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by MattGaiser 1762 days ago
As an intern I once had an assignment to try and figure out how to sell water depth monitoring to the federal government (in Canada, but it is no better) for monitoring of a waterway.

To put it mildly, we couldn’t figure it out despite our solution having a unit price of a tenth of our competitors.

This is sorely needed.

2 comments

You accidently discovered why the price of their product was 10x higher.

If you have a customer that is extremely difficult to work with and wants to be a special and unique snowflake, you bake that in to the price.

Great, I'm glad my tax money is going to pay for snowflakes in the government mistreating their provider.

To give another anecdote, I worked for another government (not US) and it was literally the worst client ever. Besides paying a year late, they had the worst pm ever.

I left that country not long after.

It isn't only snowflakes in the government mistreating their power.

Government procurement is also complex and long-winded to ensure fairness and abuse of power, at the request of taxpayers and companies alike: Everything (with very rare exceptions) must be procured via a bidding process, so you first need a formal "call for bids". Leaving out the bidding process instantly leads to accusations of nepotism, legal consequences, or dismissal. The decision after the bids must not include interactions or refinements of the bids, because that would be favouritism and invalidate the process. So all the requirements must be known and laid down in the call for bids. So if you need someone to gather requirements for you first (because most government people actually know they would be the worst PM ever)? Have another bidding process first with "requirements gathering and CFB writing" in the CFB, taking another year, just to write the actual CFB for what you need. The eligible bidders and the bidding time is clearly defined by law, so e.g. around here you need to allow all EU companies and have to wait for 6 months before opening the bidding envelopes to decide. The decision itself must be objective, so you need to rely on a scoring system that might later on be attacked in court, therefore usually the only score that is used is the price. Using anything else will lead to a lengthy court battle about the scoring criteria, preventing you from making any progress during the proceedings. Make any mistake and bidding will have to be restarted, leading to another 6 to 12 months of delay, more if courts get involved (which they will).

Oh, and to use public money responsibly, you may only pay after execution and delivery of the contract. And only after formal verification and acceptance of the criteria laid out in the bid. So there is another few weeks to months after you are done before payment can even be ordered. If you left that out, the public would metaphorically hang you for paying for the occasional shitty job. Being informal about it would invite lengthy court battles from loosing bidders. Additional pain comes from bids where there is more than one contractor, e.g. in buildings where the electrician has to wait for the plaster and paint. Any delays in painting will lead to delays in the electrician being paid for work and material he already delivered ages ago. Lots of small companies go bancrupt in those situations.

So I actually thing a bit more flexibility, less fairness and a little more power to some government snowflakes could make everything go far smoother.

>>The decision itself must be objective, so you need to rely on a scoring system that might later on be attacked in court...

Yup, the current Besos/Blue Origin lawsuit against the US Gov/NASA selecting SpaceX for a lunar mission is a great current example.

We see this quite a lot. Even worse is the maneuvering that can take place to make something look cheaper. This can happen when the government is procuring a complex list of things and trying to do so with one vendor. While the individual pieces can be much cheaper through multiple vendors, those vendors are not eligible to bid because they cannot fulfill the entire request.

We're trying to circumvent this with our collaboration tools--Allowing multiple companies to work together on a single bid.

You could just become the contractor there and arbitrage :)
That business model is already taken, most larger contracts are won that way. Somebody founds a special-purpose company for that exact contract, gets bids of their own on the subcontracts and then submits an offer. After the project is paid, money is split up, company founder gets an appropriate share.

However, this is also the usual way that the government and subcontractors taken advantage of in bidding processes: Submitting company wins, collects payments, pays founders, but doesn't pay subcontractors, doesn't perform all of the contract, hires unreliable subcontractors and when shit hits the fan just goes bankrupt. That is why there usually is a "good standing" requirement in the call for bids that excludes new, small or government-contract-inexperienced companies. Or puts liabilities on the subcontractors, who of course don't like that.

Amazon Basics for government contracting
Given what I’ve seen on it comes to government of Canada chair procurement, this seems like it would be a needed niche.
That is a great tag line and I completely agree.
Depends whether they view the market size as fixed (where you'd want to capture as much of the surplus as possible through arbitrage) or as expanding (where they'd want to bring new firms into the marketplace that don't currently exist).

Normally government spending is about as fixed of a market size as exists, but with the recent expansion in government spending and the political winds blowing the way they are, this may be one of those rare moments in history where a platform play in government makes sense.