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Procurement Perspectives: Why municipalities ensure maximum bang for the buck

Stephen Bauld
Procurement Perspectives: Why municipalities ensure maximum bang for the buck

When delivering government procurement programs and services municipalities struggle to balance two conflicting long-term imperatives.

As noted in one study funded by Human Resources Development Canada: “Local governments face challenges related to this new ‘world class’ world. In order to strive in the new environment, communities need both magnets and glue. ‘Magnets’ refer to the factors that attract a flow of external resources — such as new companies and new people — to renew and expand skills, and contribute to the economic health of the region. ‘Magnet factors’ typically include a healthy and well-educated workforce, clean environment, vibrant business climate, and a solid social and cultural infrastructure.

“But communities also need ‘glue’ to hold them together. In addition to the physical infrastructure that supports daily life and work — roads, sewers, electricity and communications systems — communities require a social infrastructure to solve problems and promote the economic and social well-being of all their members. Interestingly, many factors that comprise the magnets of a local region — especially the solid social and cultural infrastructure — also effectively comprise its glue.”

It would be fair to say that increasingly over the last decade, municipally funded and provided programs and services have become the glue that holds the local community together.

It is understandable, perhaps, that people in the “City of Boondocks” expect to get the same level of quality of municipal services as are enjoyed by their neighbours down the road in the “City of Mudville,” even though one city is in a deep and lengthy decline, while the other is in its sunrise.

On the other hand, one of the primary attractions for business in terms of selecting a site for a newly expanded plant or office is the municipal tax burden in comparison to the corresponding burden in other municipalities.

Except in unusual cases, which are generally short-lived, high tax municipalities do not attract new business.

Even their existing business will leave when given the chance to do so.

As a municipality loses business and the jobs such business affords, the existing burden must be spread among fewer hands, thus further increasing the tax rate.

Left unchecked, the municipality is drawn into a vortex of steady rising taxes and deteriorating conditions.

Thus, there is a critical need in municipal procurement to keep a lid on prices. The more that a municipality spends to deliver a given range of programs and services, the more it will need in tax revenue to fund that expenditure.

A newer city, which enjoys new, state-of-the-art infrastructure and an expanding economic base as well as an affluent population, may not feel constrained to spend money wisely. In contrast, Canada’s older cities have little choice but to orient their procurement operations towards getting the maximum bang for the buck.

As with any other level of government, municipal programs and services are provided within an overall fiscal framework. The subject of municipal procurement relates to the acquisition of goods and services (including construction services) by the municipal sector of government for the purpose of delivering its services and programs.

Expenditure in any one area must be reconciled with demands for services and programs in other areas, and aggregate expenditure must be balanced against the overall willingness and capacity of the tax-paying public to meet the financial demands that are placed upon them.

As I have mentioned over the years, many municipalities across Canada have been operating subject to tight funding constraints, with a consequent adverse impact on program and service delivery.

The reason why a shift towards a more strategic approach is necessary at the municipal level, and indeed across the public sector in general, is clear.

The importance of dealing with inefficiency in procurement systems becomes clear when one considers the implications of poor decisions to the taxpayer.

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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