In 2001, the government of British Columbia initiated a number of deals with private sector vendors with the goal of transforming service delivery to British Columbians. But by 2011, the province found that 10 of the 16 deals in the works needed realigning to ensure optimization and value for money for government.
Action was needed to ensure that taxpayers would get the maximum value possible out of the deals in terms of service delivery and cost savings. To do so, the province decided it needed to be more strategic with its negotiations so that gains could be leveraged across the public sector as a whole.
To address the problem, the province established the Strategic Partnerships Office (SPO) in June 2012. C.J. Ritchie, Assistant Deputy Minister of the Strategic Partnerships Division, was chosen to lead the project. She was assisted by Laurie Barker, executive lead of negotiations within the SPO, who was responsible for gaining vendor commitment to the contracts.
The success of the project, they said, was hinged on building strong relationships with vendors, the ability to keep an eye on the lifecycle of the project, and by remaining flexible enough to change with the market and politics.
Relationship with vendors
Ritchie stressed the importance of giving vendors context when negotiating a deal, pointing out that she and Barker were most successful when they gave vendors an understanding of what they were trying to achieve.
“Sometimes giving vendors context on what the political agenda of the day is, what the platform commitments of the current administration are, and why we have political interests in moving something forward, can align the government’s corporate direction with the private sector interests of a vendor,” she said. “That’s magical.”
Consider the project lifecycle
“From the opportunity development, through business cases, negotiating mandates, ongoing performance of a deal, right through to end of life and end of term analysis about what you want to do at the end of a deal…” Ritchie said, “you need to know where you are in that lifecycle and be thinking through what you need to do next.”
The SPO was the first time anyone in the British Columbia government had been responsible for the end-to-end lifecycle of deals, Ritchie added, so it was important that she, Barker, and their teams stayed one step ahead, strategically, to avoid unexpected pitfalls.
Importance of flexibility
“Try to keep whatever you’re doing in the contract flexible enough that you can align with market changes and align with political changes and align with business drivers that you may not have the ability to foresee in the future,” Barker said. “Some flexibility to take advantage of market changes that are happening [is key], especially in technology, where it’s happening so quickly.”
The reason the SPO was established in the first place was to deal with contracts that were outdated and no longer served their purpose. Ritchie and Barker knew their work had to be conducted in such a way that the same problem could be avoided in the future.
Barker cited HP as an example of a deal the SPO successfully re-negotiated. The multi-year contract, worth $900 million for managed hosting and data centre services, was re-opened for review. The government was hoping to re-align the deal to better meet the province’s objectives. The SPO identified areas in the contract that could use improvement and worked to gain the vendor’s commitment to changing the contract.
As a result of the negotiations, the SPO was able to resolve contract disputes, remove barriers to gain-sharing, and realize millions of dollars worth of cost avoidance and savings.
“We ended up garnering over $150 million of benefit through that realignment activity,” she said.
In the year since its establishment, the SPO has achieved $135 million worth in cost avoidance and $44 million in cost savings. It has resolved a number of outstanding contracts and capped the costs of high growth services to provide more funding certainty to the province. The SPO has also improved the government’s relationship with existing vendors and has shifted the focus toward interest-based relationships.
At the Canadian Government Executive Leadership Summit in April 2013, CJ Ritchie and Laurie Barker received the Leading Management Change Award in recognition of their work with the Strategic Partnerships Office. See http://cgeleadershipsummit.ca/ for more information about this and about next year’s summit in February 2014 in Ottawa.