Any public sector organization seeking to rely on past performance must be able to overcome two conflicting realities.
To have any validity, performance evaluations must be systematic, fair and based on explicit criteria of which the contractor has notice.
Key considerations include creating legitimate performance measures and developing a reliable reporting mechanism. The contractor must also have some opportunity to respond to any assessment given.
As well, a major problem for most public sector organizations to overcome in introducing a formal contractor evaluation process is finding the human resources required to make the system work.
In principle, a comprehensive system of contractor evaluation is worth the time invested because a considerable portion of staff time is usually spent dealing with precisely the type of “bush fire” that a good system of evaluation will mitigate.
Unfortunately, such advice may be likened to the suggestion that the solution for the problems of the poor is for them to save more money — it does little to explain how.
Accordingly, nearly every level of government has considered incorporating into their bid opportunities a statement that the purchase decision will take into account prior performance. Actually enforcing that statement faces a series of major obstacles. There is little uniformity concerning such basic questions as to what standards of assessment should be applied, how the process of assessment should be carried out, and the consequences that should flow from a poor assessment.
The basic objective of any contractor assessment process is to provide an underpinning for enhancing the quality assurance aspects of the contractor-customer relationship.
One basic goal of performance assessment is to encourage a contractor to align its performance with the organizational goals and objectives of the municipality.
There is considerable reason to believe performance levels improve simply because the contractor realizes performance is being measured and evaluated.
Other reasons for performance evaluation are to lead to more informed decision-making about the quality of performance that can be expected of contractors both individually and collectively.
Measurement and evaluation can lead to the identification of hidden areas of waste and other cost drivers in the supply chain. By eliminating them, a municipality can reduce its order cycle time and may possibly be able to reduce inventory levels.
Risks can be identified earlier and proactive steps taken at a time when there is good reason to believe they may lead to problem avoidance.
Even if these improvements are never achieved, for obvious reasons, customers are concerned about the quality of service they are receiving.
In many cases, however, an anecdotal approach is taken towards this important question.
A more rigorous approach measures contractor performance against a standardized set of criteria that, so far as possible, are capable of objective measurement.
For best results, it is advisable to use only experienced assessors who have a sufficient range of expertise and information available to allow them to produce a complete picture of the municipality’s contractors.
Individual contractor performance is, of course, a critical consideration because it relates to the satisfaction of the needs of an individual ordering department within the municipal organization.
However, to enhance municipal operations on a consistent basis, it is generally necessary to approach contractor performance monitoring on a comparative basis.
Strategic planning is optimized when one moves from a known point of origin towards a predetermined destination.
Thus it is important to compare current results with historic performance.
In terms of public service delivery, the overall goals of performance assessment are to help ensure cost effective programs and source delivery and obtaining fair value for money.
To that end, in assessing the overall performance of a municipality’s contractors, the purchasing department needs to be consistent both in the way the assessment is written as well as how it is evaluated.
Stephen Bauld is a government procurement expert and can be reached at swbauld@purchasingci.com.
Some of his columns may contain excerpts from The Municipal Procurement Handbook published by Butterworths.
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