Designing for manageability

Last week I commented on a series of recent public sector contract failures (see Government Procurement in a Mess).

John Smit posted a reply, in which he correctly highlights the problem of inappropriate contract design. He observes a fundamental difference between traditional acquisition contracts and those for services – and that is the need to design for on-going oversight and management. In John’s experience, many Procurement organizations continue to use contracts that were designed for product acquisitions where significant on-going management is unnecessary. They than hand this off to a business unit which now has an inappropriate form of contract, as well as lacking skills or experience in contract management.

John also confirms my original point, that these weaknesses are not unique to public sector.

It is in many ways remarkable that contracting parties continue to allow these weaknesses. Procurement often claims that it merits a seat ‘at the top table’, yet how can this be the case if the function fails even to act on the weaknesses of its own procurement tools and strategies? And providers also share the blame, for these poorly performing contracts are in no way helpful to them. it does not take much investigation to discover whether a customer has post-award management capability. If suppliers had the integrity to point out the likely consequences and helped clients to build their skills, the market would become far more healthy, sustainable and profitable.