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Vendor management, one step removed


Procurement flexibility

Ask team leads and contract owners how they monitor vendor budget.

  • Bad: The state has little or no regular visibility into how the vendor is billing.
  • Meh: The state has visibility into how the vendor is billing but is uncertain how to manage if a vendor is burning too hot.
  • Good: The state has regular conversations with the vendor about burn rate.

What's this about?

What makes up a good contract between a vendor and a state? In this conversation, Princess Ojiaku and Carrie Feher talk about how to steer the vendor-state relationship toward a good place and how to get it back on track when it's not.

Lesson outline

Active listening: A conversation on vendor management (~1h, solo)

This lesson's material is a conversation between Carrie Feher and Princess Ojiaku. In this conversation, we explore what vendor management might look like in an agile context. A full transcript is (with a few "ums," "ahs," and flubs removed) is provided below, if you'd rather read the conversation.

A conversation about agile vendor management.

Listen actively

As with previous conversations, listen or read actively:

  • Keep a thread running in the back of your mind regarding your own projects, and turn up your “bullshit filter.”
  • Pause the conversation at any point that you hear something that makes you think about some aspect of a project you’re working with that makes you… wonder.
  • Reflect and take notes on the themes and ideas discussed to share with your group. In an active listening/reading process, it is this reflection, not the content itself, that is most valuable.

The process of listening actively takes time. You can listen closely on a first pass or have a first listen on a walk, then sit down and do a second listen where you take some notes. Do what works best for you.

A conversation on vendor management

Princess Good morning, my name is Princess Ojiaku, and I’m an innovation specialist at 18F. Today we’re going to be talking about vendor contracts and budgets and how they can go right or maybe even wrong. I’ve asked my colleage, Carrie Feher, to share her experience with us so we know what we can look for when we’re asking states about their vendors. So Carrie, can you tell us a little bit about what you do at 18F and your background and who you are?
Carrie Sure! Hello, my name is Carrie Feher and I’ve been at 18F for almost 2 years now. and I’m an account manager at 18F. And that basically means I am the liason for our partners, so I do a lot of business development initally with our partners to bring them on board. And I work with with them really closely to work on scope of work and get our agreements going and set the teams up and do some staffing for the teams. And make sure that even during the projects that the internal team health of 18F is healthy and that the partner team health is healthy and that if we do an assisted aquistion (or acq consulting/aquistion consulting) that all the different internal teams of the vendors and all of that is really healthy. So I’m not necessarily part of the internal team to build something but I’m part of the team that works with each separate team to make sure team health is really good. Before that, I worked at CMS in Medicaid for 8 years. So I’ve actually been a federal employee for 10 years as of December 2nd. SO I’m really proud of that – I love being a federal employee. I feel like I can make a lot of connections between the role of a state officer and the role of an account managet at 18F. So that’s why I cwas really excited to do this. There’s a lot of comparison between what I do as an account manager and what someone would do as a state officer as far as partnernships and bringing people along where they need to be to really make some significant changes and difference in how they do their work, to really see value. I feel like my experience both at Medicaid and in having managed some state officers for awhile as the deputy director for some time and then also being an account manager for a couple of years now – y’know I can draw on some of those experiences. So hopefully some of that can come out today. (2:29)
Princess Yeah, I can see the parallels between managing accounts – even though it’s not called “account manager” you’re almost doing the same thing – you’re looking at state contracts and kind of approving or denying those. So let’s start with the vendor-state relationship. If you’re trying to find out how something’s going with a vendor-state relationship what should you do? What kinds of things should you look for and how do you probe at that?
Carrie Right. So as with any relationship, you need to form trust first. So a state, as with anyone, isn’t going to give you all of the information and give you what’s behind that curtain until you build that trust and earn the right to hear their story. So you will know some information based on the documents you have on hand as a state officer. Obviously you will know who the vendor is so that will give you some indication – is it a small vendor or a large vendor? You’re going to know how long they’ve been with that vendor, you’re going to know the size – like how much money they’ve spent on that vendor. Those will give you some indications, which we’ll talk about later, which could be some red or green flags. But to really know how the relationship is, you need to build a relationship, as a state officer, with the state to know is it a healthy relationship? is it a partnership? Or does the vendor sort of own the state in the sense of – if you ask the state a question and the state defers to the vendor for the answer – does the state not really own their system, does the state not really own their mission, does the state not really own their vision for where they’re going and their prioritization, or their data for that matter. So its improatnt for when a state officer is talking to their state that they really understand what that dynamic is between the state and their vendor or their vendors, obviously they could have multiple vendors. So you wanna understand, is it a healthy partnership? Is the vendor bringing them along, or is the state bringing them along, or is it very much that they’re working together on this? But the state should be the leader. If that’s not the case, that could be a red flag. But understanding that relationship is really the first step in this because most state officers are going to inherit where the state already is with a vendor. It’s not going to be new. So the state officer is going to get the state, and the relationship’s already going to be there, and so understanding what that is is really important. (5 min)
Princess Yeah it sounds like you might not be able to gather a lot from the documentatation even if you have it in front of you. You have to build that relationship and ask questions to get at where the staate’s at and look for red flags like the vendor’s answering the questions. So you’re building one relationship to look at another one.
Carrie Right.
Princess So I guess let’s turn to the documentation. So if we look at a contract between a vendor and a state, that’s one place were you could look to see what kind of relationship they have and how it’s going. But are there particular things to look for in a contract to indicate that there’s a red flag?
Carrie There’s definitely some things. I know we’ve talked about this before in some documents we’ve shared with CMS. So just to sort of reiterate on some of these things that I know some state officers do know. And I know state officers do look at contracts, but just to highlight some really big ones that are red flags that I do feel are important and I’m pretty sure CMS is definitely aware of these things and they don’t like to approve these but I think they’re really imporant to note, just to see if a state is really stuck in some of these. So osme big ones are obviously these massive, multi-year contracts. We don’t want to see those. We don’t want to see priopritary databases; we don’t want to see states that don’t own their data. We don’t want to see states that don’t own their stuff. We don’t want to see them in these lock-ins and no-wiggle-rooms, where they don’t have insight, there’s no partnership, they’re not being taught anything. These big contracts are locked in where they can’t do anything – they’re just going off and building something, coming back, flipping a switch, and it’s not working. And they’ve spent millions if not billions of dollars and it doesn’t work and they’re kind of stuck. I know that CMS is very aware of that and they’re obviously pullling away from that. But if a state officer inherits something or if they see where there’s iterative funding [of] these contracts and they’re doing these modifications…even with these subtle modifications, it can turn into these really big multi-year contracts. It’s just important to look for some of these things.
Princess So I know we wanna avoid those kinds of things. Are there signs in a contract that things are going well, or “green flags,” if you will? what’s good to see?
Carrie Some good things to see…I know CMS does look at RFPs, which is excellent because obviously that’s where you can fix things. Once the contract is already done, it’s very difficult to fix it then. So it’s important to mention that it’s good to look at RFPs. Contracts are really telling, but RFPs is where you can actually do something about it. So when you’re lookind at an RFP, which is the step beforehand, obviously, states need to own their own product. They need to own their own data, so it’s important that that’s spelled out there. You don’t want to see a list of requirements, you want to see…are they focused on what the goal is? What is it that they’re trying to do, not these lists of requirements. I’ve learned this from working at 18F really well, and it’s proven to be amazingly effective…instead of having these 400 page RFPs of requirements…how would you possibly know that? You need to have good user research and let that be your guide. So just have what it is that you’re trying to get to, but let it be really concise and have the goal in mind. Let there be a good user research guide in there so you’re not just having them go off and build for 2 - 4 years and then not see anything. So breaking it down into small chunks that are buildable, that are doable, making sure that you’re testing early and often, that you’re building something attainable, that you have working software in weeks or months, not in years, which sometimes I know is what they’re seeing. And like I said, that you’re having some user research in there. Also I think it’s important to mention that there’s partnerships with the vendor, that there’s a lot of transparency in the development along the way so you know what’s the process with the vendor. I’ve just learned that as well and I don’t know that states or CMS has been offered that same transparency in the builds, which I think has hurt the success of some of these builds – that they are going off in this black box and not really knowing what’s going on and trusting that the vendor’s doing what they say they’re doing. But there’s not a lot of collaboration in the development. So we don’t know if they’re testing early and often, we don’t know if there’s user research and so then things don’t work out they way that people hope. I think everyone’s doing this in good faith, but then it doesn’t work out and there’s a lot of dollars on the line. So vendors should not be going off and building and coming back and saying, oh this doesn’t work! There needs to be more control over that and I feel like state officers knowing this can really help and encourage their state to have more ownership over this and be more involved in that. How the team works and partners with the vendor (and even internally at the state) can be a real red or green flag as to how they’re partnering, or if they’re too siloed, or if the users are really considered in all of this. But if you start at the RFP, that’s why CMS asks to look at those. Because CMS pays 90 cents on the dollar for DDI or 75 for the MNO and so that’s a huge investment and CMS has a huge stake in making sure these are successful. Which is different from what I do in account management. They have a lot more leverage to be able to approve these becaue they’re saying, let’s invest in this. They’re more of an investor, which is really powerful in a good way to make some influence and some real strategic decisions and prioritizations and changes. (11:15)
Princess Yes, I love the way you’re thinking of them as an investor. It’s like, should I put money into this? Can you show me you have ownership over the process? Can you show me that software is going to be delivered and you’ll be able to check on it as it’s going on? So how might state officers get these good contracts going with the state. Should they ask questions like that? How do thery talk to the state when they’re trying to pick the vendor?
Carrie Right. It can be challenging. Medicaid is a state-run program. It’s important to mention that right here because they have their own internal way of doing contracts. There’s internal state silos. State officers sometimes have to touch different silos within a state to really be effective. And so touching that contract silo within a state can be hugely efefctive but obviously equally difficult. So that can be worth the energy to really form a relationship with the contract part of a state. And so I say…not to discourage the state officer from really reaching out and and trying to make a difference and explain all the things that we’re talking about on this call today…which is the reasons why you want to look at the RFP and make sure that you’re looking for these green flags and not these red flags. that you’re writing these RFPs in a way that is smart. The state also has to match that 10 cents. State budgets are super-tight. The state wants it to be successful too. States don’t want to waste money either – they don’t have money to waste. I say that to say – states want good value for their money, so they are open to doing things better. And sometimes framing it in that way of – you keep doing this the same way and we’re still getting the same thing and it’s not working. And here, let’s do it this way. This is a proven way of success that we’ve seen – can be pretty powerful. And doing it in small chunks and seeing success and building off of that is a really effective way to bring people along. It’s not expensive. You’re taking small chances, small risks. You’re not asking people to bite off big chunks. So I feel like that’s a really smart way for state officers to start. And kind of go with that and see if that works. And that’s exactly how we work at 18F. So I feel like we have demonstrated that, even when we work with CMS on other projects where we can start small and build off of that success. And that’s how you build trust as a state officer with your state.
Princess I love that. That’s amazing. Thank you. Well, it sounds like a difficult process, but at the same time you can meet states where they are and feed them a little bit and say, “Ok, well what can you do to make this better. This isn’t working.” I think it’s really important work to do despite being difficult and I really thank you for sharing this with us today. It’s really great insight and I hope it’s helpful to state officers. I just wanted to ask if you had anything to close us out with.
Carrie Yes! I would just like to mention that state officers have a very difficult job. I have seen it first hand. I worked in Medicaid for 8 years. I worked with the state officers. I know the struggle is real, as they say. Mediciad is political, I understand that. It is difficult to have these conversations. It is difficult to do this job for so many reasons. It is so unique. You do have to meet the states where they are. They do have their own challenges, both from a fiscal standpoint to their own resource limitations. So having said all of that, even if you can just take some small, incremental changes –tiny, tiny improvments can make a big difference over time. And I think that is the message I want to get across – meet the states where they are but then try to build off of that. Small changes are better than no changes. I think it can be really rewarding. State officers have a big lift and they have really important jobs. Sometimes it can feel really thankless if you’re in an enviroment that is state-run and is politcal and can be really un-resourced. But finding those small wins can feel really really good and seeing the bigger picture in how you’re part of that is really powerful. So thank you for letting me do this with you I really appreciate it.
Princess Thank you so much Carrie! It remind me of – here at 18F we like to say that “We’re doing the best we can with what we’ve got” and it sounds like that’s what we close with. Thank you.
Carrie Absolutely. That’s great.

Sharing experience (30m, small group)

Meet with your small group and connect what you learned in this lesson to situations you’ve seen with your state projects. Consult the notes you took throughout the lesson and try to link them to a story that you can tell about a particular project. It’s probably useful to do some brainstorming on this before you meet with your small group to trade stories.

When you get together with your small group:

  1. Share your stories with each other.
  2. Figure out which ones are the best candidates for a case study or use case that would be helpful to share with other state officers.
  3. As a group, choose useful stories and write notes on how they link up with the concepts shared.
    • Include in your notes:
      • When did this story take place?
      • What were the events or background leading up to this story?
      • How did this story demonstrate an ideal or non-ideal situation?
      • What specific principles from the lesson does this story illustrate?
      • If the story shows an ideal, what were the conditions that made it work? How did it fit with the principles shared in the lesson?
      • If the story shows a non-ideal, what could have changed to make it better?
  4. Share these notes with the larger group when you meet.
  5. After discussion with the larger group, document these stories and their connections to the lesson to help other state officers understand how this lesson’s concepts apply to their work.

Discuss in community (1h, group)

You will need someone to volunteer to take some notes. Whomever was born after (but closest to) January 20th should be the note taker today.

  1. Check in. (5m timer) While people are arriving, check in with each-other. How is everyone doing? Take a moment to share something positive from the week, either at work or at home.
  2. Centering. (3m timer) We jump from meeting-to-meeting and there’s nothing healthy about that. You will get more from the next hour if you’re here. A simple breathing exercise (breathe in on 4, hold 4, exhale 4, hold 4) is a good way to clear your mind and body. There’s lots of resources online (4m20s) regarding simple centering exercises that you could investigate and use at the start of group conversation.
  3. Focus. (1m timer) Take one minute to identify one or two insights this conversation led you to. Make a note or two in your notebook so you can be focused when you share out.
  4. States and vendors. (30m timer) As a group, first share out which aspects of the conversation you found to be most interesting in your reflections. Then, after you share out which dimensions of vendor management inspired reflection on your professional practice, go back around and take a minute or two each (round-robin) to share why those ideas triggered insight. This should take roughly 30 minutes total, and try and create space for everyone to share out.
  5. Transformation. (15m timer) Were there themes that you saw emerge from your insights? Commonalities across projects? Identify what you saw as a group. Then (and more importantly), do you have any thoughts about your process with states, and how you might transform your process so as to improve outcomes? The note taker should try and capture the group’s thoughts regarding themes and process transformation for sharing back out to the group/community.

In the guides

This lesson is the beginning of a journey. If you're interested in learning more, there's material in the 18F Derisking Guide that you'll want to check out.

From the Federal Field Guide:

From the State Software Budgeting Handbook:

Wrapup (5m, solo)

Take a few minutes to share your reflections on this lesson.