Procurement
June 20, 2012

A dirty dozen procurement trends

Procurement is a strategic issue in the public sector. The expenditures are vast. In addition to fostering an ethical environment, you must comply both with the public policy of fair, open and transparent procurement as well as the rulings of our Supreme Court. Remember Gomery or the Toronto leasing scandal.

We all know that finance is more than budgets and payables. We also know that procurement is more than simply “buying stuff.”

From a policy perspective, procurement’s role is simple: acquire the needed goods and services using a competitive process to achieve “best value” while conducting business in a fair, open and transparent manner (as defined by the Supreme Court of Canada).

Implementing this policy is challenging. It’s difficult to do this in a timely manner, with reduced staff, increased public scrutiny and a more litigious vendor community.

Being an effective procurement or material management executive in the public sector requires harnessing new technologies and creating an innovative, ethical environment.

There are a number of worldwide trends in public procurement. Some have been with us for a long time; some are new to the scene. Here are my dirty dozen trends that procurement executives need to recognize as their emerging reality (if they haven’t already done so), trends that can significantly impact their plans for procurement reform:

1.    Governments and agencies have, in the past few years, espoused fair, open and transparent competition as a value. Driven by scandals and litigation, many agencies have listened to their professional procurement staff and revised their practices.

2.    We’ve gone from lowest price to best value. That’s why lifecycle costing and Requests for Proposals are on the rise. RFPs get you “best value.”

3.    Cooperative purchasing and piggybacking on other agencies’ contracts is a major force and saves money by increasing leverage of small entities. So, if the government of Ontario gets a great price on printers and its contract allows piggybacking by your agency, then you can purchase off the same contract with no competition and little effort.

4.    We often use alternative dispute resolution mechanisms because of the expense and delays in the court system. This saves money by reducing the formal legal process. It also bypasses the court system and saves billable legal hours.

5.    Many agencies have tried P3 – public private partnering or joining forces with a private sector firm to implement a major project – typically on a highway or bridge. This saves money by using private capital for initial funding. It is highly controversial and always a political issue.

6.    Using credit cards, called P-cards, to reduce the costs of small purchases can save money by reducing paper processes. Without P-cards, you typically set up the vendor on your master file, issue a purchase order to the user area, obtain approval, mail the purchase order to the vendor, receive the goods, match the shipping documents with the purchase order, initial a cheque requisition, issue a cheque, reconcile the cancelled cheque, post the charges to the department. This typically costs between $75 and $150; a P-card can save about 50 percent per transaction.

7.    Implementing e-procurement or having the procurement processes automated saves time and effort and improves management information and control.

8.    Reverse auctions, where the agency asks for bids on a specific commodity and the vendors submit prices until the end-time saves money by driving down the price and driving business off-shore.

9.    Using a Fairness Officer to re-assure the public that a specific procurement has been carried out in a fair and open manner. While this doesn’t save money, it does preserve public policy and reduces the probability of scandal, protest or legal action.

10.    Green procurement – RFPs and ITQs where “green” is a requirement or an evaluation factor – has shown that it can actually save money when you do lifecycle costing. There are organizations dedicated to green procurement that publish sample RFPs and sample green specifications.

11.    Strategic procurement means changing the function from order takers, an operational perspective, to a broader, strategic perspective involving long-range plans for ensuring timely supply of goods and/or services that are critical to an agency’s ability to meet its core objectives.

12.    Outsourcing, the transfer of “non-core” functions from an agency to the private sector, means divesting a business function, involving the transfer of people and the sale of assets, to the supplier. The process begins with the agency identifying what is to be outsourced and building a business case to justify the decision.

Michael Asner is an independent consultant specializing in public procurement. He is author of The Request for Proposal Handbook and a frequent conference speaker (www.rfpmentor.com, michael@rfpmentor.com).

For more on this topic, see State Procurement: Strategic Positioning for the 21st Century January 1999: www.naspo.org/whitepapers/whitepaper-21century.cfm.

About this author

0 comments

There are no comments for this post yet.

Be the first to comment. Click here.

Procurement
 
By June 2017, the Public Engagement Team at the Privy Council...
 
We are excited to share with you the May/June issue of...
 
Over the past decade, major Canadian procurement projects have encountered increasing...
 
We are excited to announce that the October issue of Canadian...
 
Does your organization have a very narrow view of what digital...
 
In the last few years, we’ve seen various federal governments warning...
 
In this special episode of CGE Radio, your host John Jones...
 
Commodity Management (the official term for life-cycle asset management of goods...
 
Risk is always present in any undertaking, no matter the size...
 
The North Atlantic Treaty Organization, with its 28 independent member countries...
 
Strategic Procurement, recognized in recent years for its promotion of intelligent...
 
Even as talks between the government and federal workers affected problems...
 
The largest effort in 20 years to seek public input on...
 
July 27 was pay day some federal public workers that finally...
 
The government has to move quickly in replacing its fleet of...
 
The Liberal government is taking steps to rein in the National...
 
Canada is severely in need of a maritime vessel that can...
 
By Jason Zhang  The best way to cost effectively manage the retention...
 
Veterans Affairs Canada is not adequately managing the drug component of...
 
Some public servants will have to request their departments for emergency...
 
A research project at that explores the design and feasibility of...
 
The facility of a top-secret military communications group in Borden, Ontario...
 
While Dwight D. Eisenhower’s famous remark that “Plans are nothing, planning...
 
OMX , known for disrupting supply chain management primarily in the defence...
 
It took me more than 20 years in the public service...
 
I have often written about what to me are the unusual...
 
The release of the Defence Procurement Strategy (DPS) in February 2014...
 
It is amazing how much information goes back and forth between...
 
In April 2014 the Environics Institute and the Institute on Governance...
 
The president of the Treasury Board gave a speech in November...
 
Last month I supported the argument that if a received bid...
 
Roy Wiseman’s blog, “In defence of direct negotiation,” on the CGE...
 
As difficult as they may be to accept, we all know...
 
When the government introduced the Defence Procurement Strategy in February, it...
 
I used to be responsible for managing the s9 delegation file,...
 
Last spring the government adjusted its approach to defence procurement, creating...
 
From time to time, the popular media jump on examples of...
 
The early May annual workshop of the Canadian Institute of Procurement...
 
Ten years ago I was as member of the Parliamentary Secretary’s...
 
Benjamin Franklin said that “in this world nothing can be said...
 
“This is urgent,” the poobah said. “If you don’t put this...
 
Last month I wrote about accountability for procurement. I like this...
 
A procurement is designed to deliver specified results to a client....
 
Kudos to the President of the Treasury Board for announcing that,...
 
At the May 2013 Canadian Institute for Procurement and Materiel Management...
 
You’re in a crunch to meet a looming deadline. A couple...
 
How often have you seen buyers use years or months as...
 
As the organization in National Defence responsible for procurement and management...
 
In my time the almost automatic response to austerity was to...
 
Government supply chains, in defence and elsewhere, are increasingly becoming interconnected...
 
A year since my last article on defence procurement, positive change...
 
Public Works has started a project that tries to fix an...
 
In the March edition, I put forward three stories about process...
 
My previous articles have talked about process and results-driven procurement, and...
 
Good procurement takes good people using the right tools at the...
 
When I retired there was no one to whom I could...
 
Canada’s new Chief of the Defence Staff has been mandated to...
 
Over the past 40 years federal procurement has incorporated many measures...
 
Preparing a detailed procurement manual for a client is like trying...
 
…well, maybe not – but there is a link. Governments must...
 
Purchasing card (P-card) systems provide decreased costs per transaction, higher purchasing...
 
Are you going to the IPAC annual conference in St. John’s...
 
Procurement is a strategic issue in the public sector. The expenditures...
 
What constitutes excellence in public procurement? How is it measured? You...
 
Every jurisdiction has a public procurement policy. In its simplest form,...
 
Government executives are responsible for ensuring the integrity of the procurement...
 
There is defence procurement, and then there is Defence Procurement. The...
 
We all know the story, the one about the high-risk project...
 
How do you know what you don’t know? How do you...
 
With few exceptions, public spending rightfully requires competition and due diligence...
 
We all know the music and the steps that go with...
 
Procurement today is often like buying horses from Thomas Hobson in...
 
Don’t pay for what you can get for free. We’ve heard...
 
Our fascination with the future has long roots. Back in the...
 
Once upon a time, the King was looking for a really...
 
Like any small part that runs our cars, procurement is largely...
 
Many policy organizations have learned from sad experience that the best...
 
The New West Partnership (NWP) cements the West as an economic...
 
Canada’s shipbuilding industry is now on the cusp of resurgence thanks...
 
In most democracies public procurement is expected to be fair, transparent...
 
In 2005, an Ontario government-sponsored task force generated a number of...
 
New ways to incorporate value into projects are maximizing the value...
 
Effective public procurement can be “make or break” in developing countries...
 
Recent high profile troubles at e-health operations in both Ontario and...
 
Anyone who has been told by a doctor to lose weight...
 
When he was younger, our son liked to play with Rubik’s...
 
Sore losers: we all know they like to involve their lawyers...
 
The next time you hear someone argue that government procurement has...
 
Some title Some author
Some excerpt
By June 2017, the Public Engagement Team at the Privy Council...