Municipalities lack comparatively bottomless resources of more senior levels of government.
They also have less capacity to spread risk and cost. Despite declining real revenues, the demands upon them have been increasing steadily in recent years due to the practice of downloading.
Many municipalities must somehow deal with the problem of an aging infrastructure, while at the same time maintaining a level and range of services consistent with public expectations.
In such an environment it is becoming progressively more necessary to drive if not hard bargains, then certainly economical ones.
To do so, municipalities must learn to borrow from the lessons learned by the private sector whose tighter financial constraints are a closer approximation to their own, than are the loose constraints applicable to provincial and federal governments.
The process of materials management — the adoption of a strategically focused approach to procurement that I have been advocating for the last 30 years — offers municipalities their last best chance, at least on the expenditure side of the income statement, to meet these conflicting demands.
I have also mentioned over the past three decades that there is no single magic formula that can be applied in adopting such a system. Rather, it requires a minute examination of individual practices to see which best tend towards maximizing value-for-money.
To that end, established practice needs to be put under the microscope, and subjected to an exacting and painstaking cost-benefit analysis. Not only the procedure and approach, but the individual purchase decisions (and the proposals that underline them) also need to be subjected to a systematic process of critical review.
Adequate resources need to be invested in procurement and control to make sure that value is maximized. It would be going too far to suggest that a more scientific approach to procurement is the only thing that needs to be done. It is nevertheless a critical step to be taken.
When I worked for the government, I would receive regular complaints from the business community that it is too difficult to be a supplier to government. Often, there is more than a degree of merit in these complaints.
What is perhaps not so well understood is the fact that many of the procedures necessitated by the open, fair and transparent contracting process actually make the government procurement system far less competitive than it otherwise might be.
The preparation of a tender or an RFP takes a considerable amount of time and effort. The more exacting the requirements of the tender, or RFP, the more costly it is to participate in the process.
From the time that we were small children, we were told that time is money. Yet, for some reason, the basic principle of commerce is often forgotten by the people who put together tender instructions, which require a contractor or supplier to provide page after page of information.
What I am told that is particularly galling to many suppliers is the fact they are being asked frequently to provide precisely the same information as they just provided a few weeks before with the request to another tender.
All other options being equal, when faced with the choice of perusing a municipal contract which entails filling in copious questionnaires and reports, or a private sector contract which requires the provision of only minimal information, it is a fair bet which of the two options the average salesperson would prefer.
Where the competition is open to any supplier or contractor, there is even less reason to compete. Undoubtedly, there are some suppliers and contractors who will simply decide that municipal and other government business is just not worth the effort.
There are diminishing returns to be gained from the continuous pursuit of any objective. Discouraging qualified suppliers from competing for municipal work by making the contract so open that they despair of any chance of eventual success defeats rather than serves the cause of openness.
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.
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