New Zealand Government Software Procurement 2.0

The Minister’s dissatisfaction with ICT software procurement led MBIE to adopt a procurement approach called Qualification-Based Selection (QBS) for a planned app to help Emergency Services better respond to 111 calls from mobile phones.

QBS was established by US Congress in 1972, aimed at public service procurement of professional services for construction projects, recognising that “a low bid process does not work when selecting design professionals”. As it says on the tin, QBS focuses on the qualifications of proposing suppliers rather than pre-defined requirements and price. Of course, tenders usually assess against a range of criteria, including requirements, fit, and experience, so, in that respect, the QBS approach is not revolutionary.

Even allowing for its oblique genesis, it is good to see the government taking a fresh look at this field of broken dreams and recognising that dissatisfaction doesn’t just result from poor supply- side/delivery performance.
What is the objective?

Let’s say it is to address the routinely poor outcomes of commissioned software development and delivery. There may even be a sliver of well-informed and ultimately self-serving altruism involved, plus podium promises to support and nurture the local scene so there is both a high-performing “kitchen garden” for future procurement and benefits to the export economy.

The wrinkle will be that focusing on qualifications may yet continue our government’s evident preference for multinational, or at least international, ‘names’ at the cost of local capability and innovation – or even innovation from any source.

Purchasing organisations’ establishing the ‘right’ brief and recognising a suitably ‘right’ solution in procurement exercises has been just as flawed as suppliers’ necessarily optimistic delivery commitments, and just as much of a contributor to unsatisfactory outcomes and wasted taxpayer funds. While it’s customary to hold the supplier responsible for ICT failures, often with good cause, poor practice on behalf of the purchaser is also common. Purchasers need to be clear and realistic about what they are seeking, be willing to front up to adaptation themselves, and be aware that, in a competitive process, suppliers may feel compelled to accede to a flawed brief and be overly optimistic when unrealistic delivery timeframes are sought.

Which leads on to the question of IP. Deliberately, possibly cynically, the counter to the innovation barrier is the approach to bidders’ IP.

Will the bake-off approach actually lead to the worst of all worlds – prospective innovative suppliers unwilling to commit their IP at the risk of seeing it taken forward by a “more qualified” competitor?

The level of upfront funding investment for the paid bake-off approach resulting in a preferred supplier and a preferred solution and a bunch of right-to-use IP (not necessarily from the same winning ‘bid’) will practically be a big constraint on the adoption by government agencies, while suppliers considering entering the process with competitive solutions will be more than a little uncomfortable at the potential IP outcomes. These two dimensions look like unhappy bedfellows. Will their pairing result in headlines such as, “Government pays unsuccessful vendors millions”?

In procurement, one size does not fit all. While media inevitably references to the trail of tragedies such as INCIS and Novopay, big complex solutions (as required by those aforementioned organisations) won’t easily lend themselves to ‘bake-offs’ in terms of illustration of a supplier’s breadth of solution or ability.

Perhaps the closest thing to a silver bullet for procuring agencies would be relentless simplification and a term from the distant past – modularisation – of requirements and deployment. Above all, an effective sourcing strategy is a good investment for all parties involved (including us, the funders).

To discuss the topic further, please get in touch with the author, Jon Wallace, on 021 500 035.


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