Rich Major, Client Partner at Made Tech, explores how government can get more from digital transformation by looking beyond individual contracts, bringing competing priorities into alignment and giving delivery teams the flexibility to respond when circumstances change.
Government has become quite accustomed to delivering digital transformation in separate pieces. One supplier delivers a capability, somebody else delivers another, and the customer takes responsibility for managing the integration between them.
Sometimes there’s something sitting in the middle that means those capabilities don’t quite join up, or the whole journey is simply too complicated to outsource in its entirety. But there’s another problem with this approach that doesn’t necessarily get enough attention, and that’s the commercial reality of making the whole thing work.
Government organisations often look at contracts individually. What does this particular supplier need to deliver? How will their performance be measured? Are they meeting their contractual obligations? All perfectly reasonable questions, except they don’t necessarily tell you whether the end-to-end service is delivering what the organisation actually wanted.
And sometimes the way a contract has been written for one part of a process makes life considerably more difficult for whoever is responsible for the next.
The trouble with getting contracts right in isolation
I’ve seen examples where a contract encourages a supplier to maximise the performance of their particular part of a service, even when doing so creates problems further down the line. Equally, if the price has been driven down far enough, being more efficient doesn’t necessarily mean that the supplier makes more money. There’s no real incentive for them to improve things.
This gets particularly complicated when you’re working across organisations. Multiple agencies might all be contributing to the same service, but they’re driven by different organisational objectives.
How do you make sure the contracts, service levels and performance measures encourage everybody to work towards the same end goal? And how do you manage the situation when the objectives of the organisations themselves aren’t entirely aligned?
For me, it’s key that the end-to-end business function is understood, a clear direction established and then contracts are aligned to this, ensuring all parties are incentivised to deliver the business outcome required. This also allows suppliers to innovate within their scope as they are incentivised to optimise the part of the chain that they are responsible for.
Outcome-based contracting: is it always the answer?
There’s a lot of discussion across the Government about moving the majority of work to outcome-based contracting, which has some considerable benefits, but I don’t think it’s necessarily the right answer in every circumstance.
Sometimes an organisation simply needs somebody who’s really good at something to come in, help solve a problem for a defined period and then move on. Or perhaps the requirement isn’t particularly well defined, and the customer needs the expertise to work that out before committing to an outcome.
If an organisation commits to a defined outcome when it doesn’t really know what it’s going to need, it risks creating an enormous amount of unnecessary change control. And that’s before circumstances start changing, whether through budget pressures, a shift in priorities or something else affecting the wider portfolio.
There’s a balance between giving customers enough flexibility to respond to those changes and ensuring civil servants can demonstrate that they’re getting value for money. The commercial model needs to reflect the circumstances rather than dictate how everything must be delivered.
The key is to align contracts with the wider business outcome, giving suppliers the incentive to innovate and government the flexibility to adapt as priorities change. That way, individual contracts contribute to the success of the whole service.
About the Author
Rich Major
Client Partner
