Municipal Procurement and Essentials for Effective Practices

June 24, 2024

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In the evolving landscape of municipal procurement, strategic procurement is a cornerstone, enabling municipalities to align their purchasing activities with broader organizational goals. Building a comprehensive procurement toolbox is essential for navigating today’s complex market. Here, we chatted with Dan Munshaw, Business Development Advisor with OECM, to look at public procurement from a municipal lens, and learn the essential tools he recommends keeping in your procurement “toolbox.”

Let’s dive into the foundations of municipal procurement. What are they and how does municipal procurement differ from other sectors?

While public procurement strives to be fair, open and transparent, municipal procurement is even more subject to transparency. Municipal procurement leverages taxpayers’ money and is subject to compliance with international, federal and provincial regulations including international trade agreements, the Canadian Free Trade Agreement (CFTA), and the Comprehensive Economic and Trade Agreement (CETA). On a regional basis, Councils establish Bylaws—the governing laws of our municipalities. These “rules” are the foundation of municipal procurement.

Municipal procurement is the most “fishbowl” of public procurement. Council meetings today are often recorded for playback on cable TV or live-streamed and are forums for the public to watch and stay informed. Surprisingly, there is tremendous community interest, and municipal matters are often reported in the various news media. Municipal procurement activities are on the radar, more so than ever before.

When it comes to strategic procurement planning, what are some key considerations for municipalities? What do municipalities need to build their procurement toolbox?

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Strategic procurement goes beyond simply buying a good or service. The power of public spend can contribute to advancing government Acts and objectives. For example, Bill S-211—also known as the Forced Labour Act—is a federal measure to protect frontline workers from exploitation, how we spend our public monies can affect frontline workers. Also, Canada’s Truth and Reconciliation Commission (TRC) has established 94 recommendations to contribute towards healing and reconciliation. Corporations, through their actions and leveraging the power of spend, can contribute to advancing recommendation #92. Here in Ontario, the provincial government has established the Building Ontario Business Initiative Act (BOBIA) which aims to contribute to the growth of Ontario businesses through procurement opportunities. When leveraging public monies for procurements, our actions should align with the strategic directions of our local Council and Provincial and Federal governments. As procurement professionals, it is up to us to ensure we understand and operationalize their goals and directives through our actions.

In municipal procurement, we have what I call a “toolbox” containing assorted procurement tools. One of these procurement tools is an updated and meaningful procurement Bylaw. Some municipalities have outdated Bylaws which may not adequately address current matters such as environmental, social and governance (ESG), diversity, equity and inclusion (DEI), or those of Indigenous considerations. These are newer or enhanced factors that move us beyond simply “green” considerations.

Having an updated and meaningful procurement Bylaw is essential—it provides a procurement professional with the necessary Council support on social, environmental and sustainable matters and authorities needed to fulfil their procurement obligations. Suitable authorities must be in place to address newer and more frequent emergency needs due to pandemics, floods, excessive heat and wildfires. In addition to having the right authorities, procurement teams must receive the right training to be responsive and effective in times of need.

Another important tool is the possession and use of various up-to-date procurement templates. These templates may include an Expression of Interest (EOI), Request for Information (RFI), Request for Quotes (RFQ), Request for Supplier Qualifications (RFSQ), Request for Proposals (RFP), not to forget the RFNP, PDQ, EIEIO, and many more. Included within these templates should also be a standardized set of Terms and Conditions (T&Cs). And to help manage your supply chain and supplier performance expectations, a standardized Supplier Code of Conduct is also useful to include.

Other templates to consider for your “toolbox” could include those obtained from associations and other professional organizations such as Canadian Construction Documents Committee (CCDC) documents, Ontario Association of Architects (OAA) Standard Form of Contract, Fairtrade Reporting templates and more.

What are some emerging considerations in public procurement? How are current market conditions affecting municipal procurement and what are some tips for addressing these?

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Within my 40-year procurement career, I have never seen the speed and volume of change that’s happening right now within municipal procurement and the industry as a whole. 

Here are a few examples:

  • Supply Chain Disruption: Before the pandemic, few had heard the term supply chain, and most were unaware of supply chain issues. Today, the term and what it entails is widely known and well-documented. Lingering pandemic impacts, low product availability, long lead times, dramatic increases in transportation costs, and overall high inflationary increases—these have all changed the way we approach procurement today. At the same time, low water levels, political instability, acts of war, and collapsing bridges are all contributing to impactful supply chain disruptions.
  • Technological Updates: Quickening advancements in technology, including emerging considerations around Artificial Intelligence (AI).
  • Changing Rules: The province of Ontario has recognized that consolidating and leveraging spend is a way to drive savings and promote economic development. Supply Ontario, a Crown agency created by the Government of Ontario under the Supply Chain Management Act, 2019, has been formed to advance these measures. More provincial and federal Acts, legislation directives and consolidation of services are being introduced, and at a rapid pace.
  • Staffing Changes: There is a significant shortage of skilled and seasoned procurement professionals. The impact of remote work is changing the business culture and the capabilities of procurement teams.
  • Complexity of Decision Making: The environment, sustainability, diversity, social justice, and Indigenous inclusion are important new elements in procurement that add a layer of complexity to decision-making and impact time and resources. How do we introduce social justice into decisions and how does this balance with experience and qualifications? These are complex matters to be dealt with.

To accommodate and thrive in times of significant change, I believe it is important for organizations to focus their efforts on building staff resilience through education, training and exposure. Train your staff in complex procurements. Allow your team to grow, develop and engage with professional organizations, such as OPBA, to stay informed. Leverage knowledge and strength from peers, relationships and mentors. We must rekindle the art of establishing trusting relationships and building strong networks to enable solid procurement teams.

What value contribution could OECM bring to municipal procurement?

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We talked about the challenges within our supply chain and staff shortages. Group purchasing organizations (GPOs), like OECM, enable consolidation, standardization and leveraging spend, where the outcome is better value for money and enhanced operational efficiencies. A great example of an added value offering that we provide our customers is assistance in conducting a Second Stage Selection Process, to help maximize savings and unlock additional value through negotiation that is based on your organization’s specific product or service needs.

Partnering with a GPO, like OECM, on the facilitation of your second stage selection processes or otherwise, may also help free up internal capacity, enabling your organization to re-invest this time into areas of higher value, such as advancing organizational strategic priorities, supplier research, contract management, education, training and other key areas.

Lastly, working with a professional group purchasing organization can assist in the overall reduction and mitigation of risk with the assurance that all mandatory public procurement “rules” are fully complied with at every stage of the procurement process.

This article was published in the June 2024 issue of the Ontario Public Buyers Association (OPBA) Caveat Emptor E-News.

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