We just witnessed one of the most spectacular examples of where choosing a service provider based on the lowest price can be a really bad idea. The Obama administration’s recent about-face in contracting with Accenture to take over for the incumbent CGI on the beleaguered healthcare.gov website is a vivid reminder that low price doesn’t necessarily end up being low cost.
Accenture is the premier firm in large-scale systems integration. So we have to wonder: Does the Administration wish they had picked Accenture to begin with?
One has to feel sorry for CGI, for the healthcare.gov build and launch is notorious for the government’s role in poorly scoping and poorly managing the project. So it’s likely that any firm might well have come to grief. Still, this is really just a simple story of penny-wise and pound-foolish decision making.
Government procurement decisions tend to settle on past experience and low price. Accenture is the most-respected provider for complex, large-scale SI projects; but as anyone that has bought services from Accenture knows, its expertise comes at a premium. Yet when a project absolutely has to succeed, the price is worth a premium.
Lesson learned and buyers beware!
If you select a service provider based on price and terms/conditions, you may walk right past the company that would be your strongest partner in delivering the results you want. Perhaps even the government now realizes the hazards of low-cost bidding. When it really matters, buy the best.
