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Procurement Perspectives: Municipal procurement requires an accountable system

Stephen Bauld
Procurement Perspectives: Municipal procurement requires an accountable system

An accountable system is one where those who have spending authority are required to justify the manner in which they have discharged that authority.

Although an open system may facilitate the process of accountability, in allowing interested parties to see what has been done, it is not sufficient to ensure that the process is accountable, as that term is usually interpreted in equity.

A duty to account is the hallmark of a fiduciary obligation.

The general obligations of a fiduciary, when providing such accounting, are to demonstrate that the interests of the beneficiary of that duty (the residents of the municipality) were put first by the fiduciary, and that the property entrusted to his or her care has been administered in an honest and reasonable way.

However, as soon as these obligations are stated, a dilemma becomes apparent.

If municipal managers are obliged to account for their administration of municipal property, how are they to reconcile this obligation with the duty to be fair to municipal suppliers and contractors?

The duty to suppliers and contractors is inconsistent with the duty to the residents who pay municipal taxes.

The temptation when presented with apparently inconsistent goals is to say that the appropriate response is to balance the competing objectives.

Unfortunately, merely concluding that the above considerations have to be balanced does nothing to explain how that balance is to be taken.

If one suggests that each objective should to be given a percentage, the question then becomes what percentage to assign to each. If one assumes that this question can be disposed of simply by assigning each objective a weighting of 20 per cent, one must then decide how to allocate that 20 per cent among the numerous factors that contribute towards each objective.

There must also be a ranking of priority in the event of a conflict between any two or more of those factors.

When the conversation turns to an open and accountable process some questions arise.

One’s initial inclination might well be that a system that is most open will be the one that generates the greatest level of competition.

In fact, however, in many types of situations, increasing the openness of a competition (i.e., the number of bidders who are invited to compete, and the number who may therefore submit bids) can lessen the amount of competition.

Two reasons may be advanced in explaining this apparent paradox.

First, a large number of bidders complicates the process of distinguishing viable bids from non-viable and also the evaluation of bids.

This is especially problematic where the nature of the contract is such that it would be unrealistic for it to be awarded solely on considerations of price.

Second, for certain types of large construction projects, some potential bidders may be unwilling to submit a bid for a contract if their chance of being awarded is small due to the number of participants involved to submit.

The preparation of a bid can take a great deal of time and effort.

While a contractor might be prepared to put such an effort into a contest where it is one of four potential contractors to whom the contract may be awarded, it may well balk at submitting a bid if there are 12 other contractors bidding.

Where there are a large number of participants, the chance of securing the contract is simply not seen to justify the effort put into soliciting it.

If the quality of potential contractors were uniform, the loss of one or two contractors due to the openness of the bidding process might be an acceptable price to pay.

Unfortunately, all contractors are not equal.

In the end, a more open process may lead to a less competitive one.

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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Stephen Bauld Image Stephen Bauld

Quite true. Too much bidders can unnecessarily extend and slowdown the evaluation and award processes. However, one who manages public funds is required to always apply some patience, sacrifices and transparency with those contractors that serve them. It gives courage, insight and appreciation to non-winning contractors some of whom will be force themselves to put extra efforts in a bid to succeed in future tenders.

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