This report is a compilation of conversations and communications with a Canadian consulting company. They have agreed to allow these comments to be published anonymously. Few industry sources have come forward with their concerns due to risks of corporate suicide from being blacklisted. – Editor

SME Confidential Report

It’s on MERX? It’s Already Too Late to Join the Game

FrontLine Defence, vol. 3 no.1
January 2006

Defence procurement is a highly politi-cized process from top to bottom. Everyone plays their own games... from the politicians, to the officer corps, to the civilian bureaucrats. Often with the best of intentions, people try to get around a cumbersome, inefficient system that’s long overdue for an overhaul. Industry is merely the pawn, and small business cannot really afford to play. Our firm is small but we have led international and domestic projects valued in excess of $1 million (this is considered a large contract in the consulting industry).

Our company has undertaken about 200 projects in the last 15 years, but only three were for the Department of National Defence. Our web access logs show several foreign military organizations among the most frequent visitors which leads us to believe we have a lot to offer DND, but it won’t happen under today’s rules.

In our first attempt at DND bidding, we teamed with one of Canada’s largest companies to submit qualifications for a major procurement in our area of technical expertise. We spent quite a bit on that bid, including travel time and expenses. It was a powerful submission and our partner was involved in major DND projects already. We were told within 48 hours that we had not pre-qualified as DND had seen all the reference projects of all bidders and ours did not qualify. It was immediately obvious that other influences were at play in establishing the short list. We learned not to go that route again.

We also learned quickly that by the time a project is advertised, DND officials already know who they want. This has had a critical bearing on our approach to all DND opportunities since then. Once it’s public, it’s too late to join the game!

We were approached in the mid-1990s for a sole-source study by DND officials who had heard about us. Our expertise covered a broad operational requirement, as well as a specialty application. DND staff loved our work and brought us back for two more studies.

We’ve tried over the years to repeat the specialist role, but DND moved to a large firm consulting strategy where several large standing offers were created and used to source all smaller studies and projects. We would have to join a large umbrella consulting organization if we wanted to either pre-qualify, or become involved in work. DND staff lamented to us their inability to acquire the kind of real specialty expertise we offered but were forced to go to the large firms only. We had missed the boat, but we couldn’t have met the large company, generalist management consulting experience criteria anyway, we specialize in one area!

Some years later we were approached by a larger organization (with a standing offer in place), offering lots of DND opportunities. But their professional fee scales were less than half of what our domestic and foreign clients regularly pay for our type of services. They suggested we do what other firms do and simply inflate the amount of time we book to a project as a means of getting around the problem. We walked away, but I’m not sure weaker firms would take our approach.

What does this all add up to? Poor quality firms, offering limited expertise, appearing to work for cheap rates, and DND certainly not getting either value-for-money or the benefit of advanced Canadian expertise in a subject. Bureaucrats are frustrated, victims of a system which considers all consultants equal and therefore just a labour pool from which to draw the cheapest body. This favours ex-DND staff with ongoing military pensions which only need topping-up. But Canada desperately needs to bring new thinking into our military.

I found myself sitting beside a DND procurement official on a recent business flight. He had attended a public presentation I’d made the night before and wondered why he’d never seen our firm on any of his bid lists. I summarized our DND procurement experience and pointed out that MERX procurements attract so many bidders that the odds discourage bids by anyone with a quality product. They are expensive and time consuming to prepare and then must go to the cheapest bid, or possibly a favoured bidder. He related his frustrations as a client, that a few bidders had learned how to prepare bids that meet the complex, mandated bid process, but they regularly produced work of below average quality.

As a matter of interest, we’re fairly accomplished at proposal writing and usually win 1 of 3 bids. Typically there are about six invitees for most directed proposal calls to firms known in a specialty field. With some clients, our competitive success rate has been as high as 90%.

All things considered, why should we spend time on a DND bid where the effort is high, the odds are long, and the deck stacked against us?

The current procurement rules and process, in our opinion, stifles creativity and breeds mediocrity. In a time of limited resources and expanding military needs, innovative thinking and new approaches should be the objective of the consultant procurement process. A one-size-fits-all procurement system cannot address the multi-tasked and changing needs of Canada’s military in the 21st century. A flexible system would be more appropriate, including delegation of authority to operational and technical specialists, empowering them to seek out the best skills Canada has to offer, and to procure the best services for our military in a transparent, competitive process among desirable suppliers.

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