Questionable Procurement Strategy | Letter to the Ombudsman
Being a small business person in Ottawa Centre with over 30 years experience working with a wide range of organizations, I provide the following with an anecdotal perception of the federal government inadequately supporting small businesses particularly during these transformative times.
In the past, the gathering of knowledge in order to make buying decisions was much more onerous, however still today in order to make buying decisions knowledge is required in order to reach objectives and establish value for the product or service required.
A formal procurement process to create a 'statement of work’ for a tendering process clearly outlines the organizational goals to be met from the product or service required. Understanding these goals helps establish value for the project. For example, the objective could be to buy a commemorative plaque. If the plaque is for a retiring colleague to be presented in front of a handful of people, the value ensuring it is perfect for the occasion is limited compared to the importance of a plaque being given by the Chief of Defence Staff in front of a audience of hundreds. In both cases the cost of a plaque is relatively low, however the value of ensuring goal success implies different levels of accountability and costs. Where are the costs incurred to ensure success?
In ensuring success, who offers better value, the employee or the vendor? What is the most cost effective way? Which way satisfies a policy that meaningly supports small and medium size businesses?
The simplest way for the government (or anyone) to buy is to engage a qualified vendor who is paid more then the product alone to ensure quality, value, and success. To avoid the cost of creating a formal 'statement of work’ that can take considerable effort and expertise, the best path forward is to simply find a vendor who is looking to establish a relationship that can help support the department while it supports the small business vendor. Supporting small and medium sized business by not going to cost as the primary criteria to buy, should apply when the value of the product or service is of comparable cost (or less) when including the costs of government employees and resources to establish a 'statement of work’. An employee who uses reasonable criteria for choosing a responsible and accountable vendor who uses a ‘consultative selling’ process is more cost effective and more supportive to small business people.
The problem arises when the buyer is not trained and/or not trusted. For example, the criteria for an employee using a vendor demonstrates a conflict of interest, incompetence, or simply not caring. This boils down to an accountability issue. If the buyer can’t be depended upon then they should not have the role of buying. Anecdotally, a friend who is a high ranking government procurement/costing official has created a policy in his department requiring three quotes on everything simply because the effort to hold individuals to account is beyond the scope of the authority. In other words, it is too difficult to deal with someone who uses indiscriminate criteria to choose and use a vendor. This is a cultural, accountability, and employment issue that effectively disallows the government to use any other criteria then the lowest price to pay for a product or service and undermines the value of the people (vendors) involved.
As a small business person I question it when buys under $5000 or $10,000 dollars are not allowed to have educated, well paid, intelligent employees use some criteria other then lowest price to establish value. This situation must change for the sake of the local communities that support government in their towns and cities and tax payers in general.
As an example, I recently engaged the Procurement Ombudsmen because a department wanted to buy a small amount of awards. They contacted a person at our company who was given the impression that the department wanted to do business with us. Being a consultive selling business and relying on trusting relationships to grow our business, we responded in good faith with information that took considerable time to prepare, and in the end we were requested to provide samples that were couriered in from an out of town factory. I then took the opportunity to take the awards to a downtown office to meet the potential new customer. Taking the time to drive to their office and paying for downtown parking. At that point the clerk sent down to pick them up said they would let us know if they would use us once they got the quotes from the other companies.
As it turned out the contract was for $1200 dollars, three vendors were all engaged to provide samples, and only one was chosen. The company used got paid the least on a $1200 order. Time to work with three companies, time of the people in the three companies involved, and to what end. How much was saved? The principle of transparency because of a lack of trust for civil servants to establish value on their own effectively saved little money for the government when taking into consideration the time spent by staff, and was unfair to small businesses who no compensation faithfully provided services needed in order to reach the department's goal.
After we were informed we would not be getting the contract, I indicated I wanted to bill for our time whereby the head of the procurement department responded by saying that the effort I put in was of no value. She made comments to belittle my job and business sighting her previous career as a meeting planner to qualify her value justification for paying nothing. Eventually, I was only given a reasonable explanation for the procurement procedure after the Ombudsmen’s intervention. This is certainly not the first time this happened however we’re normally better at avoiding such abuse.
I do not believe it is anyone’s policy not to support small business, however in these cases the transparency policy process costs tax payers more then the value of the product purchased. Small and medium sized vendors are supported as little as possible simply because of an operational policy that institutionalized a lack of trust and accountability. The issue is not the expressed intention to support small business, it is the inability of government to execute operations in the face of employees who can’t be trusted and reasonably held to account undermining it.
I would like to know what initiatives are going to be implemented by your government to rectify this situation? I’m constantly told business is more efficient and in my experience they have employees no better than yours (ours) to choose small and medium sized businesses for product and services. If all parties are committed to continuously make government operations more efficient and supportive of the communities that surround its institutions, particularly ours in Ottawa, the perspective above should inspire the initiative for creating a vision for a strategic plan to implement government wide procurement policy change.
I look to the Ombudsmen’s office to make suggestions and get the process started; the Canadian Federation of Independent business to monitor the progress on this initiative, and your office to ensure it actually gets started and finished. As a small business person without the time and resources to make my voice heard, I rely on all of you to create a supportive, better functioning, and cost effective environment for doing business.
Thank you for your consideration.