This article is an excerpt from The Art of Tendering: A Global Due Diligence Guide, which is available for purchase.
While project teams tend to focus on their project-specific technical requirements and on the industry practices that apply to the goods, services, or construction contracts that they are seeking to award, those project-specific considerations are just the tip of the tendering iceberg. Experience has repeatedly proven that there are far deeper, often overlooked, undercurrents informing and influencing the ultimate success, and the recurring failures, in public sector procurement. In fact, those deeper undercurrents inform at least three-quarters of the recurring risks and challenges that need to be proactively managed at the institutional level to give project teams the ability to achieve strategic execution at the project level.
While public sector procurement teams are expected to award contracts that meet their operational objectives and deliver those requirements on time and on budget, they must also do so while navigating four layers of rules and standards:
- the core global standards that influence the formation of procurement standards at the jurisdictional and institutional levels and inform the interpretation of those standards, including international trade treaties, model laws, guidelines, and global common law and audit precedents;
- the jurisdictional statutory standards and accompanying directives and guidelines, along with related case law rulings and audit findings, that create operating systems for institutions within each specific jurisdiction. Depending on the jurisdiction, these jurisdictional standards may enjoy a higher or lesser degree of formal harmonization with core global standards;
- the internal governance frameworks specific to each institution, which should be aligned with the global and jurisdictional standards that apply to that institution to create the organizational operating system required to support project teams; and
- the project-specific technical requirements and industry practices that apply to the specific goods, services, or construction contracts relevant to the specific project.
The greater the proactive compliance with global and jurisdictional standards at the institutional level, the better the conditions for compliance and successful execution at the project level.
While well-functioning internal governance frameworks are always critical to proper project execution, the lesser the degree of formal jurisdictional harmonization with global standards, the greater the pressure at the institutional level to bolster those internal frameworks. To give project teams a fighting chance at properly delivering on their project objectives in an increasingly global system of rules, public institutions need to establish institutional-level governance frameworks that address applicable jurisdictional and global governance standards. Failing to do so means that project teams will be left adrift to their own devices, attempting to meet their objectives with a weak institutional compliance infrastructure to support them. In these situations, the time and focus that should be devoted to project-specific considerations are often compromised by ad-hoc and largely ineffective efforts at addressing institutional governance gaps through improvised processes. This exposes contract awards to compliance challenges and often leads to sub-optimally designed contracts that fail to serve the operational needs of the organization or meet applicable public sector transparency and accountability standards.
To succeed in local purchasing, public institutions need to take a big picture approach and think globally and proactively about building winning conditions within their institutions.