The Market for Lemons

… and why public sector procurement drives down quality

Economists have a term for the way that quality is driven out of markets where purchasers don’t have a way of measuring quality. It’s called ‘the market for lemons’

Take web-accessibility for instance: Every governmental body needs to have it. Very few know what it really means – but they put it in their procurement documents as a must-have.

IT project management in highly disrupted organisations is a nightmare at the best of times. Getting the core functionality negotiated and delivered with suppliers who have won the bid on price is hard enough as it is. Management of these projects is often done by people who wouldn’t have the expertise to make a judgment on whether a website is accessible or not.

The rational supplier will, therefore, always say that their sites are accessible and go in with a low-ish bid in order to win the business.

They will then deliver a site that isn’t accessible (because this would require investment in expertise and training – as well as hard-to-find designers who understand WCAG compliance). The customer won’t pull them up on it because they’re to busy scrapping with the supplier to even get the html editor to work in Firefox. And any company that has invested in the expertise needed will lay off the staff that know this stuff because they aren’t earning their keep.

Ask a Sharepoint advocating IT manager if it’s accessible – they will say yes. But it usually isn’t.

Until governmental bodies can procure services in a human way – building relationships with trusted individuals within their supplier chain – this decline in quality will continue unabated.

2 thoughts on “The Market for Lemons

  1. This is a very interesting piece. The author raises a very reasonable point.

    How can governmental purchasers, who are often constrained, albeit by accident, and as a result of causes which may include both policy and statute, to avoid the trap described?

    This author makes the point in the context of accessibility on a website, but the same point could be made for any non-commodity purchase, particularly when professional services are required.

    What is the incentive for the service firm? As the author points out, it is often to avoid carrying professional staff, as overhead, when the customer is often not qualified to evaluate fitness in any case.

    What is the incentive for the governmental purchaser? Again, as pointed out, it is often not what one would expect in a common-sense sort of way, but rather slanted toward lower cost, even if that might carry an increased risk to the fitness of the final product for intended use.

    Good thought. Thanks for sharing.

    Alex

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