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Wednesday, March 12, 2014

The pot vs. the kettle

One in five businesses think public procurement skills are getting worse
More than 60 per cent of businesses have not seen an improvement in commercial skills in public procurement in the past year, and one in five believes capability has deteriorated.

That’s the results of a survey of CBI members, in which respondents also said improving the public sector’s commercial skills is essential to transforming the procurement process.

CBI added inconsistency across government departments and a short-term approach to commercial contracts are also key concerns amongst businesses.
Sometime last year, I gave a brief presentation to one of the Rotary Clubs on Guam on procurement matters in general. The Rotarians included some of the leaders of the business community, many with more than passing involvement in selling to the government.

I asked for a show of hands to grade Guam's government procurement capability, starting with 'A' down to 'F'.  Overwhelmingly, they rated Guam's government contracting effectiveness an 'F'.

I then asked for a show of hands to grade the private sector's effectiveness with the government contracting system.  The question seemed to unsettle the crowd a bit, and the show of hands going up didn't get much support until down to 'C' and 'D' (but no 'F'). I admired my colleagues for their critical self-examination.

All contracts require (at least) two parties. Failure of the contract formation process, and contract administration, is bound to deteriorate if either or both parties fail to understand their role in that process, whether it is private or public contracting.

Even the government (on Guam and likely elsewhere) seems to recognize that government handling of its contracting does not always go well, let alone ideally. It is also important that the private sector appreciate that they have a role to play in facilitating that process, however.

There are thousands of protests every year in the federal system, as any search of the GAO website will reveal. Far and away, the bulk of them fail to gain traction. Those that succeed reveal flaws in the government's handling of the solicitation. Those that don't often suggest if not reveal a failure on the part of the private sector participants to understand that government contracting is very much unlike private contracting due to the governance strictures associated with expenditure of public funds. 

There are unyielding standards, disclosure requirements, timelines and limited discretion authorities that make government contracting a whole different ball game than the cut and thrust of private contracting.  Contractors should be aware of the difference and the different approaches required for each.

I have been working with Guam Community College to create a Basic Training procurement program. It consists of 4 "modules", each with 18 hours of class time teaching. 

Module 1 is an introduction to procurement, including its nature, principles, fundamentals, and statutory authority and structure. 

Module 2 is an examination of the methods of source selection, including an understanding of principles applicable to specifications, determinations of responsiveness and responsibility and the like; it is very code and regulation focused. 

Module 3 covers the administrative and judicial review processes of the controversies cognizable under Guam procurement law: solicitations and awards, suspensions and debarments, and contract disputes. 

Module 4 deals with the management aspects of government acquisition, from needs assessment and market research to creating audit trails and contract administration and enforcement. At the end, the students have had 72 hours of fairly rigorous exposure to the nuts and bolts of Guam procurement.

I'm told there has been in excess of 150 students have already gone through at least one of the three modules.  Almost all of them have been government employees (albeit with a modicum of legislative incentive).  This program will eventually raise the bar of the government's handling of Guam procurement.

Government contracting would improve significantly more if the private sector took the same interest. It takes two to tango, and practice to keep off the other's toes.

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