Tender Trends: Then and Now chronicles the evolution of the procurement process — from its early days of materials ordering to its rise in shaping policy implementation, industry innovation and social change. Tender Trends: Then and Now is written by bid management veteran and Bidhive CEO Nyree McKenzie who has dedicated more than half her life to the profession.
In this chapter we look at the rise of citizen power, and the role and impact of civil society in planning processes.
Citizen participation, data and new power
As history has shown, procurement on a macro level provides tremendous insight into government economic responses, and gives us a deeper dive into the intent of policy, sector and organisational maturity; and it signals the willingness of both sides – the buyer and the supplier – to innovate and/or to problem solve.
2018 – early 2020
Towards the close of the second decade, across the world public authorities were struggling to address the many pressing social and economic issues in the face of constrained funding and ineffective legacy business systems. To improve investor confidence in capital markets, corporate governance overhauls were occurring again, and since opening their trading doors to the West, Malaysian and Japanese governments began to adopt Anglo-American style corporate governance systems.
Single source contracts once again became short-term fixes for budget constrained procurement departments seeking consolidation of budgets and their supplier base. The hamster wheel highs and lulls of insourcing, outsourcing and co-sourcing (or strategic sourcing) cycles – were all symptoms of procurement calling the shots – not by virtue of good design or economic sensibility – but rather the result of poor systems and managerial shortcomings resulting in supplier duplication and overpayments. With election promises being prioritised over internal system improvement there would be obvious implications for the modus operandi of the traditional procurement process.
Competitive tendering was by now widely legislated in many countries to level the playing field for both small and large companies to compete and work together.
Big businesses realised the benefits of open competition and were turning the tables in their own unorthodox approaches to solicit proposals from governments.
This was a remarkable reverse of power play and a smart way to tap into incentives to aid in operational expansion — evidenced by Amazon’s $5 billion Request for Proposal inviting private and public sector collaborators to ‘think big’ and bid for their new North American headquarters to house 50,000 employees. In a hotly contested bid between the cities of New York’s Long Island and Northern Virginia it all came down to the data. The Amazon tech giant led by billionaire Jeff Bezos, used data analysis, including CNBC’s Top States for Business study, to access the quality of each state’s workforce, infrastructure and business friendliness. Virginia offered the best workforce in the nation, with the largest concentration of science, technology, engineering and math employees, with the State tying in first place with education along with Massachusetts.
Serial entrepreneur and billionaire Elon Musk’s winning (and contentious) bid for the O’Hare to Chicago downtown transport loop was another example of privately-backed innovation occurring in procurement. While Elon’s conceptual solution had promised a magic fix to Chicago’s traffic congestion, the actual project was met with new disruption of its own, with the bid and contracting process and the real cost involved under scrutiny. Like most projects championed by political figureheads, there was a rumoured conflict of interest that, despite Elon subsidising the project, he was purportedly a political donor. The Chicago Loop failed to proceed after Mayor Rahm Emanuel resigned from his position in 2019.
Above: The Boring Company’s (unproven) concept of a high speed transport sled carriage
By now citizens were empowered, and able to communicate whenever, wherever they wanted. They now expected the same of business and government. Early examples of this in practice included Volvo’s partnership with industry, the Swedish Transport Authority and researchers to devise the ElectriCity project, a testing area to electrify transport systems, beginning with Gothenburg’s electric bus fleet. It would herald a new business model of citizen participation – one from engagement to ownership – as it worked towards rolling out its two year renewable energy roadmap for the metropolitan region.
Traffic data platform Waze and its Connected Citizens program also began to exchange of data across the world with the aim of improving urban traffic conditions. With this app drivers began to alert other app users of speed camera, accidents, traffic jams and petrol prices over a community-edited map.
Below: ElecriCity electric bus recharging station
An important new actor had arrived to the mainstream – citizens and tech-savvy employees. Armed with their mobile and social technologies they would engage differently as individuals, and communities.
Educating their peers, they would raise new expectations of data security, and their influence would push cloud services and data to transform IT and business processes, along with industries and entire professions. With little tolerance for outdated systems, or long-tail budget blow-outs the new citizen power would embrace everything digital and agile. While their desired outcomes might require a much more experimental approach, they would be open to collaboration and partnerships, where leaders could learn from mistakes and prototype with speed to iterate to discover better ways of doing things.
This new power began to shift to the people on a global scale, along with their assessment of how well a country, its politicians, and a company engages and acts to effect genuine change. New domestic violence policies, consumer directed care, anti-slavery reporting, affirmative action and other social change movements were being driven and advocated both internally within an organisation, as well as externally more broadly from communities, entrepreneurs and industry groups.
By early 2020 taxpayer-funded spending for public benefit grew US$9.5 trillion each year, or around 15% of global GDP (to put this into perspective the top 100 online marketplaces sold a combined US$1.7 trillion in 2018). Yet for all this expenditure, there was still no unified government-wide system for publishing open contracting data. To bring us a step closer, countries such as Chile, the Ukraine, Mexico, Indonesia and South Korea took the necessary steps towards full disclosure through their own e-procurement platforms, while other nations including the UK as an exemplar country, began slowly collecting and sharing some or all of their civil and civic contract datasets with the help of the Open Contracting Partnership., a global non-profit organisation that developed the first worldwide standard of structured, recommended data fields for procurement departments to follow and publish.
While accepting that it is not a perfect competition model, competitive tendering — influenced by policy interventions and conservative administrations — can be attributed to started the contracting movement. And while contract law might not have evolved very much, contract astuteness and buyer-supplier power certainly has.
The old notion of having no choice to tender for ‘fear of missing out’ was now beginning to be replaced by elements of supplier-side process structure and strategic approaches to make the decision to bid more discerning. Companies were now placing their own criteria around the relative importance of the contract before they decided to bid. As a growing management practice, competitive tendering would become more of a strategic issue for CEOs and boards in shaping their agendas for growth, innovation and organisational change.
When the Covid-19 pandemic was officially declared in March 2020, public procurement strategies and infrastructure plans were at the frontline of countries’ responses to the health crisis.
Tender Trends: Then and Now Chapter 5 – Citizens