some truly innovative ways in which the public sector can procure.

MOVING FORWARD

We must always remember that agile is not a panacea. We are innovating and testing new approaches – not all will be successful. Core to the tenants of agile is the idea of iteration, learning from mistakes and building on them.

One major area that needs to be tackled is the reality that agile tends to introduce higher levels of subjectivity in evaluation, something that procurement has avoided in the past due to concerns regarding risk and defensibility if challenged. There are ways of mitigating these risks, but they are less tested.

With all the excitement for Agile Procurement, we will need to hold strong the agile concept of starting small and failing fast. Resisting the desire to go big quickly will be difficult, but we must have the opportunity to test and learn lessons on a small scale in order to be successful.

We also need to recognize that traditional procurement still has its place, in particular for stable markets with defined products and services. For those simple and complicated problems where there is little of discrepancy between what the customer needs and what the market provides.

SHARE YOUR SUCCESSES AND FAILURES

Are you making use of agile in your procurements?

We'd love to hear your stories! Share what worked and what didn't so that we can continue to test and pilot, learn, adapt and continuously improve.

All in the spirit of agile

Emilio Franco

Emilio Franco is the Professor of Public Sector Procurement at Algonquin College and the Director of Electronic Procurement at Public Services and Procurement Canada. Views expressed in this article are his own and not his employer's.


Image Courtesy of Shutterstock

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