Buy-local policies growing

August 6, 2010

Republished from the Winnipeg Free Press print edition August 6, 2010
Mayoralty candidate Judy Wasylycia-Leis recently sparked discussion about government-procurement practices when she suggested that locality be a consideration in the City of Winnipeg tendering process.

Commentaries have pitted this as an either-or debate regarding protectionism versus free trade, the higher costs associated with preferring local business over cheaper ones and about the ramifications of us doing something that the rest of the world supposedly is not.

To begin with, this debate is not an all-or-nothing conversation. Trade has its benefits, but it also has its flaws. To pretend that “free trade” and “fair tendering” are really free and fair is naive. Free trade has allowed some local companies to expand and hire more Manitobans, while others have been forced to move, close or sell out, resulting in lost jobs.

Extreme measures either way do not make responsible public policy. Our public institutions are mandated to act in society’s best interest, and our best interest is not served by blind adherence to the cheapest bid. This is why tendering policies already consider a host of other criteria. Adding locality to this mix is not in and of itself protectionist; it ensures maximum value for publicly spent dollars.

Some fear that local preference will escalate costs and result in fewer or lower quality service and products. Again, it is not simply one or the other. When weighing competing bids of similar quality and cost, it is possible to add other considerations, such a locality, as tie-breakers.

In looking out for the public good, governments increasingly consider safety, quality as well as life-cycle and ongoing operating and maintenance costs of various tenders in addition to up-front prices. We should also favour businesses that reduce taxpayer costs related to poverty, crime and incarceration, unemployment and health care while increasing government revenues through payroll and income tax revenues and consumption taxes. This is not about charity, this is about efficient use of government funds.

To present this approach as something no one else is doing is also misleading. Integrating economic, social and environmental objectives, also known as a “triple bottom line” approach, is becoming increasingly common and governments and other institutions are getting on board through their procurement policies.

For example, the Vancouver Olympics gave consideration to social enterprises in their procurement process. As a result, social enterprises employing women returning to work, inner-city residents and aboriginal youth working in social enterprises produced the flowers presented to medallists and the podiums that they stood on. The City of Calgary has implemented a sustainable environmental and ethical procurement policy. Ontario’s recently released poverty-reduction strategy includes commitments to developing procurement policies that support social enterprise. New Westminster, B.C., recently adopted a living-wage policy, ensuring that work it contracts out is awarded to companies that adhere to wage and benefit standards greater than what is legally required.

The Scottish government is implementing a policy that gives 10 per cent preference for social enterprises in certain procurement fields, including three per cent for subcontracting to social enterprises. In Great Britain, a Conservative MP has brought forward a bill in support of social enterprise procurement preference. Italy has long given extra weighting to purchasing from co-operative businesses, recognizing that their business model of collective ownership creates economic democracy and a more equitable distribution of wealth.

Our neighbours to the south understand the value of balancing free trade with strategic purchasing. More than 140 municipal governments have passed “living wage” ordinances regarding their procurement contracts, including big cities such as San Francisco, Santa Fe, N.M., Washington, D.C., Baltimore, Boston, Los Angeles and St. Louis. The U.S. government has targets of procuring five per cent of contracts from small female-owned businesses, three per cent from service-disabled, veteran-owned businesses and gives small businesses located in “HUBZones” (historically underutilized business zones located in economically distressed communities) a 10 per cent price evaluation preference on tenders and aim for three per cent of all federal contract dollars to be awarded eligible businesses. In Minnesota, targeted small businesses that are located in economically disadvantaged communities or are owned by racial minorities, women or people with disabilities are given up to 6 per cent pricing preference. The U.S. Army has a green procurement strategy.

Leaders around the world are beginning to understand the ripples of procurement. They are seeing how even incremental cost increases in procurement are dwarfed by the direct financial payback that certain enterprises provide, never mind the longer-term financial savings relating to the costs of poverty and poor health. Municipal governments could catch this wave.

Brendan Reimer is the prairies regional co-ordinator for the Canadian Community Economic Development Network, a national member-led non-profit association of organizations committed to community renewal and poverty reduction.