big fix, The

Summit, Jan/Feb 2005 by Magee, Patti

Comments on the contemplated changes in federal procurement

MOST STAKEHOLDERS agree that the federal procurement system needs fixing; it is cumbersome, inflexible and lacking strategic focus.

Parliamentary secretary Walt Lastewka and his taskforce are to be commended for taking on the daunting task of reform. Their mandate (announced December 2003) is to recommend how procurement could be carried out across the federal government in a simpler, less costly manner, have a strong ethical foundation, ensure value from a "whole of government" perspective, effectively support socio-economic priorities, and be transparent, accountable and fiscally responsible.

Lastewka's Concept Paper, released in September 2004 - the culmination of 10 months of across-the-country consultations and an extensive review of myriad statutes, regulations, policies, audit reports, and academic literature - reflects the taskforce's vision for improving procurement. The paper's recommendations are premised on Public Works and Government Services Canada (PWGSC) becoming a mandatory common service for goods, services and construction contracting, buttressed by a well-defined governance structure, a revitalized commodity management regime, more proactive contract administration, improved supplier relations, and properly qualified and accredited procurement specialists - the latter recommendations being fundamental to reforming procurement.

One would expect that the recommendations would have been informed by a rigorous analysis of the costs versus benefits (per the Treasury Board (TB) Common Services Policy) of establishing and sustaining a common service, and extensive consultations with program departments and central agencies like Treasury Board secretariat (TBS). Rather, the recommendations respond to symptoms and not root causes, leaving the reader to question why reform can only be achieved through the establishment of a mandated organization.

In terms of governance, while the need to clarify responsibilities and accountabilities is timely (and a recurring theme of recent Auditor General audits), the rationale for recommending that PWGSC have responsibility for management control, policy, and service delivery is not sound. This segregation of duties raises concerns about oversight and, with all management controls located in the service delivery organization, introduces additional risk. It also does not recognize that TBS is responsible, on behalf of TB, for the general management (including policy development) of the government.

The recommendation to manage procurement "corporately" is welcome, although treating it as a program with one Minister responsible is inconsistent with current efforts to integrate accountabilities for program management and financial management. Procurement is not a program but a management function, like human resources and finance; it supports program departments, who support Canadians through various programs.

That said, establishing an advisory board to "provide input on the strategic direction of procurement," coupled with the establishment of the Government of Canada Marketplace (GoCM) as the single portal through which procurement tools would be available across government, should contribute towards a more corporate approach. However, procurement tools should be preferred choices and not mandatory. The GoCM, if appropriately situated, should act as an enabler of cost reductions and efficiency gains. What is not clear though, is how the GoCM, or the proposal for PWGSC to collect data on behalf of the government, square with the government's plan to move to an enterprise resource planning (ERP) system to provide consolidated information and facilitate an enterprise approach to the management of procurement across government.

The paper borrows heavily from private sector practices in formulating many of its commodity management recommendations. Much can be gleaned by examining private sector management practices, but there are fundamental differences between the private and public sector. Chief among these are public interest considerations associated with providing "public goods" such as defence, security and health. While large private sector organizations may buy more in terms of dollars, they don't have the breadth of commodities. The government, however, purchases a broad range of goods and services - from detector dogs and marijuana, to expert witnesses for taxation court cases and safety inspections of federally-regulated nuclear sites. The scope and complexity of commodities, coupled with the requirement to ensure that long-term industrial and regional development and other appropriate national objectives are supported, and to enhance access, competition and fairness, add a dimension to the government's commodity management activities not present in the private sector.

The asset-centric focus of the recommendations and the "commodification" of government procurement, do not reflect the multi-dimensional nature of government procurement or the need to be responsive to unique program requirements, which essentially drive procurement requirements. A "one size fits all" solution, while perhaps appropriate to commercially available goods and services that cut across departments, might not always be appropriate to satisfy special program requirements or complex services contracting requirements, like total service solutions and systems integration projects.