Procurement: Debunking the myth of word limits
Dumbest excuses given for why procurement fails to achieve policy objectives number 53,431,754.
Your word count. That occupies the first 53.4 million of those excuses.
In the 1980s, the UK Office of Government Commerce (what is now Crown Commercial Services) developed the UK procurement process. An ultra bureaucratic, ineffective means of attempting to create a fair, level and incorruptible playing field for open and competitive tendering for the government.
Since then, it has been ineffective in addressing all those aims. Most notably during the pandemic, it also spends three times as much public money as it should have to get the goods and services it needs.
Having privatised public services, procurement processes became extremely effective in keeping it that way, by funding bad outcomes for residents. 14% of procurements in the UK are "wrong" with some 48% being challenged projects. At one point 70% were.
Which is odd, because government is supposed to work for us.
I was explaining the issues this raises in procurement to policy folk (yet again) the other day. I came out with this thing which I've refined since.
"[when procuring innovation] Word counts don't introduce equity amongst bidding candidates. It applies INEQUITY to innovators"
Why did I say that?
Let's look at this...
Convergent v Divergent Solutions: Through the lens of plumbing
Imagine you have a tap spraying water at you regardless of whether it is open or closed. It's obvious there's something wrong with that tap. You know it is that tap, no other tap, you know how taps work and what they look like. You know this should not be happening. You have a mental frame of reference that tells you that, since you've seen and used functional taps before.
You know plumbers work with taps and you can call or e-mail a plumber, explain what's wrong, can photograph and even video that damaged tap spraying water out and send that to the plumber.
The plumber will turn up at your house fully aware they have to fix a tap. They don't have to tell you that you have a problem with your tap, because implicitly that piece of knowledge is already in your brain, not least because you found the issue and know what a tap is. So you keep the context limited to the tap and the plumber fixes that. The knowledge of the problem, the solution and the suppler are all congruent with a broken tap.
Now compare this to a policy for saving water.
You can save water multiple different ways. For example:
1. Have less brews
2. Water your plants with bathwater (i.e. grey water)
3. Implement a “three wees a flush” rule
Policy limits the advancement to saving water in all its forms. Knowing this, the family can do any or all of the above, giving each person in a 3 person household, duties to each category of water saving action.
Here, the context of the policy is shared with the family, so they all know. However the plumber doesn't know! Does that make a difference when the tap bursts?
The answer again, is No. Since the outcome is the same as before.
Both parents and the child get a plumber by taking pictures, explaining the issue etc. They all know what taps look like, how they work and what the problem is.
These are all "convergent" solutions. The solution is aligned with the problem and each stage doesn't allow the problem to grow arms and legs. Indeed, it chops them off so that by process of elimination, you arrive at the fact that you need a plumber and the plumber fixes the tap.
Innovation is neither tap nor toilet!
Every procurement ever done in the public sector (and most in the private sector) bases itself on these convergent outputs. You start with a fixed sized problem and the solutions always pair-down from there. It is common because capital expenditure on infrastructure is common. Everything is a bridge, so everything they get back, will be a hammer.
Innovation is different. VERY different!
Suppose the family home now doesn’t have a spraying tap. It has “nothing”. Nothing appears to be wrong. The water appears to work. The energy bills are fine and everyone gets three square meals a day.
Yet, your costs appear to be increasing. The plants in your garden are dying and your household is getting older and more flatulent on average, since you got the dog.
One day, the ceiling of the kitchen falls in! Leaving a gaping hole into the bathroom above. You didn’t catch it happening and didn’t get your phone out in time but what you do need, is it fixing!
You need 3 quotes and only give 10 minutes to everyone you call and you only have the plumbers number.
You call the plumber, you get the plumber, they fix a leak in the neighbours house, but your ceiling it still not fixed and your 10 minute call gave you no idea what else is wrong and needs fixing. Do you know who to ask? Take a few seconds to think.
Meanwhile the dog still smells and you have no way to wash them. You don't know what the problem is, you don't even know if what you have now is structurally sound or not! Every time you look at something, you need yet another specialism but the plumber says they can do it and has failed 3 times. Each new thing is arms and legs all over the place!
The issues diverge from the original plumbing problem. It's not actually a plumbing problem! It certainly wasn't your plumbing problem but now you have to carry all the risk and unknowns around it. You don't have the knowledge in the organisation to know what the problem is, what the necessary solutions are, nor any creative way to save money on it as the costs accumulate!
Government innovation procurements are run just like that. There is no overarching recognition of the issues, even if a policy exists to “save water”. The fact you only gave the plumbers you called 10 minutes but didn't need only plumbers, leaves them with a huge problem trying to explain to you that you also need a structural engineer to ensure the ceiling and 1st floor are sound. You just asked for a plumber and got a plumber. That is all they could explain in 10 minutes.
Back to Life, Back to Reality
In innovation, word counts, like the 10 minutes, are the problem here. In order for a basic plumber to tell you about plumbing, when you know what you need, is fine. You start with a known common skill, as you have the model in your head. They don’t even need the 10 minutes.
With the collapse of the ceiling, you’re now in real trouble! You only have the plumbers number because you only ever needed a plumber and could talk the plumbers language. It start looking like a plumbing job, but it’s actually more than that! The nature of the requirement grows arms and legs as you run it! So you cannot simply start with 10 minutes and hope to get it all in, because there are unknowns in the system. You don’t have the full model in your head to allow for 10 productive minutes of conversation and the plumber hasn't initially seen the ceiling to know there's more.
But you hired them anyway. Even though they were the wrong party to get.
Procurement for innovation is exactly the same. Especially if you claim to seek more innovative solutions. All innovative solutions start from a position of external expertise and the nature of research and development means you take different paths during the project. It grows arms and legs and needs the evaluation panel to have the skills to evaluate it anyway. But they don't have the model. So they can't evaluate it because the mental model hasn't been created it. It's the innovation, which they can't choose, to never get the model, to evaluate it
This sort of extreme catch-22 exists in every UK organisation from the NHS to local government. It's systemic incompetence that hides behind the excuse of word counts which the buyers claim is fairer. However, in innovation, the reality is the more arms and legs something has the more innovative it is, but the less space that gives the bidder to describe the arms and legs to people who don't know they need arms and legs.
So describing a basic, minimal incremental innovation within 500 words means the bidder has 500 words to explain what they're going to do. Everyone know what a tap looks like, so a different tap lever is an incremental innovation.
A more innovative solution may well be a new kind of non-water dispensation device based on ultrasonics. Say with 10 different innovations. In this case, a 500 limit means having to explain in 50 words the problem to be solved, why it's important and the solution, 10 different times! Which is impossible unless ancillary documentation would be evaluated as well, which they are not with word counts as it would be deem unfair.
So instead of enabling the procurement of innovation through equality of opportunity, it destroys the equitable position between no-innovation and innovation. It trades equity for a false equality, when the different innovations are not equal, by their nature. It's divergent. It's innovation!
This should lead procurement leads to understand the need for a completely new way of buying services. Since the toilet isn't a transformer ("it 'aint no bogbot").
False Fairness: The financial cost of procurement to public money
It always makes me chuckle when people claim that word counts make it fair between bidders. The usual excuse pulled is if they gave us, say, more word count than everyone else then it would be unfair on everybody else and this is a completely false statement and false economy.
It also makes an assumption everybody sits and enjoys writing bids and businesses enjoy spending money on salaries or subcontracting to fill it in.
As business owners, bids are by far the most wasteful of any UK's sectoral economy. Every year, businesses lose £5.2 billion in wasted productivity to public sector tendering. It is vapourised in the embodied cost of the written bids of losing candidates and the public money paid to evaluate them.
Each bid loses UK Plc upwards of £48,000 per bid. £8,000 on average per bidder is wasted in staff wages for losing bids. A loss to HMRC of £1.8 billion in lost taxation.
Of course, that money isn't just lost to the eventual winning bidders, because they make up for it by pricing across multiple other bids accordingly. Which raises the overall bid price to government by a factor of up to 40% over what the private sector will buy it for. It is the most colossal, abhorrent waste of public money anywhere in the economy and it's caused by the public sector itself.
Bid writing companies advertise their services and proudly boast a 60% success rate, but what they don't tell you is that success rate only happens when you have an exact match (no maybes, even if the public body doesn't need it) and you pay £6,700 to £26,000 each for the privilege of losing 13 of every 14 that you submit. Placing the burden of recouping that cost on future public contracts. The SME will have spent anywhere from £40,000 to £270,000 before getting one successful public tender.
Seriously, why would any business owner in their right mind enjoy telling their staff to fill out thousands of words more than another bidder or even than normal? Everyone hates it! It doesn't give the business an advantage to write too much.
For procurement officers and public policy wonks to claim that it is, is an incredible detachment from reality. Showing they've never run a business before and even that they have never submitted a bid.
What's even worse, is new studies are starting to indicate word limits end up having the opposite effect. Just like speed limits on a motorway and when being interviewed on a mic, people write up to the word limit when in fact shorter answers could be possible. It gives people an implicit assumption they should write more, because they assume the buyer knows something they don't. It’s Like someone with a microphone asking someone a question and then simply not responding when they have finished their sentence. The person they're interviewing feels they have to say more as part of social compliance. A subject that was used to great comedic effect in the early 2000s (bonus points if you can name the show where that skit appeared).
This means setting a word limit requires the evaluators to read more material when in fact a picture would better communicate and would have been shorter to evaluate. But the evaluators wouldn't get that because they didn't ask and they didn't allow it.
So the failure of implementation of public policy are on the heads of the public policy makers for having designed and operated a poor process, not the bidders for doing what they were told.
And this, for the money I pay in taxes, isn't acceptable!