Distinct problems in public procurement

As I travel throughout North America speaking to government procurement people I am usually asked the same four questions.

The general feeling is that government procurement is paying too much for what they are buying. The second concept is that they pay more than can be justified on a cost-benefit basis. The biggest issue is the feeling that they are allowing uncontrolled cost overrun, often for an indefinite period; and end up buying something that is simply not needed.

I find that all of these examples possess one common characteristic: a lack of strategic foresight in the discharge of the procurement function. A shift from bare procurement towards a more strategic materials management-oriented approach requires the introduction of procedures and other controls to mitigate the risk of such over-expenditure. As I have indicated in previous articles, to have any change of being effective, such an approach must be systematic in both design and application, and be focused on strategic goals. It is also necessary to employ the correct method of procurement, with a proper balance of risk between the contractor or supplier and the municipality as its customer.

In my view, reports like the above type of evidence are serious problems, which require immediate correction. However, defenders of the status quo will no doubt point out that most of the examples of this type consist of foreign examples (particularly American or British). I would argue that it is possible to find as many Canadian equivalent examples in virtually every newspaper each month. I would also suggest that Canadian public procurement is no more honest or efficient or effective then public procurement elsewhere. The most high— profile examples coming out of Quebec related to government procurement issues.

I will say that most municipalities (and public) supply contracts are not problematic. The suppliers and contractors perform well. They deliver their goods and services on time. The price paid is not beyond sight of the prevailing market price. I accept all this as true. Unfortunately, it does not address the fact that across this country reported accounts of misuse and in some cases wastage of public funds — particularly albeit not exclusively, at the municipal level – run into the high hundreds every single year. This litany of complaints — in many cases — made by unimpeachable sources such as public auditors or judicial investigations — is too many to dismiss as isolated.

Whatever percent they may comprise of overall procurement — whether it is five, 10, or 15 per cent — the number is too large to ignore. It does not take too many city hall refurbishment projects, or too many recreation facilities completed at twice the original estimated cost, before such projects begin to have an adverse effect on overall municipal operations. Errors of this nature very rarely arise from deliberate misconduct, and often are not the result of negligence. On the contrary, one would have to look long and hard in the public procurement field to find a purchasing project in which the key players began with the deliberate intent of wasting public money.

In my personal experience, the public servants involved in Canada are certainly as hard working as their private sectors counterparts. I have worked both in the private sector as well as the public sector as a purchasing manager over the last 40 years. I always say the jobs are equally as hard to do but require a different set of skills for each sector. Government procurement is about rules and regulations and the public tax dollars, and private sector procurement is about money and shareholders.

Yet nevertheless, problems such as those mentioned above occur time and time again. When problems of the same kind keep repeating themselves, you must ask yourself whether there is something wrong with the overall approach.

Stephen Bauld, Canada’s leading expert on government procurement, is a member of the Daily Commercial News editorial advisory board. He can be reached at stephenbauld@bell.blackberry.net.