Procurement
December 13, 2013

Putting the weight in the right place

Last month’s article on balancing principles/results and process/transactions risked comments from the procurement community that there is no way that a procurement officer (PO) can be responsible for ensuring the success – achieving the results – of any given procurement action.

A procurement is designed to deliver specified results to a client. If those results are poorly understood or defined, there is little hope that the resulting contract will lead to the desired outcome. Since it is the client who defines the need or result, it is arguable that the PO cannot be responsible if later on the procurement fails to deliver.

When a signed contract is delivered by the PO to the client, it is the client who usually becomes the contract manager. Contract management is more than verifying invoices and issuing payments: It includes overseeing contract performance and identifying potential problems and dealing with them so that the contract proceeds to successful completion. If appropriate, contract management means initiating an amendment to the contract so that it will actually deliver what is needed and assessing contract results at the end. When the PO is not directly involved in that management, it is again arguable that the PO cannot be responsible if the procurement fails to deliver.

Between the two is the design and conduct of the procurement process: Developing the procurement strategy, designing the proposal evaluation and contractor selection processes, carrying out the procurement and negotiating the actual contract. In many organizations these are the responsibility of the PO, and therefore are obvious places where the PO has the opportunity to make a significant contribution to the success or failure of the resulting contract – and therefore to be held accountable.

They are equally obvious places where an organization’s service standards can have a major impact. If the key measure is time to contract and PO performance is assessed only against that standard, there is high risk that in order to meet the transaction standard the PO will, if not cut corners, then at least put less than the required level of effort into other areas, such as designing the procurement to best effect. Design measures take time and effort.

Speed instead of quality may easily have an impact on the success of the individual procurement. There is also a ripple effect: Spending more time on one file to achieve quality means less time available for other assigned files. Ensuring that quality for the one, with the attendant time requirement, may result not only in a contract award later than the standard for the one, but also delays in completing the many.

The need to devote time to achieve quality extends also to the requirement definition and contract management phases. Many, if not most, clients do not engage in procurement frequently, and therefore may lack the knowledge and skills to carry out their roles well. As the file develops, the PO has the opportunity to help, to contribute procurement knowledge and experience to advise the client on areas where some aspect of the file could be improved.

However, opportunity is not necessarily reality. Thomas Edison said, “We often miss opportunity because it’s dressed in overalls and looks like work.” Opportunities can be passed up, and in a system that measures success by speed, there is a good chance they will be. Opportunities can be missed because the PO lacks the experience to question how the client wants to proceed, or having raised valid points and suggestions for improvement, allows himself/herself to be browbeaten by an adamant client.

Opportunities can be lost if the PO does not carry or seek out post-mortem reviews of completed procurements and contracts, to identify and understand what problems arose and why, how they were dealt with, and how they could be avoided in future.

Accountability for results is particularly important when external forces govern a procurement, as is the case with mandatory standing offers and standardized procurement approaches and templates. Forcing clients and POs to use specified approaches requires that those who designed the approaches be held accountable for how well they work in actual use. It is simply not good enough to put a mandatory approach in place, count it as a “success” as a transaction, and then disclaim any responsibility if the results for clients turn out to be less than desired.

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