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Sham Contracting. What, Why, How?

Written by Barbara Rebola

22 June 2021

As observed from the procurement evaluator’s desk

Law 1: The Law of Poor Planning

“Rushing to market always ends in tears”

  • Business stakeholders demand impossible timeframes
  • Requirements are rushed and poorly defined
  • Market engagement is skipped or compressed
  • Evaluation criteria are developed without proper testing
  • Governance approvals are assumed rather than confirmed

Real-world impact: Emergency extensions to incumbent contracts while the tender is re-run

Law 2: The Law of Stakeholder Chaos

“Everyone becomes an expert after the tender closes”

  • Key stakeholders aren’t identified until too late
  • Requirements gathering excludes critical users
  • Subject matter experts are unavailable during evaluation
  • Senior stakeholders override evaluation outcomes
  • End users reject the selected solution

Real-world impact: Selected suppliers fail to get final approval, forcing process restart

Law 3: The Law of Requirements Ambiguity

“Unclear requirements guarantee unclear responses”

  • Business needs expressed as solution specifications
  • Mandatory requirements that aren’t truly mandatory
  • Inconsistencies between sections
  • Evaluation criteria that can’t be objectively scored
  • Weighted criteria that don’t reflect true priorities

Real-world impact: Unable to differentiate responses or defend scores

Law 4: The Law of Budget Denial

“The budget exists in a parallel universe to requirements”

  • Budget set before requirements are understood
  • Market rates not validated before tender
  • Internal costs excluded from calculations
  • Implementation costs overlooked
  • Lifecycle costs ignored in favor of purchase price

Real-world impact: All responses exceed budget, forcing scope reduction

Law 5: The Law of Evaluation Dysfunction

“We’ll figure out how to evaluate when responses arrive”

  • Evaluation teams assembled after tender release
  • Scoring guides developed after responses received
  • Evaluators not trained in scoring methodology
  • Inconsistent scoring between evaluators
  • Insufficient time allocated for evaluation

Real-world impact: Evaluation delays and scoring challenges

Law 6: The Law of Incumbent Advantage

“The incumbent knows more than we do”

  • Current state poorly documented
  • Incumbent-specific terminology in requirements
  • Data gaps in market briefings
  • Transition risks understated
  • Incumbent knowledge not effectively transferred

Real-world impact: Non-incumbent suppliers can’t compete effectively

Law 7: The Law of Risk Amnesia

“Previous project failures are ignored”

  • Known delivery risks not addressed in requirements
  • Previous implementation failures not analyzed
  • Standard risk matrices copy-pasted
  • Risk allocation not market-tested
  • Contract terms don’t reflect real risk profile

Real-world impact: Selected supplier fails to deliver, repeating history

Law 8: The Law of Probity Paralysis

“Process trumps outcome”

  • Over-correction from previous probity issues
  • Communication channels unnecessarily restricted
  • Clarification opportunities limited
  • Innovation stifled by rigid compliance
  • Commercial opportunities missed due to process fear

Real-world impact: Best value solutions excluded on technical grounds

Law 9: The Law of Governance Bypass

“Approval bodies become rubber stamps”

  • Governance bodies engaged too late
  • Approval requirements not understood
  • Documentation not fit for governance purpose
  • Risk appetite of approvers not considered
  • Politics overlooked in planning

Real-world impact: Last-minute governance rejections

Law 10: The Law of Contract Amnesia

“The contract is remembered after signing”

  • Contract outcomes not linked to tender requirements
  • Performance measures not properly tested
  • Contract management resources not secured
  • Transition requirements understated
  • Contract terms conflict with proposed solutions

Real-world impact: Unenforceable contracts and poor supplier performance


The Procurement Meta-Law: Political Convenience

“Procurement gets blamed for business indecision”

The fundamental failure underlying all these laws is the use of procurement processes to solve non-procurement problems:

  • Delaying difficult business decisions
  • Avoiding stakeholder conflict
  • Deferring budget discussions
  • Managing internal politics
  • Avoiding accountability for outcomes

Using These Laws in Practice

  1. Use as a tender planning checklist
  2. Build into procurement quality assurance
  3. Include in briefings to business stakeholders
  4. Incorporate in procurement team training
  5. Reference when pushing back on timeframes

Warning Signs You’re Breaking These Laws

  • “We’ll firm up the requirements during evaluation”
  • “The incumbent can help us write the specification”
  • “We can start evaluation while waiting for approvals”
  • “The business stakeholders are too busy to engage”
  • “We can fix any issues during contract negotiations”

Remember: These laws manifest because procurement often carries the burden of business dysfunction. Success requires the courage to address these issues before going to market, not hoping they’ll resolve during the tender process.

Additional REsources

A Few Other Resources We’ve Created for Our Customers

The 10 Immutable Laws of Tender Failure

As observed from the procurement evaluator's desk Law 1: The Law of Poor Planning "Rushing to market always ends in tears" Business stakeholders demand impossible timeframes Requirements are rushed and poorly defined Market engagement is skipped or compressed...

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2 Comments

  1. Sue

    Hey Barb, I saw you at the WALGA Procurement Forum this month. Thank you so much for bringing this to our attention. We had NO IDEA our cleaners were sham contracting, and guess what? They were!

    Reply
  2. Barb Rebola

    So pleased you caught it! Thanks for letting us know too, it always helps.

    Reply

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