Procurement Perspectives: Adequate resources need to be invested in procurement

Municipal procurement is a challenging environment.

Municipalities lack the comparatively bottomless resources of more senior levels of government.

They also have less capacity to spread risk and cost. Despite declining real revenues, the demands upon them have been increasing steadily in recent years due to the practice of downloading and increasing demand of the public.

Many municipalities must somehow deal with the problem of aging infrastructure, while at the same time maintaining a level and range of services consistent with public expectations.

It is becoming progressively more necessary to drive, if not hard bargains, then certainly economic ones.

To do so municipalities must learn to borrow from the lessons learned by the private sector, whose tighter financial constraints are a closer approximation to their own than the constraints applicable to provincial and federal governments.

The process of supply chain management, materials management, the adoption of a strategically focused approach to procurement are important and offer municipalities their last best chance, at least on the expenditure side of the income statement, to meet these conflicting demands.

There is no single magic formula that can be applied in adopting such a system. Rather, it requires a minute examination of individual practices to see which best tend towards maximizing value for money.

To that end, established practice needs to be put under the microscope and subjected to an exacting and painstaking cost-benefit analysis.

Not only the procedure and approach, but individual purchase decisions (and the proposals that underlie them) also need to be subjected to a systematic process of critical review.

Adequate resources need to be invested in procurement and control to make sure that value is maximized.

It would be going too far to suggest that a more scientific approach to procurement is the only thing that needs to be done.

It is nevertheless a critical step that must be taken. The importance of doing so is clear. Wastage and other misuse of public money should not be allowed to become one of the grand traditions of democratic government.

Important as the operation and control aspects of municipal procurement may be, the strategic aspects of such activity are of even more importance.

In dealing with the subject of municipal procurement, I have repeated the one continuing theme over the years. It is that municipal procurement needs to become more strategic in design, more deliberative in execution, and more critical in its approach and implementation.

As the New Zealand controller and auditor general has noted: “It is important for the public entity to focus on what it is trying to achieve. Process should not dominate at the expense of the outcome.”

Nevertheless, this is not a view that all would share. For many years, purchasing departments within the public sector viewed themselves as essentially the purchasing police.

Despite a general change in attitude at most governmental contracting authorities, there are unquestionably many who continue to cling to this view.

Consistent with the belief that “the only product of government is process,” those of the purchasing police mentality are completely preoccupied with such weighty matters as whether the correct form was filled out and filed within the time allowed, whether it had the requisite signatures in the right places, all of which were with an appropriate authority, and whether the correct reports were filed on time and with the right people.

While I recognize the importance of following the rules, in my view, the purchasing function does not end with the rules. Far more considerations are at stake.

The critical goal, and where more investment needs to be invested in government procurement, is to ensure that the taxpayer is getting a good deal — or, at the very least, to exercise every precaution to avoid having the taxpayer saddled with a bad deal.

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.