A breakdown of the challenges and opportunities in modernizing public sector procurement. Some guiding principles for best practice.

1. Enabling government transformation
through smart procurement
9 March 2017

2. Page 2
Procurement is a key enabler of transformation
Public sector has to
constantly evolve to
meet the needs of its
citizens
The Canadian
government has set
an unprecedented
agenda for
transformation
Government is looking
for innovative solutions
that harness private
sector and ecosystem
creativity, capital, and
capabilities
In most cases there
are no off the shelf
comparable solutions
on the market
Digital service delivery and the need to harness
innovation requires an agile approach to engage the
ecosystem of entrepreneurial technology providers

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What’s getting in the way today…quite a lot
Rigidity of procurement
practices and processes
Inability to harness creativity
and the better idea
Focus on lowest price as
opposed to enterprise value
No ability to co-develop and communicate through the process…
……don’t make us guess!!
Business stakeholders not
owning and leading the process
Vendor vs partner mindset
Specialized talent required
and compensation
Challenge in working with
multiple parties/ ecosystems

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Challenges and opportunities in modernizing public sector
procurement
 Fear of ending up on the front page of the
newspaper leads to rigid closed processes
Too much rigidity
 Value is often lost over the life time of a
contract/partner relationship
Value is often lost
Lack of flexibility
 Processes provide little flexibility for bidders
to differentiate or refine their offerings
Not Scalable
 Many contracts are not scalable and often
require re-tendering
Should more be given to multi-phase
contracts that allow business owners to
retain services over a longer period?
Should more flexibility be provided for
suppliers to provide innovative
services?
Should government focus more
attention and talent on stewarding long
term partner relationships?
Should government provide opportunity
for collaboration and co-design?
?

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Should the role of procurement be
elevated to with appropriate status and
compensation? Investment in robotics,
analytics etc.
Challenges and opportunities in modernizing public sector
procurement
 Sets formulaic approach to bid evaluation that
does not drive best value, rather lowest cost
Formulaic
 Need for apples to apples comparison leads to
prescriptive requests
Very prescriptive
Support not value add
 Procurement viewed as support function, rather
than core value adding/ strategic function
Not aligned to the services
 Bid requirements are often not commensurate
with the services sought
?
Does the buyer really need a 100 page
proposal for a $150K service contract?
Do you need to right-size processes?
Should government be so prescriptive
in telling us how to deliver?
Is the buyer really evaluating quality or
rather just criteria that are easier to
evaluate?

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Characteristics of world class public sector procurement
Integrated deal teams led by the business owners
Has a strong and nimble governance model
Procuring entity is a well-informed and intelligent buyer
Looks at value for money from an enterprise and lifecycle
project perspective
1
2
3
4
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6 Encourages innovation and appropriate risk sharing
Built around a well developed outcomes based strategy

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One tool to consider: Flexible Procurement – BC Model
Levers the combined
capability of private and
public sector
There are various
flavours e.g. vested
procurement
Flexible
Procurement
Structured and collaborative gated
procurement process
Shares risks and rewards
of the solution
Based on long term relationships
Provides a fair,
competitive and open
procurement process

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Case study 1 London Ventures – UK:
Innovating in Public/ Private collaboration
Outcomes:
 Generated millions dollars of investment to London that
otherwise would not occur (crowd sourcing, robotics, etc.)
 Collaborative, streamlined process to collect, evaluate,
short-list, approve and implement new commercial
ventures between the public and private sectors with a
major emphasis on moving from concept to
implementation as quickly as possible
 Overcome traditional hurdles through unsolicited
proposals such as intellectual property, NDAs
Process:
 Launch an ‘innovation hub’ as a catalyst for private sector to
bring forward concepts and new ideas
 The concepts are then evaluated with the London public
sector to prioritise and short-list them
 Business cases are then prepared and approved
 Strike a commercial deal with the commercial/private sector
proponent is struck and implementation starts
 Collaborated with the Public and
Private Sector for innovative new
ventures to create a commercial
return
 Provided support to:
 Review and evaluate concepts
 Outline business cases and
 Bring relevant parties together to
facilitate commercial deals
Absorbed 25% cut in
funding over the past 5-6
years
ChallengeEYServices
Shift from a Service to
Commissioning led model
31 London Boroughs
32 entities in City of London
London Councils

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Case study 2
Outcomes:
 Achieved 17% efficiency savings on existing contracts
 One-off cash benefits of $30m
 Child centric – minimized transition impact
 Moved to an outcome based service delivery
 Standardized support, services and contract types to
reduce the variation in the unit cost of care
 Greater competition through better procurement
Critical
success
factors
 Competitive
 Collaborative and co-designed
 Delivers value for money
 Focus on outcomes
 Harness better ideas
 Transparent
ChallengeEYServices
NSW Community Services – Australia:
Out-of-Home Care (OOHC) Procurement Strategy
Transition of 80% of children
in General Foster Care to
NGOs
NGOs to increase its service
delivery capacity four fold
An inequitable and
inefficient service system
 Co-developed with public and private
sector a new operating model for the
NGO sector including:
 Service levels
 Cost frameworks
 Performance outcomes
 Co-developed the procurement
strategy

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Guiding principles for best practice procurement
Competitive and
transparent to
optimize outcomes
Collaborative
and co-designed
between private
and public sector
Flexible that
encourages the
vendor to engage
with customers and
refine offerings
Harness better ideas to
find new opportunities to
drive efficiency and
effectiveness
Delivers value for
money
Match talent with
talent on both sides
of the table to
harness the true
potential
Protects
confidentiality
Scalable to support
complexity of current
and future procurement
Focused on
outcomes and let the
vendor propose
innovative delivery
approachesHarness an agile
ecosystem of
partners