We just spent the last week taking a moderately deep dive into the contract language of the Accenture and Chicago Strategic Sourcing engagement. We easily could have written another 30 pages and explained the best practices in entering into a gain-sharing or contingency-based sourcing engagement, but we did not get paid $250,000 like another firm did for their "paper consulting" (as a friend calls it).

A few reporters have already reached out to us with the following question:

Why did we do this analysis?

Well, for those of you who do not know, Source One Management Services, LLC, a procurement service provider, is the owner of the Strategic Sourceror procurement news and blog property. Joe Payne and I (William Dorn) are Directors at Source One, authors of this blog, and authors of the soon-to-be-published book, “Managing Indirect Spend: Enhancing Profitability through Strategic Sourcing”.

It’s not uncommon for us to chime in on a debated industry specific topic, nor is it unlike this website to offer free advice and best practices in procurement or contract negotiation.  From time to time, we also like to talk about worst practices in strategic sourcing.  It is not often that mainstream press covers a consulting engagement in strategic sourcing, so we took this opportunity to hopefully enlighten those unfamiliar with our industry about the specific details of this contract.

We don’t have an inherent animosity toward Accenture (Joe used to work for them and left on favorable terms) or Chicago (we have some very respectable clients there and enjoy our visits to the Windy City), and we have absolutely nothing to lose or gain out of this specific contract. We did not participate in the original bid (Cook County’s bid that is; the City of Chicago did not do one). In fact, we don’t actively pursue government contracts or work of any kind.   We even pointed out in the end that even though they could have done better, Chicago will likely receive some benefit from this engagement with Accenture.

What we do have is an intrinsic dislike for blanket statements that make public procurement efforts look bad, a desire to educate people on how contracts can be improved (especially when it affects taxpayers), and concern for anything that tarnishes the concept of what can be accomplished through the use of a true contingency based strategic sourcing contract.

Let’s start at the beginning. According to the Tribune:
"The city, however, didn't put the Accenture contract out for bid. The county had already awarded the company a similar contract after taking bids for the work. City officials said they saved time and money by skipping open bidding under an ordinance that allows City Hall to piggyback on the county's selection process."

So, first off, why would you not put a potentially multi-million dollar contract out for bid? Seriously, there is no excuse. This is not some rider on janitorial cleaning contract for some branch office located down the road. No, this is a major decision that affects what city workers will be doing for the next year and has a multi-million dollar, multi-year impact on individuals and companies that supply the city of Chicago.

"We wanted the best of the best," said Jamie Rhee, the city's chief procurement officer. "And when you look at Accenture's track record around the world, I am confident that is exactly what we got."
…"They are the company when it comes to this work,"

Really Mr. Rhee? You looked at their client list and said they have an excellent track record. How many of those clients did they actually perform strategic sourcing service for (not some other type of consulting services)? How many of those engagements were actually contingency-based? How were you able to make that judgment call? I have been in this specific industry for quite some time now and would really like to know the magical formula of just knowing that someone is the best. Having that magical power would surely shorten the length of the sourcing engagements I conduct for my clients.

And “They are the company when it comes to this work”. How did you come up with that? I can name 5 companies off the top of my head that have been doing the same thing, have similar client lists, and that have been in business longer than Accenture when it comes to this line of work. Blanket statements like that can give public procurement professionals a bad image, by showing favoritism and a general misunderstanding of what sourcing really is. At least we can hope that Accenture will teach the city that this type of selection process is a good way to make sure you are paying the most money for the least results.

Besides, as we have been demonstrating over the last week of posts on this topic, this is not a “best of the best” contract by any means. In fact, we will be pointing our future prospects to this contract as something to be on the lookout to avoid when they go to hire their own contingency-based sourcing firms. That is why we went into so much detail in our critique of this contract.

We have been preaching for almost 20 years that all contingency (gain-share) contracts and providers are not the same.  We want people to know that their are consulting firms out there that earn their fees on real, actual, implemented hard-dollar savings and they only collect their fees after those savings start to be realized, audited and documented.  There are consulting firms that do more than "paper consulting". 

By using this contract as an example, we were able to point out the exact flaws with other providers’ business models while simultaneously calling out our elected officials and appointed staffers when they make blanket statements about saving money knowing that the general public does not have enough expertise to challenge them.


Start from the first chapter:
Part 1 - An Intro to Chicago Accenture Sourcing Deal
Part 2 - Unclear Language and Term Definitions
Part 3 - Analyzing the Accenture Fee Structure
Part 4 - Tracking and Compliance
Part 5 - Resources and Responsibilities
Part 6 - Determining What Counts as Savings
Part 7 - Understanding Termination Penalties
Part 8 - Are Chicago Taxpayers Getting What They Paid for from Accenture?
Part 9 - You are Here
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William Dorn

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  1. Is there any post mortem on the success of the deal?