If I walked into a car dealership and announced to the salesperson that I was only interested in a vehicle on that lot and would look nowhere else, I suspect that she’d be less likely to throw in a free set of floor mats or knock a few dollars off the price.
Yet too often, this is how government procures the goods and services it needs to do its work on our behalf. And it’s costing all of us dearly.
Almost every time a public entity buys something, it posts on a website called MERX so that companies have a chance to bid openly. A scan of this site shows that government repeatedly specifies the brand of a product that it wants, rather than only explain the specifications it needs to fulfil.
When this occurs, the company that is explicitly identified will not compete as fiercely as it could because it knows it can’t lose.
Moreover, too many different branches of government approach procurement in silos, with no coordination or centralization, even if they are buying the exact same product. As a result, they fail to take advantage of economies of scale and lose out on hundreds of millions of dollars in savings that more effective procurement would produce.
For example, if a particular ministry, a government agency, three hospitals and a community college all needed new desks, surely it would be smarter and cheaper to use one centralized system to buy them in a single competitively-procured transaction.
This seems like common sense to me, but it isn’t what occurs today, as each of these entities would buy separately and spend more of our money and their time than was necessary to accomplish their original goal.
The chance to save massive amounts of taxpayers dollars by buying better was spelled out in the audit commissioned by the government and released by Ernst & Young this past September. On page 37, this report recommended that government procurement be transformed by centralizing purchasing and driving standardization across all ministries and the broader public sector.
This follows the 2017 expert panel report that concluded that more effective procurement in Ontario’s health sector could save government a minimum of $500 million every year. Consider how this number would grow if buying smarter applied to all ministries, agencies, school boards, municipalities, colleges and universities.
For months, there has been a lot of discussion about Ontario’s fiscal situation, with various deficit numbers being tossed around by different observers and analysts.
From my perspective, there is nothing at all wrong with seeking to balance the province’s books. In fact, I believe that it’s crucial to create a reasonable plan to eliminate the deficit and then execute on that plan.
A balanced budget provides us with the freedom to invest in those things that matter most — top-notch hospitals and world-leading schools, for example — without leaving behind ongoing deficits to our children and grandchildren.
And that same fiscal flexibility gives us the cushion to respond to rough waters that will occur in an integrated global economy. From the anxiety triggered by Brexit to the results of the next U.S. presidential election, we live in a world where decisions made far away have a direct impact much closer to home. It is a guarantee that we will experience economic turbulence before too long and government will need the room and resources to manoeuvre when that happens.
But how a government balances the books tells you a lot about who and what it values.
Recently, the Ford government took direct aim at some of our most vulnerable by cutting funding for after-school programs in high-needs neighbourhoods.
Thinking like this will neither balance the books nor help build a society in which equality of opportunity is achieved. It is short-sighted, mean-spirited and misses the mark in terms of fiscal restraint.
The time has come for government to make buying better a top priority by centralizing procurement and mandating that defined savings targets be achieved by more effectively managing all purchasing involving public money.
Revolutionizing public sector procurement may not grab headlines, but it will have a significant impact on eliminating the deficit and it makes sense. Most importantly, it will save big money without gutting the core public services that the people of Ontario rely on.
We just need a government that has the courage to disrupt the status quo and the competence to get it done properly.
This guest column is by Steven Del Duca, the former MPP for Vaughan. He also served as Ontario’s Minister of Economic Development and Growth.