Let’s talk procurement
From the June 2019 print edition
Suppose your company needs to hire someone. You know you need the employee to have specific education, training and experience. When you hire this person, you have some idea of what that person’s salary is likely going to be because you have industry standards and expectations. The company human resources department is contacted and you give them this information. They post the qualities the person should have and ask applicants to apply. In a normal HR scenario, they might ask the applicants to submit a cover letter and resume, but in this case, the HR department decides they want to do something different.
They ask applicants to provide a cover letter and their resume, but also some examples of the work they have done, references and salary of previous jobs. They also ask applicants to describe, in a few pages, how they might approach the job, what steps they might take to do the work, a schedule of how they are going to go about the job, and what key experiences they bring that are going to make them the best fit.
Even though the HR department knows what the salary should be, they choose not to say anything and, instead, applicants are told to submit their salary offer in a separate envelope and that only the best candidates will have their “salary envelope” opened.
Several people apply for the job and, because the skills sought are pretty specific, most people have similar, comparable, experiences. They all score fairly close to the same. There is no job interview—imagine hiring someone without ever meeting them in person!
When the salary envelopes are opened, the most points go to the person who offers to do the job for the lowest salary. All else being roughly equal, the best candidate has to offer to do the job for the least amount of money.
This sounds absurd. Who would hire someone this way? We do. This is how governments hire architects and engineers, every day.
Applying for a job (project) can cost a firm tens of thousands of dollars in staff time and printing costs. It is not uncommon for the collective effort of a group of architects to spend $500,000 in pursuit costs to win a $50,000 contract (25 firms, spending $20,000 each). And for that award to then come down to not only who is best, and who is not only cheapest, but willing to play the game.
What game, you ask? What if, in the HR example above, the person started on the first day and began asking for extras and bonuses to do the things you thought were part of their job: taking turns making coffee, or sharpening their pencil, or staying 5 minutes later to meet a deadline. What if you found that once you’d hired the person, firing them for this sort of behaviour was more expensive than just paying them the extras? And what if, in paying them the extras, you found that the total cost was what you’d originally expected the salary to be anyway? Except that you have the aggravation of constantly modifying their salary (change orders) every time something comes up.
If you hire someone, don’t you want them to bring their best ideas to the table, come prepared to do their best work, and collaborate to achieve success? Often the procurement department of a city or government agency has no understanding of architecture or engineering, and once the original contract is issued, they have no further involvement. In other words, procurement departments are often disconnected from the project itself.
A better way
There is a better way. And it’s just like we hire employees today. We post a job (issue a request for qualifications) and ask applicants to submit their information and a cover letter and tell them upfront what the salary range is (professional fees) based on published and accepted industry standards. We sort through the best candidates and select the top few. We invite the best candidates in for an interview: ask the most qualified to come forward, presenting their arguments for why they are the best team, and what they can offer to make the project a success. We offer the best candidate the job and negotiate a fair salary (professional fee) based on the published rate. If we can’t come to an agreement on the salary (fee), we move on to the second-best candidate. This is called quality-based selection.
The way procurement is done today undermines best value. Firms are incentivized to compete and offer a low fee to get the job, then provide lower levels of service, or beg for extras to deliver the services the client actually expects, exploiting loop holes in the RFP. This creates antagonism between client and architect, undermines our skills at effective project delivery and cohesive problem solving. Procurement departments try to manage this process by inserting contract language into RFPs that undermine the public interest, drives down fair competition and further alienates the architect from being able to do the best job possible.
If we want to achieve the better built environment we aspire to, we need to change how we hire the services that deliver lasting value. And as architects, when we see a bad RFP, we need to call out our concerns to procurement departments, elected officials and, when needed, refuse to participate in processes that undermine our role in creating the safe, healthy, equitable, beautiful, built environment that the public expects. SP