Local Purchasing

Buysmart WorkshopOctober 27, 2011

LOCO BC Amy Robinson

amy@locobc.com 604-351-1664

Supporting local business, building community and growing the local economy.

Local Procurement: Who is LOCO?• We’re building a movement!

– Connect, support & promote local businesses– Build community – Grow the local economy

• Spending as a Lever for Sustainability– Consumers: Own Your Own Campaign– Businesses: Connect and Support– Government: $100+ billion/yr lever

Local Procurement: Agenda

• Overview– Benefits, Drivers & Challenges of Buying Local

– Case Studies & Presentation by Victoria Wakefield, UBC

Local Procurement: What is Local Procurement

• Purchasing goods or services• Balancing factors of cost, quality, service,

sustainability & origin – Origin of goods– Ownership of the goods/services provider

• Seeking out alternatives • Giving access, consideration and potentially

preference to local supply/suppliers

Local Procurement: Benefits

• Enhance our communities• Provide security and diversity of supply • Build employment and wealth

by circulating dollars many times between local businesses

• Reduce the transportation impacts of global supply chains

Local Procurement: Benefits• Economics:

– BC’s small businesses (<50 employees) are:

• 98% of provincial economy• 57% of private sector jobs

(46% of all jobs)• 32% of provincial GDP

• Ex. $100 Spend– Economic multiplier

• Non = $43• Local = $68 (+25%)

Local Procurement: Local Procurement Drivers

• Private Sector: – Brand– Deliver on corporate values

• Supporting community• Reduced footprint

– Build relationships• Public Sector:

– Reinforce organizational goals & values• Supporting community• Economic development• Reduced footprint

– Ensure public spending for public good• Labour:

– Maintain relationships with members– Protect Canadian jobs

Local Procurement: Challenges• Defining local• Cost • Efficiency• Supply & capacity

– Supply criteria– Small business capacity

• Regulatory issues

Local Procurement: Challenges• Challenge: Defining “Local”

– Products & service differences– Supply chain vs. company ownership

• Strategies:– Geographic boundary– Company size or composition

• SMEs• Women owned, Minority owned

– Ownership & Control• Locally owned; Canadian owned (50+%)• Control over procurement & marketing

Local Procurement: Challenges• Strategies: Defining “Local”

– Use whatever definition inspires/allows you to build alliances & take action

– Ex. City of Ventura“The City of Venture supports small local businesses. A business is small if it employs less than 100 and has average annual gross revenues of less than $20M. A business is local if it has held a business license in the City for 12 months preceding the bid. Small local bidders are given preference on City projects of up to 5% when responsibility and quality are equal to competition on contracts <$250K”

Local Procurement: Challenges• Challenge: Cost

– Local environment & labour standards– Local land prices & tax structures

• Strategies:– Buy local services– Products:

• Buy in season• Increase size of buy or term

Local Procurement: Challenges• Challenge: Efficiency

– Bundled contracts• Strategies:

– Create & communicate a policy– Work with existing suppliers– Alter process (ex. split into ‘lots’)

Local Procurement: Challenges• Challenge: Supply & Capacity

– Availability of products & services• Consistency of supply• Specific needs

– Small businesses capacity to supply needs• Strategies:

– Seek out available supply– Address specific needs (product substitution)– Build capacity by ensuring access:

• Avoid bundling contracts• Advertise locally• Communicate needs to local suppliers

Setting the Stage: Increasingly Competitive Environment

Procurement processes are subject to:1. Statutory and common law rules 2. Administrative policies or directives; and3. Rules of applicable Trade Agreements (“TAs”)

Provincial & municipal public procurement will become much more open and competitive:

• Canada is under intense pressure from its trading partners (e.g., US, China, Europe, India) to open up non-federal procurements to foreign suppliers e.g. Crown corporations, utilities, provinces and municipalities

• Previously only federal procurements subject to TA• Pressure from Canada’s trading partners is being fuelled

by their own suppliers who want access to “the entire” Canadian procurement market

Key AgreementsAgreement Covers

Agreement on Internal Trade (AIT) Applies to provincial, municipal and MASH contracts being bid on by “Canadian” suppliers

New West Trade Partnership Agreement (NWPTA)

Applies to B.C. Alberta and Saskatchewan provincial, municipal, crown corporations and MASH procurement being bid on by suppliers carrying on business in those provinces

Canada-US Agreement on Government Procurement (CUSPA)

Applies to provincial and municipal procurements being bid on by US suppliers

NAFTA-Chapter Ten Applies to federal and provincial contracts being bid on by US, Canadian and Mexican suppliers

WTO Agreement on Government Procurement (GPA)

Applies to federal contracts being bid on by suppliers from 37 countries

Canada-EU Trade Agreement (CETA) Negotiations

May apply to procurements by federal, provincial, municipal, Crown corporations and utilities/commissions being bid on by EU suppliers * implications for Can-US AGP

Purpose: Reduce/eliminate barriers to movement of persons, goods, services, and investment in Canada.

Issues: Eliminating local price preferences, biased technical specifications, unfair registration requirements for non-resident suppliers to ensure equal access to procurement for all interested Canadian suppliers.

Applicability: Government entities, MASH Sector, and crown corporations.

Thresholds:

Crown Corp Gov’t MASH

Goods $25K $100K $500K

Services $100K $100K $500K

Construction $100K $250K $5 million

Canadian Regulations Agreement on Internal Trade (AIT)

Purpose: Ensures that parties do not restrict or impair trade between, among the Parties, or investment or labour mobility between or among the Parties.

Issues: Work toward the enhancement of sustainable development, consumer and environmental protection, and health, safety and labour standards.

Applicability: Alberta, Saskatchewan and British Columbia. Provincial and municipal entities, the MASH sector and crown corporations.

Crown Corp Gov’t MASHGoods $25K $10K $75K

Services $100K $75K $75K

Construction $100K $100K $200K

Canadian Regulations New West Partnership Trade Agreement (NWPTA)

Canada - US RegulationsNorth American Free Trade Agreement (NAFTA)

Purpose: Achieve greater competition for, and transparency in, government procurement.

Issues: Eliminates the protection of domestic products or suppliers or discrimination among foreign suppliers.

Applicability: Virtually all federal government agencies in the three countries, as well as many government-controlled enterprises and provincial government entities.

Crown Corp Gov’t

Goods $383,300 $27,300 (CD/US) or $76,600 (CD/MEX)

Services $383,300 $76,600

Construction $12,200K $9,900K

Canada – US RegulationsCanada-US Procurement Agreement (CUSPA)

Purpose: A provincial and territorial procurement commitments in exchange for U.S. sub-federal commitments.

Issues: Temporary Canadian procurement commitments for construction projects for some provincial/territorial agencies and for a significant number of municipalities, in exchange for the U.S. exempting Canada from the “Buy American” provisions of the Recovery Act for seven federal programs.

Applicability: B.C. has offered access to all Ministries, Boards, Commissions, Agencies and Committees but not Legislative Assembly procurement. Procurements by covered varies between provinces.

Gov’t

Goods $604,500

Services $604,500

Construction $8,500,000

International RegulationsWorld Trade Organization

Purpose: “Like products” are treated similarly, regardless of source.

Issues: Public procurement isn’t covered in general provisions. However, the WTO’s Government Procurement Agreement applies directly to 2 categories of procurement not covered before—services and sub-central entities.

Applicability: Applies to Central agencies, provincial governments and affiliated agencies and central government contracts.

Crown Corp Gov’t MASH

Goods $355,000 $130,000 $355,000

Services $355,000 $130,000 $355,000

Construction $5,000K $5,000K $5,000K

Canada and the EU is in negotiations for a comprehensive economic and trade agreement.

Issues: Proposed CETA procurement rules would prohibit municipalities from:• Restricting tender calls to local or Canadian companies or requiring that bidders use some

proportion of local or Canadian goods, services or labour in providing the goods and services being tendered;

• Using procurement for sustainable development purposes such as promoting food security by adopting “buy local” food practice.

Applicability: All central government entities, all other central public entities, as well as all sub-central government entities (i.e., at the local, regional or municipal level), be open to European goods and services.

In addition, the EU is requesting an opportunity to bid on contracts awarded by the MASH sector as well as by airports, publictransit systems, ports, municipal water services, and power and energy authorities such as BC Hydro and Hydro-Québec.

International RegulationsCanada-EU Comprehensive Economic and Trade Agreement (CETA)

Federal/Provincial/Municipal Monetary Thresholds (CDN $ January 1, 2010 – December 31, 2011)

TA Entities (Departments & Agencies) Crown Corporations

Goods Services Construction Goods Services Construction

AIT Annex 502.1A Annex 502.3MASH 502.4

25,000

N/A

100,000

100,000

N/A

100,000

100,000

N/A

250,000

25,000

500,000

N/A

100,000

500,000

N/A

100,000

5,000,000N/A

NWPTA 10,000 75,000 100,000 25,000 100,000 100,000

C-U.S. AGP* Permanent

604,500 604,500 8,500,000 N/A N/A N/A

WTO-GPA 221,300 221,300 8,500,000 604,500 604,500 8,500,000

NAFTA Can/U.S. 27,300 76,600 9,900,000 383,300 383,300 12,200,000

Case Studies: University of Victoria• Policy Context:

Procurement Principles1. Use Quadruple Bottom-Line (4BL) acquisition evaluation framework

for major procurement decisions – “People, Planet, Profit, Socio-Cultural “

2. Increase use of locally produced goods and services to reduce GHG emissions where practical & economically feasible

3. Calculate & incorporate into purchasing decisions the value of GHG as compared to other supplier products and distribution points (ground transportation, air travel, energy-electricity, fuel, coolants, etc).

4. Incorporate into sourcing documents the requirement for supply of products produced locally where feasible & practical

5. RFP and contract for green cleaning supplies for campus wide use

• Goal: Support local food producers whenever and wherever we can. • Benefits:

– Use local labour – Minimize carbon footprint of food purchases.

• Means:– Standard Sourcing Clauses for all Formal Solicitations – Stewardship Provisions

• Initiatives:– Local Produce Acquisition Initiative - Organics – Local Meats and Dairy Acquisition Initiatives – Produce RFP – Islands West

• Success: 46% produce from Vancouver Island farms; 36% of meat and poultry comes from BC producers; Baked goods including bread, muffins, pastries, buns & pizza from bakeries located on the southern part of Vancouver Island

Case Studies: UVic Local Food

Case Studies: UVic Local Procurement• Produce RFP 402 and Contract

– Assessment of local availability– 46.4% by VI producers (38.7% of the contract value approx

$1mil/year)– VI firm was awarded the contract; Supplier uses local labour– Calculated GHG emissions in award decision

• Pizza RFP 441 – Approx. $400,000 – VI firm was awarded the contract; Supplier uses local labour – Vancouver Island Products Clause

• Future RFP’s– Meats (Approx. Annual Value $1 mil); Dairy (Approx. Annual Value

$800,000); Eggs; Baked Goods

Case Studies: UVic Local Procurement• Vancouver Island Products & Services RFP Clause

• UVic acquisitions are conducted with compliance to Federal, Provincial, and Local legislation, regulation, and policy directives as stipulated in UVic Policy 5105 as follows:

– It is the policy of the University of Victoria to acquire goods and services through a competitive process whenever practical that results in supply arrangements at the most effective net cost, in the correct quantities, of the appropriate quality, and from the most responsive and responsible source.

– Purchasing Services shall comply with the letter and spirit of laws and regulations governing the public procurement function.

– Purchasing Services will make purchases in compliance with legislation and statutory regulations including CSA for safety standards, WHMIS for hazardous products, customs duties, excise taxes, GST and provincial sales taxes.”

– 4BL in best-value analysis and evaluation addresses monetary value placed on the carbon footprints of the respective products and or services.*

*BSI - PAS 2050 Methodology to calculate GHG emission values in RFP evaluations

• Policy Context– Local Food Procurement Policy (2008)

• Progressively % of food budget from local sources• Defines “local” as food grown in the Greater Toronto

Area, the Greenbelt of Ontario and other regions of Ontario

• Phased approach for implementation - Phase I by Children’s Services

– Goal of 50% Local Food Procurement– Climate Change, Clean Air & Sustainable Energy

Action Plan

Case Studies: City of Toronto

• Toronto Environment Office with Children’s Services Department targeting Municipal Child Care Services ($2.2 million/yr)– Mapped out process for menu prep, food ordering

and on-site food prep– Worked with food distributor to assess existing

supply chain (600+ manufacturers & suppliers)– Analysis of food expenditures– Tracked food purchases by supplier & site for one

year

Case Studies: Toronto Local Food

• Outcomes: – Origin Map– Baseline– Opportunities

• Results: – Increase local sourcing 13.4% to 33% ON produced

goods– Minimal operational & financial impacts

• 15K increase in budget anticipated (none seen as of 1st quarter 2009)

Case Studies: Toronto Local Food

Local Procurement: Case Studies• Other examples

– Federal Government:• National Shipbuilding Procurement Strategy

– $35 B shipbuilding initiative» $25 billion combat vessel contract Irving Shipbuilding

(Halifax)» $8 billion non-combat contract to Seaspan (Vancouver)

– Ontario Government:• Clean Energy Program

– Domestic content requirement» Domestic content provisions» Requires that 60% of value of wind and solar be sourced

from within Province» Incentives to local rather than barriers to others

Local Procurement: Case Studies• Other examples

– City of Toronto:• Subway car contract required Canadian-made• Created 1,000 well-paying jobs in Thunder Bay

– City of Victoria: • Required local servicing in office machines contract• Sources consulting services from island suppliers within law

– City of Ottawa: • Local preference on contracts where they have a tie

– Vancouver Convention & Exhibition Centre (VCEC)• Local purchasing a requirement for operations (local ingredients “whenever

possible”)• Annual purchases include:

– 12,000 heads hothouse butter lettuce– 18,000 bottles BC wine– 1 tonne mushrooms

– United Way & CUPE• Buy Canadian policies

Local Procurement: Case Studies• Other examples

– Eclipse Awards • Local recycled glass • Local FSC certified wood

– Saul Good Gift Co. • BC products and businesses

– Peake of Catering• Locally sourced products wherever possible

Local Procurement: Next Steps• 10 Action Steps:

1. How does local support organizational mission/brand2. Assess what you buy most of (by product or spend)3. Assess what is available locally4. Think about broader context - what local industries need

the most support? Ex. forest products, food, etc.5. Create a list of opportunities6. Address your policy context (sustainable procurement,

carbon, economic development)7. Build support 8. Add standard clauses9. Advertise widely where small businesses are likely to

look10. Work with existing suppliers and reach to find new ones

Local Procurement: Next Steps• Build Support:

– Sustainability Office– Food Advocacy Groups– Sustainability NGOs

• LOCO• Buysmart• Local Food Plus

– Existing supplier base– Other aligned purchasers:

• Universities• School board• Labour organizations

Local Procurement: Commodity Areas

Buysmart Top 10 (with a few LOCO additions)1. Electronic Equipment2. Office Supplies3. Office Furniture4. Paper5. Lighting6. Cleaning Supplies & Custodial7. Meetings/Conferences/Events8. Business Travel9. Gifts & Apparel (incl. uniforms)10. Coffee, Tea, Food & Other Commodities11. Food & Catering12. Couriers

Local Procurement: Next Steps

Don’t Accept the Status QuoTake Action

Collaborate & Communicate

Thank You Amy Robinson

amy@locobc.comwww.locobc.com 604-351-

1664

Thanks to Our Partners

Thank You

LOCO BC Amy Robinson

Info@locobc.com 604-351-1664

BuySmartBob Purdy

bpurdy@fraserbasin.bc.ca 604 488-5358

Supporting local business, building community and growing the local economy.