February 13, 2012

Fair, open and transparent key in a winning formula

Procurement Perspectives | Stephen Bauld

I spoke at the recent 12th Annual Contractor/Consultant/Owner conference and workshop in Kelowna B.C. and was very impressed with the format. The event called “Project Success Foundations – Fair, Open, and Transparent processes” was truly all of that and more.

Bringing consultants, buyers of construction services and contractors together, at one conference, is the ticket for understanding each other’s perspectives and concerns.

This process started with regular meetings over 15 years ago with contractors and individual buyers to build respect and open dialogue. The 12th annual event was a packed room of engaged stakeholders.

This year morphed from being developed and promoted by contractors, to having all three partners on the organizing team. As well, owners and consultants were equal partners in making group presentations. It was the first time SICA (Southern Interior Construction Association) had provincial government participants as part of an industry event for all of B.C. and Canada to see first hand. It was inspiring to see the benefits of truly working together to achieve a common goal.

My topic for the day was making a comparison of public and private sector approaches in the procurement process. Although public procurement is based upon the notions of an open, transparent and fair process, this approach to procurement is not entirely alien to the private sector.

However, while many corporations subscribe to general principles of openness, fairness and transparency in the award of contracts to their suppliers, their understanding as to how these objectives should be applied in practice is radically different from the notions that guide government in their procurement activity.

A review of the procurement policy of one large, multinational corporation is sufficient to bring the differences into sharp focus. Although procurement is said to be conducted on a basis that is open and transparent, the goal of the process is not to conduct some wide competition for supply on a periodic basis, but rather to achieve a long-term trust-based relationship with suppliers, sharing the same goals of achieving synergistic growth”.

No one would suggest that such an approach is wrong for a business corporation, but it is not consistent with the general practice among North American governments which, in general, employ short-term contracts that are put out for unrestricted tender at least every few years. The driving rationale of the private sector is, of course, almost exclusively economic.

Governments, in contrast, pursue the less clearly defined goal of good governance. One element of good governance is the notion of “fairness” in the sense that all potentially qualified suppliers have an opportunity to participate.

Far from being committed to sustaining long-term supplier relationships, there are no doubt many who would argue that public contracts should rotate among competing suppliers periodically, to prevent any appearance of bias and to ensure that all receive a fair share of government business.

Unquestionably, municipalities have much to learn from the study of private sector procurement practice. However, there are important features of the environment in which municipalities operate that will prevent them from simply adopting private sector solutions.

In Canada, municipal governments conduct their business in a fairly public manner. Council meetings are public meetings. Except as permitted under section 239 of the Municipal Act, 2001, all meetings must be open to the public.

Thus, while Canadian business corporations make their key decisions privately, Canada’s municipalities do so in the full glare of the public eye, often in the presence of not only newspaper reporters, but of the local cable television as well.

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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