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BUYING LOCAL: Tools for Forward-Thinking Institutions

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BUYING LOCAL: Tools for Forward-Thinking Institutions A RESOURCE GUIDE Buying Local TOOLS FOR FORWARD-THINKING INSTITUTIONS > Acknowledgements The authors would like to acknowledge a number of people who contributed to this study. The following people were consulted for their opinions and experiences regarding local procurement. Their contribution to this report was invaluable. Larry Berglund Supply chain management professional and consultant Brita Cloghesy-Devereux Partnerships and community investment manager, Vancity Credit Union Maureen Cureton Green business manager, Vancity Credit Union Ben Isitt Victoria city councillor and regional director Elizabeth Lougheed Green Manager of community investment (Impact Business Development) at Vancity Savings Credit Union Jack McLeman Port Alberni city councillor Josie Osborne Mayor, Tofino Michael Pacholok Director, Purchasing and Materials Management division, City of Toronto Lynda Rankin Manager, Sustainable Procurement, Government of Nova Scotia Tim Reeve Sustainable procurement professional and consultant Amy Robinson Founder and executive director, LOCO B.C. Victoria Wakefield Purchasing manager, Student Housing and Hospitality Services at the University of British Columbia Juvarya Warsi Economic strategist, Vancouver Economic Commission Mike Williams General manager, Economic Development & Culture, City of Toronto Rob Wynen Vancouver School Board trustee BUYING LOCAL: Tools for Forward-Thinking Institutions by Robert Duffy and Anthony Pringle Editing: Charley Beresford, Helen Guri December 2013 ©Columbia Institute, LOCO BC, and ISIS Research Centre at the Sauder School of Business. No part of this publication may be reproduced without permission of the author. Design: Working Design 1200 – 1166 Alberni Street 1075 Victoria Drive 221–181 Keefer Place Vancouver, BC V6E 3Z3 Vancouver BC V5L 4G3 Vancouver, BC, V6B 6C1 604.408.2500 604.351.1664 604.568.8433 [email protected] [email protected] [email protected] columbiainstitute.ca locobc.com isis.sauder.ubc.ca > Contents Acknowledgements ........................................................................................2 About This Report ...........................................................................................5 PART I THE STATE OF LOCAL PROCUREMENT ................................................................6 Introduction ....................................................................................................6 The Purpose of Procurement ............................................................. 6 The Power of Procurement .................................................................. 7 The Opportunity of Procurement ...................................................... 8 The Current Landscape ..................................................................................8 United States ........................................................................................ 8 United Kingdom ................................................................................... 9 Australia ..............................................................................................10 Canada ................................................................................................11 Summary ............................................................................................ 13 PART II CHALLENGES .................................................................................................. 14 Overview ....................................................................................................... 14 Challenges to Increasing Local Procurement ............................................. 14 Trade Agreements .............................................................................. 14 Internal (Interprovincial) Trade Agreements .................................. 14 International Trade Agreements ....................................................... 16 Challenges for Small and Medium-Sized Local Businesses ......... 17 Challenges Faced by Procurement Departments ..........................18 Challenges with Local Business Lack of Capacity .........................18 Lack of Leadership and Collaboration .............................................19 PART III SOLUTIONS AND TOOLS .................................................................................. 21 First Steps ..................................................................................................... 21 Policy Leadership and Management Commitment ....................... 21 Define Local ........................................................................................24 Leakage Calculators ..........................................................................26 Targets .................................................................................................27 Greater Engagement ....................................................................................28 Reverse Trade Shows.........................................................................28 Work with Large Suppliers ................................................................28 Pre-procurement ...............................................................................29 Broader Advertising ...........................................................................30 Requiring Some Local Businesses in Bidding ................................30 Tailoring RFPs to Local Businesses .................................................31 Process Improvements ................................................................................32 Databases ...........................................................................................32 Procurement Cards – Speed of Payment ........................................33 Simplify Tender Documents .............................................................33 Unbundling .........................................................................................33 Tie Locality to Other Value Based Goals ......................................................35 Tie to Small Businesses ....................................................................35 Tie to Social Ventures ........................................................................36 Tie to Sustainability ..........................................................................37 Tie to Minority and Female Owned Businesses ..............................38 Move Towards “Total Cost” ...........................................................................40 Inclusion of Values in Score Cards – Give Local a Weight .............40 Measuring Local Multipliers (LM3) ..................................................40 Inclusion of Tax in Bidding ............................................................... 41 Notes for Policy-Makers ...............................................................................42 Municipal ............................................................................................42 Provincial ............................................................................................42 Federal ................................................................................................43 CONCLUSIONS ...............................................................................................................44 4 BUYING LOCAL: TOOLS FOR FORWARD-THINKING INSTITUTIONS > About This Report There are many opportunities for organizations to benefit themselves, as well as the economies that sustain them, by making minor adjustments to the way that they purchase goods and services. This report outlines strategies and paths that policy-makers, sustainability managers, procurement professionals and others involved in institutional purchasing decisions can pursue to realize this potential. Around the world, there is a growing movement to support local economies, and various approaches are being taken in different places. Great benefits come from strong, resilient local economies, and many opportunities exist to take small steps that can majorly benefit our public institutions, businesses and communities. If purchasers are ready to take on leadership roles, the tools and solutions detailed here are effective ways to expand local purchasing and strengthen our communities. Part I outlines the argument for local procurement. It demonstrates the power that institutional procurement has over the economy and highlights opportunities for change by examining the current landscape in Canada, the United States, Australia and the United Kingdom. It details how local economic impacts fit within the definition of value when attempting to achieve best value in procurement. Part II and Part II identify tools that can be used by institutions and policy-makers to increase local procurement. They outline a number of challenges, and detail solutions that are currently being used. Examples of the tools have been included along with references to material for further research. COLUMBIA INSTITUTE / LOCO BC / ISIS RESEARCH CENTRE AT THE SAUDER SCHOOL OF BUSINESS 5 PART I The State of Local Procurement > Introduction Around the world, institutional procurement is beginning to incorporate the value of local economic health and vitality. Important opportunities exist to benefit public, non-profit and private sector institutions as well as communities. The Purpose of Procurement What is the purpose of institutional procurement? The most straightforward answer is “to acquire the goods and services needed to operate, for the best value possible.”
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