Metro Vancouver is a powerful purchaser in the region. In 2012, the total payments to Canadian suppliers by the regional district – over
750 – was over $800 million.
The regional district’s current Sustainable Procurement Procedures and Green Procurement Procedures, focus on the conduct of suppliers and contractors relating to environment attributes of products and services, as well as environmental and social practices.
Metro Vancouver’s policies are a good start, and we believe the regional districts policies could go even further to strengthen the local economy.
The Columbia Institute’s latest resource guide, Buying Local: Tools for Forward-Thinking Institutions, details specific policies and practices for economic development through local purchasing. We would urge the Finance Committee to examine the report, and consider adopting applicable procurement practices.
Last year, we released a study detailing the economic impact of local purchasing – the first study of its kind in Canada.
Using office supply procurement in B.C. as an example, the study measured a 77%-100% economic advantage for B.C. from buying local, and an 80%-100% increase in jobs per million dollars spent.
That study, The Power of Purchasing showed the value that local companies have to the economy through the lens of office supplies. Buying Local provides some tools for institutions to harness that benefit and become economic change agents.
Increasingly, large institutions and municipalities are beginning to incorporate locality as a critical component of procurement value.
Challenges and barriers to greater local procurement do exist. For public bodies, trade agreements can limit the ability to give explicit preference based on location. It is possible to do so under certain dollar thresholds, however or by including local social benefits as a value in procurement.
Many challenges to local procurement come from current procurement practices that make it difficult for local businesses to compete with large multinational businesses, which may have staff dedicated to finding and winning contracts. Local businesses may not have the capacity to address all procurement needs.
The first steps to increasing local procurement generally involve establishing a leadership commitment, identifying where opportunities lie through leakage calculations, defining “local” and setting targets for improvement.
Engaging the local business community plays a critical role in successful local procurement. More interaction with local businesses can be facilitated by reverse trade shows, pre-procurement procedures, broad advertising, seeking out local businesses before tendering, and requiring some local businesses in the bidding process. Institutions can also work with large suppliers to stipulate that local businesses be included in work being tendered.
Changing some aspects of procurement processes can have large impacts. Using local databases is a common way to engage more local businesses. Simplifying tender documents, speeding up payments and looking for opportunities to unbundle large contracts are also small changes that can have big effects. Local procurement can be aligned with other goals such as social procurement, emphasizing female and minority owned businesses, small and medium-sized enterprises and sustainability goals. Finally, the benefits to the local economy of using local suppliers can be given explicit value in the procurement process, for example by measuring economic multipliers.
These measures do not necessarily mean that all bids must go to local companies, but they do provide procurement professionals with the ability to incorporate local value where it makes sense to do so.
Institutional procurement can be an effective tool for creating more diverse, equitable and vibrant economies.
CLICK HERE to download the full report.
This post is from a presentation to the Metro Vancouver Finance Committee on June 20, 2014.