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Measurement systems key to procurement

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One system for government procurement in Canada is a lofty goal, but one that we should all strive to develop.
Stephen Bauld
Stephen Bauld

Procurement Perspectives | Stephen Bauld

One system for government procurement in Canada is a lofty goal, but one that we should all strive to develop.

At present, there are no common systems across government for:

Recording what is purchased, the associated prices and sources of supply;

Analyzing the true costs of procurement transactions;

Rating the capability and performance of suppliers and contractors; and,

Targeting and measuring year to year value for money improvements from the purchasing function.

I think we would all agree that good common measurement systems are an essential component of any procurement system which aspires to be best in class.

These points 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 upon simple bid prices (i.e., base or sticker price, or upon the full life cycle cost) of the goods and services that it purchases.

It is also beneficial to have in place a systematic approach towards rating the capability and performance of contractors and suppliers.

Every municipality 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 such as those identified above 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 numbers 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.

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 in 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 upon various 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 the foregone conclusion: the problem with municipal procurement 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 then 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 solution is to change the system — but how, where, and in what way?

Systemic problems are the very things that 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 sound bites.

The importance of dealing with inefficiency in procurement systems becomes clear when one considers the implications of poor purchasing decisions to the taxpayer.

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

by Journal Of Commerce

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