Government procurement of digital services: a simple approach
By Nick Butler
3 June 2022
Government procurement of digital services can be a daunting process. So here are three ways you can make procurement simpler, get started sooner and deliver public value faster.
The guide focuses on the procurement of digital experience (DX) services. That’s the full range of services needed to build, implement and manage effective web and mobile applications.
While the NZ government procurement rules can be complex, the principles are short and simple:
- Plan and manage for great results
- Be fair to all suppliers
- Get the right supplier
- Get the best deal for everyone
- Play by the rules
These three approaches help you follow the principles:
- Deliver projects in small stages.
- Build procurement relationships.
- Use the Marketplace procurement panel.
1. Deliver projects in small stages
Research shows that small projects are four times more likely to succeed than large ones.
So, if your project is aiming to have big impacts, break down your project into a series of smaller phases. Rigorously prioritise the smallest piece of work that will deliver your highest priority outcomes. Deliver these outcomes, then feed what you learned into the next phase. The same goes for ongoing programmes.
- reduces risk
- delivers benefits to your users sooner
- simplifies procurement by cutting complexity and allowing streamlined procurement processes.
2. Build procurement relationships
The simplest way to do this is to talk early and talk often. You don’t need to wait until you have all the details ironed out.
- your agency’s procurement people — to understand the procurement process
- potential suppliers — to better understand the business problem you want to solve and what the market can offer to solve it.
Conversation is a powerful tool for navigating uncertainty. That’s because you can get real-time feedback and validate your understanding and approach as you go.
Your agency’s procurement people
If you don’t already have a relationship with your agency’s procurement people, get them to talk you through your next steps.
They’ll let you know what they need so they can help you with your procurement. And they can share any agency-specific processes or templates, and any lessons learned from past procurements.
“Involve suppliers early – let them know what you want and keep talking.”
— Public sector procurement principles
Treat procurement as the start of a relationship. Start engaging with the market in the way you want to continue, as a conversation.
Try to find people who listen and respond to what you want to achieve. If they prefer to talk about themselves, or to pitch solutions before they understand the problem, you’ll get less benefit.
3. Use the Marketplace government procurement panel
“Make the process as streamlined as possible and proportionate to the value and risk of the contract.”
— Using supplier panels for procurement
Pae Hokohoko / Marketplace is an all-of-government panel set up to make it easier for agencies to procure digital services. It replaced the Web Services Panel.
If you procure via a panel you can use streamlined procurement processes, known as “secondary procurement”. That’s because the suppliers on the panel have been pre-selected based on their business record, key personnel, experience, capability and security.
This means you only need to formally request proposals via GETS for large and risky projects. Otherwise, you can approach suppliers directly.
Hopefully your agency has already joined Marketplace. If not, here’s what you need to know.
Guidance on procurement through Marketplace
The Marketplace secondary procurement guidance includes this overview (PDF). The last page has a useful summary of the process.
Plus you’ll find a set of handy tips in the government guidance on procurement via panels.
Planning your Marketplace procurement
Using Marketplace lets you follow a simple four-stage process:
- Prepare: Create a simple brief of the outcomes you want to achieve and shortlist the Marketplace suppliers who fit the brief.
- Discover: Check the suitability of the suppliers on your shortlist.
- Select: Pick your supplier, agree a pricing model and get any approvals your agency needs.
- Contract: Sign the contracts and debrief the other suppliers on your shortlist.
Here’s more detail on the four-stage Marketplace procurement process.
First you’ll develop a brief and shortlist the Marketplace suppliers who fit this brief.
Develop a brief
“Agencies are recommended to focus on outcomes rather than requirements.”
— Marketplace procurement guidance (PDF)
Develop a simple brief covering the outcomes you want to achieve, the capabilities you need and the background to the work. In government procurement terms, the brief is your statement of needs. In particular, this brief should describe who the users are, the benefits you’ll bring them and how this helps achieve your agency’s strategic goals.
You can base this on your business case (learn more about developing business cases for NZ government projects here). If you’ve broken down big goals into smaller phases:
- make sure your funding enables phased delivery
- focus the brief on the current phase (with a short summary of the wider goals).
It can help to develop the brief in conversation with suppliers. That way you build a shared understanding of the desired outcomes and the solutions available to achieve them.
Try to find suppliers who can help you narrow your scope to the outcomes that will create the most value, in the shortest time.
“Decide how many suppliers you will approach – you don’t have to approach everyone on the panel unless you think it would be worthwhile.”
— Supplier panels for procurement
Put your shortlist together from among the Marketplace suppliers who offer the services needed to complete your project. You can narrow it down by checking their service descriptions and case studies on Marketplace, along with their websites. You can also feed in what you’ve learned by talking to suppliers.
Marketplace lists services in catalogues, which are grouped into wider channels. The Digital Experience (DX) Services catalogue is part of the Consultancy and Professional Services channel.
Full-stack suppliers deliver faster
Where possible, shortlist suppliers who deliver the full set of services you need to complete your project. That’s because splitting between suppliers breaks the flow of the work and slows you down.
Check the suitability of the suppliers on your shortlist. Evaluation criteria you can use include:
- track record
- capability fit
- team fit
- solution fit.
Past success is more important than future promises. So check that their previous government projects have:
- delivered the required outcomes
- on time
- on budget
- at the quality required.
Do they have the:
- technical expertise and experience
- project management expertise and experience?
Both are needed for success.
In a partnership, the people are as important as the technical aspects.
Is the team aligned with the impact you want to have for New Zealand and New Zealanders? Synched teams deliver value faster.
Will working with them be a pleasure? When you’re having your initial conversations, meet in their office so you can directly experience their working culture.
Select teams for fit and effectiveness not size
Ask them if they have the capacity to complete your project. Keep in mind that more people doesn’t mean better or faster results. The coordination and communication costs of big teams slow them down.
As the government procurement guidance says, focus on the outcomes, not on requirements.
That means you’re looking for the high-level approach, not a detailed solution. In particular, you want to assess whether the suggested approach shows an understanding of the outcomes you want to achieve.
Off-the-shelf vs. custom solutions
Watch out for predetermined solutions for complex problems. For example, avoid trying to adapt off-the-shelf software designed for other contexts. The customisation required rarely meets user needs and eats up any cost savings from buying the ready-made solution. If the outcomes you want to achieve are complex or specific, develop a custom solution.
Pick your supplier, agree a pricing model and get any approvals your agency needs.
If you’ve chosen a supplier who uses a partnership approach, they’ll work transparently and collaboratively to deliver value regardless of the pricing model.
Your agency’s procurement team will be able to help you out with your internal approval process.
Sign your contract and debrief the other suppliers on your shortlist.
When buying DX services through Marketplace, your contract is in two parts:
- Subscription form (also known as the Subscription agreement)
- Statement of work
You can get Marketplace templates for these documents.
Once the contract is signed, you can let the other suppliers know which evaluation criteria they fell short on.
Managing the contract
You’ll want to be clear up front how you’ll ensure the work is on track and delivering the desired outcomes. If your supplier puts a premium on transparency and collaboration, this will be straightforward. You’ll have a clear view of progress, time spent and budget remaining, along with any potential obstacles and the path to resolve them.
So now your project should be ticking away nicely, and you’re getting the benefits of this approach to government procurement of digital services. By building relationships, delivering priority outcomes in stages and streamlining procurement, you’re cutting risk and creating public value sooner.
Procurement website for New Zealand public sector
Assurance plan for government projects
Government Marketplace: a short guide to DX procurement
The Government Digital Service Design Standard made simple
In addition to the DX services Boost supply through the Marketplace, we also provide Agile consultancy and training services through the Government consultancy panel.
Questions and feedback
If you have any questions or feedback, email me at: [email protected]