Case Report on Public Sector Procurement

Final Case Report

Implementing New Procurement Policies in Public Sector

Table of Contents                                                                 Page number

1. Executive Summary -                                                                 3
2. Issue Identification -                                                                 5
3. Operating Environment and Root Causes -                                        6
4. Alternatives and Options -                                                         9
5. Recommendations -                                                                 9
6. Implementation –                                                                11
7. Monitor and Control –                                                         16
8. References  –                                                                         16

1. EXECUTIVE SUMMARY: -

The West Coast City (City) had a staff of 7,500 with an annual budget of $800M. The City was situated by the ocean with a backdrop of snow-capped mountains. It boasted bike lanes and pedestrian walkways along with parks, lakes and a well-developed skyline with panoramic vistas. The City was a perennial top 10 location for places in the world to live. Its financial reputation was measured by a AAA bond rating of which it was very proud. The City won awards for its urban planning, and its real estate values continued to trend with a general increase year over year. The location of the City on the Pacific Rim made it a very attractive location for new immigrants. The City had a very cosmopolitan flavor and a relaxed lifestyle. As with most urban centers, the City had its share of social problems, such as inadequate accommodations for low-income people, substance abuse problems and a large contingent of homeless citizens.

 The City Manager had just attended the biweekly public Council meeting in the City Hall Chambers. Among the agenda items that were approved was a request that the City implement a sustainable and ethical purchasing policy. A very assertive Councilor was anxious to get this policy adopted as one of his first acts as a newly elected official. He had campaigned on this issue and wanted to deliver on it for his constituents. The agenda item stated that the City should form a Task Force to implement the policy, which should be adopted by all City branches and departments. The media that attended the meeting reported this as being a contentious issue for the City staff and elected officials to work through.

The Ethical and Sustainable Procurement Policy Task Force members included the Manager of Supply Management, the Director of Finance and two Councilors, along with representatives from the City’s Library, Police, Fire and Park branches. In addition, the Task Force consisted of several Non-Governmental Organization (NGO) members, who strongly advocated for the sustainable and ethical purchasing policy, and several local business owners wanting to know how the policy might affect their businesses.

After several heated meetings, the outcome of the Task Force was to have supply management draft a policy to buy only fair trade certified agricultural products along with clothing and uniforms supplies that could be sanctioned as being sweatshop-free. The policy would have to be approved by Council at a public Council meeting within six months. The estimated annual value for the goods and services affected by the policy was $1M. This would be considered as the first phase and should be ready for implementation shortly after the policy was approved. The second phase would be to apply the policy City-wide to all products and services within two years for all branches. The Manager of Supply Management was expected to report back to Council at the end of the first year of the policy being in effect.

Manager of Supply Management have following issues in hand to implement new ethical purchasing policy: -

1. Supply chain risks 
2. Lack of knowledge and Man-power 
3. Lack of corporate procedures and systems
4. Lack of budget to cover additional costs
5. Structural and organizational changes

In order to prepare and implement the new Sustainable and Ethical procurement policy and also After analyzing all the possible options, I recommend a plan like below: -

Our recommendation is to divide the Implementation into two phases. First phase will be as under: -

1. Prepare the Ethical Purchasing Policy and Supplier Code of Conduct related to the purchase of apparel and fair trade certified agricultural products like coffee.
2. Creation of one full time permanent position in corporate purchasing department to provide support to all City departments and boards to implement and for ongoing administrative support of the Ethical Purchasing Policy
3. Get Council approval for an increase in the operating budget for Park Board and for all other City departments to cover estimated increase in costs of apparel and agricultural products resulting from the implementation of the Ethical Purchasing Policy
4. Collaboration with all departments to successfully implement and improve the process to move to second phase – which is city wide implementation of Ethical Purchasing Policy for all the public-sector entities.
5. Training for internal staff and Tier one suppliers to support everyone including sub-contractors and tier 2 and Tier 3 suppliers meet the minimum requirements for moving to sustainable goal.
6. Monitoring the progress and present the results to Counsel in a year.

Phase 2 – Conduct a thorough research on the topic and then Prepare & Implement Comprehensive Sustainable and Ethical Procurement Policy for all the public-sector entities city wide.

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