The 90-Day Service Desk Renewal
A government agency's IT service desk contract with an incumbent ends in 90 days. The service supports 4,200 staff and handles 1,800 tickets a month. Procurement policy requires a competitive tender with a minimum 120-day open period and three bids for contracts above $500,000. The incumbent's renewal price is $1.9 million, 31% above the approved $1.45 million budget. The agency has no transition plan and the incumbent holds the knowledge base. The CIO asks for a sole-source extension outside policy, arguing service continuity. Finance says no additional funds. A union agreement requires 60 days' consultation before any staff transfer. The agency's supplier policy says exceptions need documented risk acceptance by the accounting officer and a remediation plan.
1. Evaluate the CIO's request for a sole-source extension. What should the agency decide, and why?
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The request addresses a real continuity risk but cannot be approved as an open-ended sole-source extension. The policy allows exceptions only with documented risk acceptance by the accounting officer and a remediation plan, so the decision must be framed as a controlled exception, not a bypass. The facts also show the agency is poorly prepared: no transition plan, incumbent-held knowledge, a 90-day window against a 120-day tender period, and a price 31% above budget. A short extension may be justified to protect the 1,800 monthly tickets and 4,200 users, but only if it is capped, priced within the approved budget or with identified savings, and tied to knowledge transfer and a credible tender launch. The union's 60-day consultation can run in parallel. The accounting officer should record the residual risk and the conditions; otherwise the agency is simply converting a planning failure into an unmanaged procurement dependency.
2. What conditions should be attached to any approved extension, and how should the agency handle the budget gap?
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Conditions should include a fixed end date shorter than a full contract term, a cost-reduction or benchmark clause to bring the $1.9 million demand toward $1.45 million, open-book cost transparency, mandatory knowledge transfer and documentation, named transition milestones, service continuity and exit assistance, and a published tender timetable. The agency should also require monthly assurance against ticket handling and knowledge-transfer completion. On the budget gap, the agency should not assume extra funds; it should negotiate scope reduction or productivity savings for the extension period, validate the incumbent's price build-up, and reserve any contingency only with finance approval. If the gap remains, the accounting officer must document the affordability risk alongside the continuity risk. The extension should be treated as a bridge with measurable exit criteria, not as a renewal by default.