I am always surprised at the continued procurement mistakes that take place in several municipalities every week.
Repeating the same mistakes time after time without fixing the root cause is one of the frustrating issues we all face. Policies and procedures need to be updated to address these procurement problems and a more consistent approach needs to take place.
I would say most municipal supply contracts are not problematic. The suppliers perform well. They deliver their goods and services on time. The price paid is not beyond sight of the prevailing market price. I accept this as true.
Unfortunately, it does not address the fact that across Canada reported accounts of misuse and in some cases the wasting of public funds — particularly, albeit not exclusively, at the municipal level — run into the hundreds every single year.
This litany of complaints, in many cases made by unimpeachable sources such as public auditors or judicial investigations, are too many to dismiss as isolated.
In my view, whatever percentage they may comprise of overall procurement, whether it be five, 10 or 15 per cent, the number is too large to ignore.
No one would argue that paying 50 per cent more of the original estimated cost of a construction project would 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.
Nevertheless, problems related to large construction purchases occur all the time.
When problems of the same kind keep repeating themselves, one has to step back and ask whether there is something wrong with the overall approach.
Evidence of a systemic weakness in public procurement is not difficult to find.
In a U.K. Treasury Review of Civil Procurement in Central Government noted that: (1) There are no common systems across government for recording what is purchased, the associated prices and sources of supply. (2) Analyzing the true costs of procurement transactions. (3) Rating the capability and performance of suppliers. (4) Targeting and measuring year-on-year value for money improvements from the procurement function.
Good common measurement systems are an essential component of any procurement system that aspires to be best in class.
I believe in Canada we do some of the points mentioned in this report somewhat better, however, we all have room for improvement.
These points relate to concerns that are relevant in any procurement.
In the municipal context, as in any other context, it is of vital importance to know whether the municipality is awarding contracts for supply based upon simple bid prices (i.e. base or sticker price), or upon full-life cycle cost of goods and services that it purchases. It is also beneficial to have in place a systematic approach towards rating the capability and performance of suppliers.
I continue to believe that every municipality should have a settled business plan directed towards improving the effectiveness of their procurement function.
Mechanisms of this nature are business tools that are intended to keep problems such as those identified above to a bare minimum.
Yet the importance of dealing with inefficiency in procurement systems becomes clear when one considers the implications of poor purchasing decisions to the taxpayer.
It is axiomatic that high costs of government procurement must be met out of tax dollars.
The level of expenditure differs from one municipality to another. The fact still remains that systemic problems are far more difficult to solve then those that relate to individual cases of abuse.
When problems are systemic, the solution is to change the system.
Stephen Bauld is a government procurement expert and can be reached at email@example.com.
Some of his columns may contain excerpts from The Municipal Procurement Handbook published by Butterworths.