market.

In the Year 2020 . . . Government Market

As posted this past past Friday, each day this week I will be providing my take on the top 5 predictions for the year 2020 from Bob Lohfeld’s July 7th Washington Technology article aptly named 5 predictions for the 2020 market.

Today we tackle prediction number 1, the government market.

Lohfeld’s prognostication: The government push to insource will have disappeared, having been debated and resolved at least once in each of the last three decades. Government and industry will be partners, working together to streamline acquisition processes and reduce wasteful proposal requirements (and time spent on the activity). Government procurement organizations will have been substantially rebuilt. The need for hard-copy proposal submissions will have disappeared or diminished sharply, especially with the push for green computing. I think sophisticated multimedia proposals versus text-heavy submissions will increase companies’ competitive positioning (remember the videotape submissions of the 1990s.)

As socio-economic legislation runs its course, the emphasis will shift from the government helping small businesses to large businesses doing this via mentor-protégé relationships sanctioned by government agencies. Performance-based contracting will finally be understood by both government and industry and be increasing significantly, so the need for quality certifications and processes for contractors to meet service-level agreements and performance standards will be on the upswing.

Having operated within and written extensively about public sector procurement, the biggest challenge with assessing the Lohfeld prediction is where to begin.

From the 10,000 foot level, Lohfeld’s predictions regarding the government market in 2020 are akin to a game of Boggle in that he has basically taken the been there, done that observations that have been in our collective consciousness all along and shaken them up a bit. In short, he still says the same things but in a slightly different way, while only making passing references to the elephants in the public sector room.

One example of this is his comment that Government procurement organizations will have been substantially rebuilt. Without expanding on his revamping prognostication, it is difficult to know from where Lohfeld is actually coming. Good thing that I have an opinion . . . and you know what they say about opinions.

The fact remains that there are three major stumbling blocks as it relates to the reformation of the public sector procurement organization as well as purchasing in the government in general. Starting with leadership and the need to replace the old guard, there is a compelling need to address what has become an over-bloated workforce, as well as the absence of creative originality in the approach to solving said problems.

Interestingly enough, these three suspect factors intersect into the collective mush of inefficiency that has plagued the public sector for what seems like an eternity and has led to the majority of negative headlines recounting the travails of wasted taxpayer dollars. As an aside, I still recall with mild amusement the comments made by a senior purchasing executive from Colgate-Palmolive who at the conclusion of one of my seminars came up to me to tell me that the only difference between failed initiatives in the private versus public sector is that in the private sector they are not likely to end up on the front page of the local newspaper.

One of the glaring examples of this convergent mayhem that immediately comes to mind is the Canadian Federal Government’s uneasy and at time acrimonious relationship with Kevin Lynch, the former Clerk of the Privy Council and Secretary to the Cabinet.

During a May 2009 telephone call with my favorite Ottawa Citizen reporter Kathryn May, our conversation was interrupted by the announcement that Kevin Lynch who May, in her subsequent article described as “the driven “big ideas” mandarin,” that Harper had picked as “his top bureaucrat” three years earlier was “retiring.”

What was telling about Lynch’s “retirement” (you will note the quotation marks) is that at that precise moment something clicked as I openly mused with May that Lynch was supposed to be the guy to turn around the public sector, especially in the key area of workforce morale. The Lynch strategy also included the aggressive recruitment of new, younger and more out of the box thinking university graduates to help the public sector enter the 21st century in terms of how it conducted business. All sounds like a good idea except for the fact that, and has reported in my post a couple of days later, many senior people within the government were actually talking about a reduction in workforce via attrition versus a head count addition of much needed talent.

Referencing the Lohfeld rebuilding prediction, the Lynch story also led to a revelation of sorts involving the future direction of the Government’s workforce (and changes at the sizable Public Works and Government Services Canada department).

Specifically, when the Lynch departure was viewed in combination with the PS union suit and the then recent Shared Services press release from PWGSC Minister Christian Paradis, the pieces of what had at times been a complicated puzzle began to fall into place. A puzzle that included an 800-pound gorilla in the room that no one was talking about – massive layoffs in the public sector based on the introduction of a Shared Services strategy.

The conceptual view of this revelation was really quite simple; 1) weaken the negotiating/bargaining strength of the PS union, 2) introduce a replacement for Lynch who is more amiably tied to what May referred to as the “federal politicians and the bureaucrats that serve them,” and 3) reach an important “accord” in which the biggest obstacles (re ITAC, CATA etc.) to implementing a Shared Services (nee Outsourcing) program have been compromised, if not removed.

Not wanting to wander too far off the path of today’s post focus, as the challenges for change are similar or shared to a certain extent with all governments around the globe, check out my original Lynch post Wayne Wouters, Gershon and the PS Union Suit = Shared Services.

The salient point with the Canadian Government – Lynch story is simply this . . . most governments are a morass of competing and conflicting interests that rarely if ever align themselves within the framework of a cohesive strategy for change.

Because of this absence of a collaborative single-mindedness, the public sector finds itself in the constant position of having to make forks-in-the-road decisions that ultimately land it right back to where it started. From a purchasing standpoint, and with a few exceptions such as Virginia’s eVA program, this pattern is mirrored and often repeated. What was Einstein’s definition of insanity again?

Perhaps this is one of the reasons why Dr. Ronald D. Utt, Ph.D. in his controversial May 26th, 1995 Heritage Foundation article Privatize the General Services Administration Through an Employee Buyout, made the following observation:

“Of all the agencies and departments that have been discussed for privatization this year, the GSA would be one of the easiest to privatize. Its many services are available from the private sector, whose more successful firms offer a blueprint for how a privatized GSA could survive and thrive in a competitive environment. Moreover, because of the routine and commercial nature of most of its operations, as well as the performance benchmarks provided by its private sector counterparts, GSA is amenable to forms of privatization that allows for substantial and active participation by the existing federal workforce. Thus, besides saving a considerable sum for the taxpayer, privatization of the GSA could become a model for many of the other privatizations lawmakers and Administration officials say they intend to pursue.

Whether or not Utt’s perspective captures the spirit of the Lohfeld prediction that Government and industry will be partners, working together to streamline acquisition processes and reduce wasteful proposal requirements (and time spent on the activity) remains to be seen, as he isn’t clear as to the nature and make-up of the Government – industry partnership. What is clear is that the lines between the public and private sector continue to be blurred, and as a result cause even greater confusion as to where the influence of one begins and the other ends. Until this duplicity of values has been resolved there is not likely to be any meaningful progress relative to the reforms or transformation to which Lohfeld refers in his article.

The validity or perhaps accuracy of Lohfeld’s other predictions re the socio-economic legislation running its course and, the need for hard-copy proposal submissions either disappearing or diminishing sharply, remains to be seen.

I personally believe that while the latter point re the paperless office has always made sense, in reality and like the results from a recent PI Window on Business survey asking about the future of paper money, the extent to which paper-based transactions will dissipate into a cloud of electronic efficiency is uncertain.

As for the running of the socio-economic course, I think that Lohfeld is somewhat off the mark in both his limitation in defining its area of impact to the driving of the economy through SME-centric programs, and his ignoring the reality of the overall budgetary crisis as reported in my January 27th, 2011 Procurement Insights post The Stat Takes Over Nassau County's Finances . . . is this the first domino in what is going to become a chain reaction across the country?

At the end of the day, the reality of the economic condition both at the federal and local levels trumps everything, as demonstrated by the recent public sector crises in both New Jersey and Wisconsin, and the fact that for the first time since the Great Depression state’s and municipalities are facing the very real prospect of having to claim bankruptcy.

Finally, Lohfeld’s reference to Performance-based contracting, and the need for quality certifications and processes for contractors to meet service-level agreements and performance standards is interesting in that it is stating the obvious. What he doesn’t address is the manner in which such a strategy will be implemented especially as it relates to certification.

In a two-part PI Window on Business broadcast which originally aired on the Blog Talk Radio Network in April and May 2009 titled Is The Traditional Association Model Dead?, I convened an expert guest panel to talk about the very questions surrounding the continuing viability of traditional associations and their respective professional education curriculum. I would suggest that you listen to the broadcasts at your convenience to get the complete picture of the changing association model, however the observations provided by the panel during the segments were telling in both the contentiousness of their substance and the accuracy of their vision.

The fact is that performance-based contracting is nothing new, nor is the requirement for continually building time relevant competencies, which is why Lohfeld’s comments are disconcerting in that they should not have had to have been made in the first place.

All-in-all, the Government Market is and will continue to remain in a state of static flux, where the irresistible force of needed change will run smack into the immovable object of bureaucratic conditioning. Unless the budgetary crisis that is presently being faced by governments at all levels coupled with the emerging influence of international trade can break the inertia deadlock, the public sector procurement practice is likely to remain in a kind of non-active limbo for the foreseeable future and for some time to come.

Tomorrow’s post: Workforce

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Personal Profile: http://www.linkedin.com/in/jwhansen

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