Procurement Perspectives: Competitive procurement using pre-set criteria

In procurement terms, we always say any government purchasing should be done in a fair, open and transparent manner.

We also say the contracts are generally awarded on a competitive basis with the successful contractor being chosen by reference to the best overall offer that meets the pre-set criteria.

The strong preference, at least in terms of municipal purchasing bylaws, is for a price-based competition, with the winning bidder being the contractor who offers the best acceptable price. Nevertheless, despite these principles, it has been repeatedly noted actual practice strays far from the original intent, not only at the municipal level but across the public sector generally.

Patterns of stepping outside the “normal” competitive procurement process are documented across Canada at all three levels of government and similarly in the United States.

This pattern is repeated in Britain, Australia and New Zealand. It remains relatively constant, despite fluctuation year-to-year in the number of instances, and regardless of changes in government. Even the underlying political philosophy of the government in office from time to time doesn’t have a major impact.

Another idea common across municipal government in Canada is to pool similar purchases wherever possible so as to achieve the maximum volume purchase discount.

There is also a strict prohibition against the subdivision of procurement contracts to avoid the application of rules that kick in once the dollar value of a proposed purchase passes a given threshold.

Many examples of bylaws provide that “no requirement may be divided into two or more parts to avoid the application of the provision of this bylaw.”

Repeated auditor general reports over the years and similar studies at all levels of government have pointed to many of the same causes as the explanation for wide-spread deviation from what is supposed to be the standard approach to public procurement. These include a lack of understanding of the applicable rules and how they are to be applied.

This limited understanding is attributed to inadequacy of training.
A further cause is the often limited degree of co-operation between the client and purchasing departments with respect to the conduct of the procurement process.

The goal behind the openness of municipal procurement is to allow as many contractors and suppliers of goods and services as possible to compete for municipal work.

Therefore, using pre-set criteria in all procurement documents is a critical part of the process.

This way everyone is bidding apples-to-apples on every contract, creating the fair, open and transparent philosophy.

It is argued the openness of the competition leads to the best overall price. Where a public tender is employed, it is assumed that publication will attract all available contractors who are available to do the offered work.

Nevertheless, the process can be frustrating for those contractors. I spoke recently to a contractor who came second seven bids in a row. He explained he has been bidding against 10 to 15 bidders for government contracts and it was no longer worth his while to continue bidding for municipal work.

On the other hand, I have also seen very large government contracts (over $50 million) that attract only two or three bidders due to the onerous conditions and risk transfer to the contractors in the tender and RFP documents. These two extremes provide evidence that consistent and fair criteria must be applied to every contract document issued by government agencies.

It is also extremely important that the criteria be applied the same way to each bidder by the owner. The very fact we have so many lawsuits and disputes every year is again proof the system in general needs, at the very least, a complete review, if not an entire overhaul.

Maybe with the newly elected government this review of government procurement will finally take place across the province.

Stephen Bauld is a government procurement expert and can be reached at swbauld@purchasingci.com. Some of his columns may contain excerpts from The Municipal Procurement Handbook published by Butterworths.