Last week Premier Pallister announced the progress the Province of Manitoba has made with a common sense approach to purchasing. Since adopting a shared purchasing approach that includes a bulk buying arrangement, the province has realized savings of close to $13 million. This is important work and should be applauded.
This new purchasing calls on government departments and Crown Corporations such as Manitoba Liquor and Lotteries as well as health authorities to purchase together. Bundling these purchases means savings of hard-earned tax dollars, which can be used elsewhere.
This shared purchasing initiative is very much in sync with the municipal leaders at the Winnipeg Metro Region. They created John Q Public to deliver regional services and strategic projects that have a shared tendering and purchasing hub. Member municipalities began a pilot project five years ago and tested the concept at the municipal level. They tackled purchasing of several goods and services that were commonly used by the municipalities.
One area that was tested was emergency equipment such as breathing apparatus and turnout gear. The process began with the creation of a shared specification list put together by the fire department staff. Then the municipalities went to market to seek pricing quotes. This bundling of purchasing and in the market, they received more bids at more competitive prices.
Experts have estimated that the typical acquisition costs for municipal purchases is 2 – 5% of the product or service cost. This includes administrative time spent researching products, drafting RFP’S, selecting suppliers, managing bids, finalizing contracts and managing product or service delivery. This labor cost is significant and can add up when done individually budget by budget. Anyone in the business of procurement will tell you, it is quite an intensive process, laden with fine print and pitfalls if not done correctly.
Working together does not just benefit the purchaser, economies of scale also benefit producers who get to rely on repeatable larger scale orders that can also drive total costs down.
We applaud Premier Pallister for his vision, hard work and determination to move procurement in a new direction. We hope in the coming months to work with the Provincial government on this approach. Because we believe that every dollar wasted is a debt owed to the taxpayer.