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Procurement Perspectives: Relevant points to consider in procurement

Stephen Bauld
Procurement Perspectives: Relevant points to consider in procurement

The points that I want to address 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 purely on simple bid prices (i.e., base or sticker price) or on the full-life cycle cost of the goods and services it purchases.

It is also beneficial to have in place a systematic approach towards rating the capability and performance of suppliers. Every municipality as well as private sector companies should have a settled business plan directed toward improving the efficiency or effectiveness of their procurement function.

Mechanisms of this nature are business tools that are intended to keep problems that are identified early to a bare minimum. While no system of public procurement will ever be fail-safe, it is obviously essential for such problems to be minimized.

The large number of problematic cases that come to public notice in the municipal area each year leave considerable room for doubt as to whether proper measures are in place in relation to municipal procurement.

A third, and far more valid, defence of the status quo is that newspaper and other on-the-record accounts detailing misuse of public funds are often sensationalized.

This is especially so where the source of the account in question is a politician who is seeking to score points at the expense of an opponent.

Indeed, in my experience when one investigates accusations of wrongdoing, what one usually finds is that any rational person put in the same circumstances as the decision-maker at the time of question would have come to much the same decision.

For instance, across the country, municipal governments are forced on a near routine basis, to compromise dubious claims based on principles of the Canadian law of tender, for the simple reason that it is too costly in terms of demands on staff and the cost of legal services to do otherwise.

Yet this simply reiterates my foregoing conclusion: the problem with municipal and other public procurement does not lie in individual action and the ability of individual staff. Rather, the problem is systemic in nature, and the law of tender as it has evolved in Canada is part of that system.

Systemic problems are far more difficult to solve than those that relate to individual cases of abuse.

When problems are caused, or allowed to happen by individuals, the solution is simple: Get rid of the people concerned.

When problems are systemic, the solutions are to change the system. But how, where and in what way? Systemic problems are the very things the political process is not well suited to remedy.

Solving them requires bipartisanship, involves a lot of research and analysis and requires decision-makers to learn boring factual details and then undertake hard thinking to put those facts into a meaningful context.

Efforts of this nature never yield soundbites.

Yet the importance of dealing with inefficiency in procurement systems becomes clear when one considers the implications of poor 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.

Discussing the nature and extent of a problem is the first step towards the identification of its cause.

A second and equally important step is to determine what the existing system, within which the problem arises, is intended to do, and then to decide why it is falling short of those goals.

In the case of procurement generally, it has been suggested the measures of procurement success are to be in a constant state of monitoring and measuring every matrix available to you on a regular basis.

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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