January 9, 2012

The procurement challenge in 2012

Procurement Perspectives | Stephen Bauld

Municipal procurement is a challenging environment at the best of times, and 2012 will be just as difficult without changes to the process.

Municipalities lack the comparatively bottomless resources of more senior levels of government. They also have less capacity to spread risk and cost. Despite real revenues, the demands upon them have been increasing steadily in recent years due to the practice of downloading, and the increasing demands of the public. Many municipalities must somehow deal with the problem of an aging infrastructure, while at the same time maintaining a level and range of services consistent with public expectations. In such an environment, it is becoming progressively more necessary to drive if not hard bargains, then certainly economical ones. To do so, municipalities must learn to borrow from the lessons learned by the private sector whose tighter financial constraints are closer to their own.

The process of supply chain management, materials management, the adoption of a strategically focused approach to procurement that I have advocated in the articles last year may be the future for a better system in 2012. However, one may prefer to describe it, offers 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. 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 the 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 has to be taken. Waste and other misuse of public money should not be allowed to become one of the grand traditions of democratic government.

While I recognize the importance of following the rules, in my view, the purchasing function does not end with the rules. Far more important considerations are at stake. The critical goal of public procurement at all levels of government is to get the taxpayer a good deal, or at the very least, to exercise every precaution to avoid having the taxpayer saddled with a bad deal. In advancing the idea that public procurement should be more results-oriented, I am not alone. As the federal government’s Treasury Board Secretariat has noted, over recent years there has been a radical reorientation of the public procurement process. Comments like the one from R.W. Dye’s, “Report of the Review of the draft Treasury Board Policy on Managing Procurement (Ottawa Treasury Board of Canada Secretariat, 2006)” are very relevant in today’s landscape. He went on to say:

“At one time, public procurement was considered to be a clerical function of government, simply processing purchasing orders. This is no longer the case. Today, public procurement consists of a widely recognized body of knowledge practiced by professionals with highly developed expertise who play a critical role in the quality of service delivery to citizens.”

This statement was as true in 2006 as it is today. Government procurement professionals have the opportunity to change the future of our profession. The process of government procurement can, and will change for the better. The purchasing managers of today have the opportunity to change the process for tomorrow.

Stephen Bauld, Canada’s leading expert on government procurement, is president and CEO of Purchasing Consultants International Inc. He is also the co-author of the Municipal Procurement Handbook, published by LexisNexis Canada. He can be reached at stephenbauld@bell.blackberry.net.

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