Article

Procurement Perspectives: Look internally before purchasing

0 132 Government

by Stephen Bauld

For many types of items, the determination of need cannot necessarily be made by reference only to the resources and requirements of a single department, or on the basis of established practice. For instance, one department within a municipal organization may need additional computer equipment; meanwhile another department may have a number of redundant units sitting idly by.
Procurement Perspectives: Look internally before purchasing

The mere fact that an ordering department can establish that it has a need for additional supply of materials does not mean that there is a need for the municipality as a whole to purchase additional materials of the sort in question. Often the need of a particular department can be satisfied simply by redeployment of existing stock. In order to do so, it is necessary to have a reliable record of what is available, what condition it is in, and where it is located.

One particular area in which there is considerable evidence of duplication of effort and also of expenditure is in relation to office furniture and equipment. Many governments maintain extensive large stockpiles of old office furniture and nevertheless make considerable purchases of new furniture every year to meet emerging needs. New branches and offices are supplied with new office furniture even when the branch or office concerned is expected to exist for only a short period of time.

When the office is closed down, the newly acquired furniture is added to the growing stockpile. Poor inventory records and other deficiencies in information keeping make it difficult to draw on these existing stockpiles. Costs of storage add to the level of waste of taxpayer funds.

Much of the problem in this area began with the shift towards the open office concept in the 1970s. The original goals of the open office idea were to reduce initial construction cost and to facilitate the reconfiguration of a building in line with changing requirements. Much of the pre-existing stock was not suited to use in an open office plan. That furniture was replaced with modular work stations, which in theory could be broken down into their component parts and combined with other compatible furniture to make new units.

Changes in modular design and its market and the exit of former manufacturing companies in this space have often cancelled out this possibility. Purchasing departments can play an effective matchmaker role in building up supplies of inventory and equipment in one part of a municipal organization, to meet an anticipated need in another part of the municipal organization.

Procurement bylaws should direct staff that no new office equipment or furniture may be purchased until it is determined that the need cannot be addressed from existing inventory. The mere fact that an operating department within a municipality wishes to purchase something does not in itself demonstrate sufficient need.

Measurement of needs must be approached on several levels, including: can the requirements of one department within the organization be met by diversion of resources from another part of the organization; can the requirements of a department be met out of existing stores; does the benefit derived from servicing the requirements of a department exceed the cost of doing so? Another method of addressing need is to change existing patterns of use.

A 1996 study by the Ontario Ministry of Education indicated that the use of a semester system in Ontario schools could increase the capacity of existing schools by between 25 and 50 per cent. However, there is often resistance to such change. A follow-up study undertaken two years later by the Provincial Auditor found that only one of the boards sampled had implemented a three semester, full year schedule, and it had done so at only one school.

Stephen Bauld is a government procurement expert and can be reached at swbauld@purchasingci.com. Some of his columns may contain excerpts from The Municipal Procurement Handbook published by Butterworths.

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