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Procurement Perspectives - Understanding municipal strategy

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BY STEPHEN BAULD - It is sometimes difficult to understand the distinction between strategy and control in the municipal setting, as it relates to the purchasing policies.
Stephen Bauld
Stephen Bauld

What we need to keep in mind is that all municipalities operate within council-approved budgets and other control mechanisms such as purchasing bylaws.

Bylaws of this type will often begin with a statement of the overall objective of the council in adopting the bylaw. Such bylaws are more directed at imposing control than at the proper positioning of the municipality as a viable political and economic entity. For instance, there is almost always a declaration “that procurement decisions will be made using a competitive process that is open, transparent and fair.”

The extent to which these three goals are carried into effect is itself a matter of great debate. Around the world, auditors general (and other watchdogs) complain about the extent to which government employ “work-arounds” to overcome the requirements of open competition.

Management supervision of the process is often less than energetic. Not infrequently, the commitment to openness, transparency, and fairness proceed further than including in the purchasing policies, pious recantations of the usual platitudes with procurement activity, such as:

Municipal officers must not make any purchase except in compliance with the purchasing bylaws, and perhaps some other declared policies. Unfortunately, as we have seen, it is often unclear which rules are intended to apply in particular circumstances, with the result that the direction given is left obscure.

The municipality must obtain “best value for money”, however, there are so many ways of computing best value, this declaration is essentially meaningless;

Municipal staff must exhibit the highest standards of integrity, and should employ “the most effective process and practices” in carrying out the procurement process.

One of the most important aspects of any purchasing bylaw is to identify the responsibilities of each municipal officer likely to be involved in the procurement process, and to set down a scheme of checks and balances to make sure that none of them exercises inordinate influence over the process.

This scheme of checks and balances is negated by the top-down management structure by the municipality, with the result that the apparent power of the “purchasing manager” is under the practical control of various directors, assistant commissioners and so forth.

When individual councilors involve themselves in procurement, decisions, there is a further subversion of apparent scheme of control.

Even if commitments to being open, fair, and transparent, were observed, there is good reason to believe that the public procurement system would still perform below the level of public expectation. A fair system, conducted openly, leading to contracting decisions that are transparent does not in itself result in a procurement process that furthers the goal that governments are seeking to pursue.

A strategic approach to procurement requires the municipality to give its staff precise direction as to the overall goals to be pursued through the procurement process, which makes it possible to determine which of two possible approaches should be used in particular circumstances, and when councilors (either individually or collectively) are stepping over the line of giving acceptable direction.

It is very clear that the imposition of budgetary control does not give strategic directions.

Budgets, may reflect strategic imperatives and the limitations of available resources. Unfortunately, budgets alone do not set targets for growth and development, nor determine priority between such matters as infrastructure capital as opposed to maintenance and repair, or even as between capital investment and service/program delivery.

Stephen Bauld is Canada's leading expert on government procurement. He can be reached at stephenbauld@bell.blackberry.net. Some of his columns may contain excerpts from The Municipal Procurement Handbook published by Butterworths.

by Stephen Bauld last update:Sep 2, 2014

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