Procurement Perspectives - The wag of the accountability finger

Everyday, we are faced with another government procurement issue in one of the major newspapers across Canada.

The accountability factor has been reduced to finger pointing from every aspect of the procurement process.

Despite the problems that arise from time to time, the purchasing staff at most municipalities go about their work on a day-to-day basis, in an honest and conscientious manner. Most councils attempt to create a governance formula, which provides assurance that they will do so.

Sadly, the extent of the problems that arise in municipal procurement indicate some considerable disparity between the promise and the delivery.

I have seen this first hand representing contractors on tender and RFP issues with council members in several municipalities.

Municipalities need to invest heavily in developing their purchasing staff, to ensure that they are equipped with the requisite commercial skills appropriate to their responsibilities. It would also help if council members would take the time to get a better understanding of procurement policy and procedures.

Taking staff reports at face value without knowing anything about government procurement can also prove costly.

I also find it interesting to compare the trend in private sector procurement to the corresponding development (or lack of it) in the public sector.

I do not blame the procurement staff in any way for this shift in training public sector buyers.

Tight budgeting and the consequent comparative under-investment in training in the public sector, relative to the private sector, coupled with the growth in municipal responsibilities have created a very wide skills gap in the municipal sector. Small purchasing departments, which result in staff being spread across different areas of responsibility, further undermine the procurement effort.

To carry out the purchasing function properly, it is not sufficient to provide a clear chain of accountability.

Most municipalities have by-laws, policies and procedures that dwarf anything in the private sector. It is equally necessary, in order to give effect to those bylaws, policies and procedures to have an appropriate procurement system, which has the capacity to carry out the core responsibilities to it, and to develop, improve, deliver and manage performance at all levels.

Under-resourcing has led to a situation in which purchasing controls and accountability procedures look strong on paper, but break down in practice because there are insufficient people to do the task.

As a general observation, not only do municipalities fail to appreciate how a more effective approach to purchasing could improve their bottom line, they consistently undermine the importance of purchasing as a critical part of overall municipal operations.

Across Canada, municipal purchasing departments at mid-sized cities consist of four to six buyers, who are responsible for purchasing between $300 million and $500 million dollars in goods and services each year.

In contrast, in the private sector, a firm with an annual procurement of $150 million or less would likely have a purchasing department staff twice the size.

Yet a buyer at a municipality is likely to be engaged in a wider range of purchasing activity than any person in an equivalent position at a private sector corporation of comparable size, for the simple reason that the activities of a municipality are so diverse.

Although municipalities have a much wider range of activities than 10 years ago, many still run with the same sized purchasing department.

Moreover, they have not trained their staff to handle these new areas of concern, with construction being one area that hasn’t progressed with the changing landscape of the industry. Municipal purchasing departments have remained small, despite the growth in tender-related litigation. One or two tender claims a year, even if settled before going to court, stretch procurement staff even further.

Stephen Bauld is Canada’s leading expert on government procurement. He can be reached at stephenbauld@bell.blackberry.net.