DeliverologyProcurement
September 13, 2016

Strategic Procurement in the Age of Deliverology

The true potential of Strategic Procurement resides in a new notion: that of Stage III (which could alternately be referred to as Contract ‘C’). The ultimate goal of this Strategic Procurement Delivery Model is to understand the organization’s environment and challenges and enable true strategic procurement with results that are tied to objectives.

Strategic Procurement, recognized in recent years for its promotion of intelligent decision-making systems, is evolving again in the present environment of Deliverology. Strategic Procurement is now understood to be a concept bigger than bulk buys and opportunistic sourcing; rather, it has transformed into a strategy by which one can not only plan procurements, but also monitor, course correct and measure the outcomes of contracts. Deliverology─an approach that defines methods to achieve the most important objectives, implementation of which will have the most significant impact─is driving a fundamental change in the culture of the Federal Government, embodied in a new concept: that of Stage III (sometimes referred to as Contract “C”).

Federal Government procurement has historically been the subject of criticism from suppliers, stakeholders and the public, subject to comprehensive external reviews and the introduction of formalized oversight measures. The 2006 Gomery Commission report, and recent reports from the Office of the Procurement Ombudsman, commanded a change in corporate culture and a need for concrete actions to be undertaken to achieve this.

The Government has been challenging procurement groups across organizations to bring “smarts” to the process─the words “strategic procurement” continue to be discussed and a hot topic around management tables especially when budgets are at their thinnest.

For more than a generation, the federal government procurement function has been based primarily on a two-stage model: Stage I (which is often referred to as Contract ‘A’) being the intent to enter into a contract, and Stage II (also referred to as Contract ‘B’) being the execution and award of the contract itself.

Under the model of Contracts A and B, as long as a project or program has available funding and supporting procurement documentation, the role of the Contracting group has been somewhat limited to expediting contract requests efficiently.

Following the award of the contract, contract administration is largely left to project or program managers. Further engagement with the Contracting group seldom occurs unless modification to the terms and conditions is required. Such segregation of responsibilities within organizations makes it difficult to tie the output of the contract to its initial intent. With the emphasis within the Procurement group often on expediency rather than systematically measuring outcomes of contracts, the result is a loss of focus on results and accountabilities.

procurement

The true potential of Strategic Procurement resides in a new notion: that of Stage III (which could alternately be referred to as Contract ‘C’). This third contractual concept forms the foundation of a framework designed to increase awareness and influence; the ability to plan; the power to implement; the tools to monitor; and the capability to course correct. The resulting Strategic Procurement Delivery Model affords a unique opportunity to demonstrate real, measurable progress through tangible results and improved outcomes.

Including Stage III in the framework affords a key tactical tool: it returns the responsibility to the initiator of the contracting action to account for the need for the procurement and demonstrate added value to the Crown. Contract “C” makes the procurement intent and the resulting added value the central focus.

Adding Stage III formalizes the holistic framework surrounding true Strategic Procurement: a combination of Stage 1 and Stage 2, as well as the planning, consultation, collaboration and understanding of interdependencies within a given procurement undertaking. Including Stage III in the model demands an understanding of “the big picture.” The executing contract officer must be aware of the moving pieces in the procurement mechanism, and of how they fit together. It is the sum of these pieces, the aggregate grouping of stakeholder participation, planning and project objectives, which comprise Strategic Procurement.

The success of the Strategic Procurement Delivery Model resides in the foundational concept that the procurement request must reflect planned business requirements. Capacity within the procurement organization must be built to allow procurement officers to challenge requests that are not planned, are not clearly tied to departmental objectives, and/or are duplicative. We must also build the business acumen required to enable and drive organizational and governmental priorities by recognizing and acting upon opportunities to deliver strategically.

This is a true paradigm shift. Under this new model, Procurement is mandated to perform the challenge function related to a potential procurement requirement prior to a formal contract request being made. The expectation is not to simply execute all contracting requests, but rather the introduction of a critical question: Why?

Neither the understanding of the criticality of Stage III, nor the skills and abilities within the procurement group that are required to implement it, are new; rather, it is the formal inclusion of Stage III within the Strategic Procurement Delivery Model, and the broad recognition of Procurement’s increasingly key strategic role in enabling positive business outcomes, that is novel.

It must be noted that the function of the Procurement group is not that of gatekeeper, ultimately charged with deciding which procurement activities are actioned by the organization. Rather, The Strategic Procurement Delivery Model provides a framework within which Procurement groups can exercise the opportunity to challenge the rationale and intended results for a given procurement action, flagging those requests that warrant further consideration, either by the commodity manager responsible for the programmatic approach for the commodity, or Senior Management, or both.

The ultimate goal of this Strategic Procurement Delivery Model is to understand the organization’s environment and challenges and enable true strategic procurement with results that are tied to objectives. By truly comprehending the larger business needs and working collaboratively with all stakeholders, Procurement can add value through holistic, intelligent, well-informed advice that enables decision making.

The procurement officer should not, and cannot, be solely accountable for the decision-making within the Strategic Procurement Delivery Model. The role of the procurement officer is to enable achievement of organizational goals, and the Strategic Procurement Delivery Model is a mechanism by which this can be achieved. This model is based on partnership and collaboration, and a shared commitment to delivering on priorities.

The Public Service has been mandated to innovate, deliver, drive real change, and facilitate improved outcomes for Canadians. With this transformative agenda demanding results, the Procurement function must be further leveraged and built to drive efficiencies, enable measurable outputs and add value to the Crown. Procurement organizations have much to offer in terms of facilitating collaboration, broad strategies, intelligent decisions and Deliverology across business lines.

Introduction of the New Strategic Procurement Delivery Model at the CBSA

Commodity Management is being enabled at the Canada Border Services Agency (CBSA) through implementing the Strategic Procurement Delivery Model described in this article. For security reasons, the following example describes the process undertaken without identifying specifics.

A commodity identified had previously been purchased across the CBSA by individual regions. Opportunity existed to standardize the item being procured, ensure consistency within the commodity group, and potentially enable strategic sourcing. Strategic procurement possibilities available ranged from simple bulk buys to more sophisticated approaches including the creation of a national master standing offer solely for the CBSA’s use, or an omnibus contracting approach, to provide flexibility as well as cost and resource efficiencies .

While considering the options available to strategically procure this commodity, the CBSA’s Procurement group recognized that Strategic Procurement stretched beyond the boundaries of Contracting, and even Materiel Management. They identified various stakeholders, each with a key role to play in an overall strategic approach, including: Security, Resource Management, the program and/or policy owner for the commodity, the Agency’s Chief Financial Officer (CFO), and the Regions (clients).

Procurement led the group in initial discussions that included:
• The overall efficiency and results for the Agency that can be gained through Strategic Procurement;
• The traditional role of procurement (acquisition of goods or services) and the proposed role of Procurement as a strategic partner and enabler of efficiencies and real results for the Agency;
• The conditions required for this opportunity to become reality, including collaboration, communication and commitment to a shared goal;
• Roles and responsibilities of Procurement, commodity managers, and decision makers;
• The next steps required to implement the Strategic Procurement Delivery Model, including identifying a commodity manager, creating a national strategy for the commodity, and establishing a commitment to ongoing collaboration in support of the Agency’s goals.

This example marks a significant shift in mindset within the Agency, from task-based, transactional contracting to viewing Procurement as a strategic partner who can enable intelligent, strategic procurement that drives efficiencies and achieves tangible results for the organization.

Full implementation of the Strategic Procurement Delivery Model is ongoing at the Agency, and initial response to this transformational undertaking has been positive. This is heartening for our trail-blazing Procurement officers at the CBSA, and we hope it is very reassuring and encouraging for the procurement community and the federal government as a whole.

Learn more about Deliverology at the CGE Leadership Summit on Oct 5.

Jessica Sultan is the Director, Strategic Procurement and Material Management Division, Canada Border Services Agency.

Claude Miville-Dechêne is the Manager, Business Practices and Strategic Procurement, Canada Border Services Agency.

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