The Relational Divide: Why CGI HealthCare.gov experience reflects more about the contracting process than the company itself by Andy Akrouche

I read with interest the January 14th Wall Street Journal article “Accenture to Take Over Fixing HealthCare.gov Website” by Stephanie Armour, in which it was announced that CGI’s contract with the Federal U.S. Government would not be renewed.

Even though the loss of the contract was small in terms of CGI’s overall revenue, what likely stings the most is the perception that blame for the highly publicized challenges with the new website was the sole responsibility of the Montreal-based consulting firm.

But does this conclusion reflect the true story?

One of the biggest lessons I have learned over the years, is that when faced with the opportunity to enter into a true partnership based on a shared mission and purpose there really is no other alternative. You must choose to collaborate.  Unfortunately and as repeatedly demonstrated by so many initiatives in both the public and private sector, collaboration is an afterthought when it comes to the contracting process.

In the following excerpt from Relationships First: The New Relationship Paradigm in Contracting, I talk about why initiatives – and more specifically relationships – such as the one involving the HealthCare.gov website go off the rails:

Why Do the Majority of Outsourcing Initiatives Fail?

Despite industry’s best efforts to modernize and professionalize sourcing practices, project management and service delivery methods, 70% of significant business relationships or large projects do not meet their objectives.

This is because organizations in both the public and private sector continue to rely on outsourcing partners who provide services based on a static requirement that is established at a specific point in time. Relationships that are structured around this approach inevitably fail because a ‘single transaction’ approach does not allow for the natural evolution of needs and stakeholder capabilities.

These issues are further exacerbated by ‘futuresourcing’ which takes place when new service requirement capabilities are introduced in the absence of client or vendor experience.

Even with the promise of significant up-front reductions in operating costs, vendor responses to ‘futuresourcing’ bid requests are speculative and often tied to a ‘let’s win the business first and worry about making it work afterwards’ mindset.

As discussed in Section I, the failed relationship between the U.S. Navy and EDS demonstrates the folly of this approach. Yet it continues to be the norm in the industry.

In order to reverse this trend, we must change our mindset around contracting and contract governance. We have to think in terms of being ‘relational’.

In my book I go into great detail in terms of what it means to be relational.  For the purposes of this post I will say that without a relational framework collaboration is a virtual impossibility.  And this is where the challenges with the creation and launch of the HealthCare.gov website likely originate.

The fact is that this was an extremely complex undertaking, which meant that traditional contract governance models would prove to be ineffective in creating the kind of collaborative framework that would have been necessary to address the website challenges in a timely and cost effective manner.

The real question going forward is simply this . . . has Accenture been set-up for success or failure?  If the same engagement process that was used to originally create the relationship with CGI was also used to select Accenture, how can we expect a different outcome?  This of course is the real story behind the headlines.

Over the coming weeks and months we will likely learn the answer – at least in part – to this last question.

CGI post HealthCare

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2 thoughts on “The Relational Divide: Why CGI HealthCare.gov experience reflects more about the contracting process than the company itself by Andy Akrouche

  1. Andy
    I agree with your observations. As we both know, ‘collaboration’ requires both parties to make the necessary investments of time, resource and attitude. And you are absolutely right that many contracts today have to establish governance principles that facilitate the management of change and uncertainty.

    Suppliers are often frustrated by the hands-off approach of their customers, who seem to think that once the contract is signed, they simply need to stand back and watch. Public sector is not alone in this weakness, but it has perhaps been more prevalent. I could write extensively on this topic alone, but the real point is that smart organizations are waking up to the fact that they must explore a supplier’s post-award contracting and governance process and skills before they get into contract with them.

    CGI management has not been among the leaders in its industry in understanding the importance of contract and commercial skills. Perhaps this experience will change that. Accenture, on the other hand, has been a major investor in developing the contract management function and process; it recognises that this is key to its own margins, but also to successful project delivery and customer satisfaction.

    Tim

    Like

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