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Purchasing policy increases spending limits, local preference to break ties

Posted February 4, 2014

The five year update to New Tecumseth's Procurement of Goods and Services bylaw raises the dollar limits that can be spent by municipal departments without triggering the approvals chain including increasing the minimum ceiling from $250 to $1,000.

Other categories whose levels have been increased include:
  • $1,000 to $5,000, (up from $250 to $2,500) which requires three quotations "where possible and practicable", no purchase order required;
  • $5,000 to $20,000, (up from $2,500 to $15,000) in consultation with department head, three quotations, and no report to CAO or council necessary unless a contract/agreement is to be executed; and
  • over $20,000 to $75,000 (up from $15,000 to $50,000) "where goods/services are included in the approved budget" tenders should be advertised, report to CAO/delegate for approval.
  • All other cases, tenders to be advertised, a report to council by the issuing department head, in consultatation with Purchasing, for council consideration and approval.
As part of this update, spurred by complaints from Trillium Ford Lincoln, which last spring lost out on a vehicle tender to a Brantford dealership over a difference in price of $586.47 including HST, the prospect of including a "local preference" clause was reviewed, but ultimately rejected because of broad based legislation that discourages such trade restrictions.

"The basic principle of public procurement is being fair with open competition. If a municipality practices local preference, this principle is jeopardized. Fairness in public procurement is not limited to those individuals or businesses submitting bids or proposals, it is also extended to the taxpayers that are being served by their municipal government. It is the responsibility of municipal staff to acquire goods and services in the best interest of all taxpayers, not just those individual suppliers even though they may also be taxpayers," according to Lori Archibald, New Tecumseth's Senior Buyer, in her report to council.

"In addition, due to the geography and the Town's surroundings, many local businesses do a great deal of work outside of our borders. Not only is it sound practice to comply with public purchasing principles, it is also a reasonable approach to keeping an open competition process available to local businesses who may bid on contracts in other jurisdictions. By advocating local preference policies, a municipality not only limits its own level of competitive bids received, but it may also limit its local businesses from being awarded contracts outside of the area, if other municipalities react and reciprocate with similar policies to limit dealing within their boundaries. Allowing local preference to become a factor in determining the award of a contract has been legally regarded as a very restrictive trade practice. Not only is a municipality limiting the amount of competition, and therefore its choices with regard to value, quality, etc., but it would also be contravening various pieces of legislation. Furthermore, the Municipality has to be accountable for its use of the public's funds and such a practice could easily be viewed as inappropriate and having to pay more with access to a smaller pool of vendors. If a local preference provision was adopted, this would certainly limit our ability to obtain competitive bids. The bids obtained through the process could potentially reflect a higher cost. Local Preference provisions are essentially a tax to support local business."

One concession to "local preference" is using it as consideration in the case of a "tie" between competing bids.

"If a competitive market exists and two or more compliant bids are received and are identical in price, quality, service and delivery, then location of a business will be given consideration."

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