Strength in numbers

From the December 2023 print edition

Public procurement is evolving quickly. The pandemic provided an avenue for procurement to gain attention and a seat at the table.

Stéphanie Dion is Procurement Manager, Canoe Procurement of Canada.

This is an amazing opportunity. My colleague, Sean Carrol, former CPO from the State of New York, said in an open letter to members of the National Institute of Government Purchasing dated March 2020, the pandemic would be our opportunity to raise our profile and shine. Was he ever right.

This spotlight means more is expected of us, as procurement is considered a strategic function in many public entities.

Public entities are facing challenges like never before, with evolving and heightened regulatory requirements, workforce, and supply shortages and pricing volatility having to do more with less, from microchips, to fleet, to lumber, to tampons. As practitioners, we must be agile, creative, and flexible. Public entities must rethink how to provide their services strategically, do more with less. This is where group purchasing comes in.

Group purchasing has seen a significant surge in popularity and use in the last 10 years in Canadian public procurement. While it may be a new tool in the procurement toolbox for many, collaboration is well established in Canadian public procurement. Collaboration has been used for decades for various sector-specific groups like the provincial, municipal, health, and education, often in defined geographical locations in proximity such as Alberta, Ontario, and the Maritimes. Some not-for-profit municipal associations such as rural municipalities of Alberta were created for the function to do group purchasing 100 years ago.

Group purchasing organizations (GPO), known as cooperatives in the US, are used extensively south of the border. The pandemic, supply chain, and workforce challenges have contributed to the Canadian surge in popularity.

In addition, the Canadian Free Trade Agreement (CFTA) now permits the use of buying groups in procurement. Public entities can utilize GPOs, bringing opportunities for entities to enhance their performance. When used strategically, cooperation in procurement can bring significant benefits to public entities, including shorter production and delivery timelines, access to alternative equipment in high demand, administrative efficiencies, contributing to optimization of operations.

While CFTA allows for the use of buying groups, it’s silent on implementation. Therefore, it is critical for public entities considering the use of any buying group such as Medbuy or Canoe to do their due diligence before using them. Not all GPOs are the same. For example, the level of disclosure of information may vary between them while some are public entities, others are for profit. Similarly, not all public entities have the same policies or obligations and are subject to various trade agreements. Entities would therefore benefit from reviewing information and processes from a GPO they are considering utilizing.

Something for public entities to consider is the importance of compliance for GPOs. Executing solicitations in a compliant manner is the basis for GPO’s existence. Following the rules is mandatory for anyone involved in public procurement, GPOs included. To be compliant, GPOs must adhere to the same rigorous processes and procedures as public entities or better. Entities considering using GPOs can access multiple resources from the National Cooperative Procurement Partners (NCPP), with thought leader Tammy Rimes at the helm. The NCPP is the voice for cooperative procurement through legislative advocacy, training, sharing member success stories, and educating public procurement teams across North America. Membership is free to public sector practitioners at www.ncppassociation.org.

There are many success stories from entities using GPOs. The value levers available through GPOs will differ depending on the goods or services in question, each entity’s challenges, and the driver behind their decision to use GPO contracts. Some entities have been able to reduce the backlog of requisitions, often eliminating delays in accessing critical goods and services, and were able to re-allocate their procurement expertise to complex and high-risk solicitations. Others reduced the wait time in the production queue for high-demand fleet equipment by eliminating the three-to-six-month tendering process they would have had to issue had they not leveraged a GPO contract. Multiple smaller entities could access a better value proposition (for example compliance to regulatory requirements, better pricing, enhanced level of service, better product) by leveraging the buying power from joining forces under a GPO. Finally, many public entities have turned to GPO contracts to plan sourcing strategy should a public emergency occur. Challenges can have some positive or “less bad” outcomes.