How changing government procurement policies are impacting the Canadian nonprofit sector

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Remember that classic refrain: “Birds gotta fly / Fish gotta swim”?

There’s another line one could add: “Governments gotta procure.”

Not as catchy, granted. Still, the reality is that obtaining and providing services and resources for social services, training and other nonprofit endeavours falls to provincial governments across the country.

To the uninitiated, this topic might not seem like a big issue. However, for charitable sector workers and leaders on the ground, provincial governments should be looking to procurement methods that take into account the expertise of the sector, rather than looking to ostensibly save money by funding large, multinational organizations with no prior knowledge of the nuances of the communities they are signing up to serve. It’s a situation that is playing out in BC right now.

To procure. But “how” to procure?

One of the more vocal voices against the direction the government of BC is taking on procurement contracts is Jody Paterson of Vancouver-based BoardVoice, which represents the interests of volunteer boards across the province.

Paterson said the nature of procurement in her province has changed dramatically over the past few years and presents a disturbing trend.

The BC government, she says, has been using procurement for employment training since the late 1990s and may be moving toward using a similar ideology for procurement of social care services.

“I suspect that what's driving it is a loose understanding of what services under free-trade agreements must be dealt with through procurement; a clearly growing interest at the federal level of using procurement; and governments that are eager to reduce the hassles of multiple small contracts with nonprofits by shifting to giant regional ones managed by giant multinationals,” Paterson says.

What is being missed, she contends, is that use of a procurement model will abandon ground-level expertise for and by those who work in nonprofits and know their communities like no other.

There is a potential loss of the “reinvestment in community that nonprofits have to do as a condition of being nonprofit, the collaborative model of nonprofit service delivery - and of course, the passion and, dare I say, love that is the whole reason for nonprofit existence,” Paterson laments. “The sole reason for a nonprofit being created is because someone cared enough about their community to identify a gap and take steps to address it. I do not understand why we think a company that is first and foremost motivated by profit, is going to be the solution.”

The BC Government’s procurement services office is run out of the Ministry of Citizens’ Services. The ministry released a strategy document last year indicating it spends more than $6 billion on procuring “a wide variety of goods and services for British Columbians and their communities.”

In her introductory comments for the document, BC Minister of Citizens’ Services, Jinny Sims, writes that in an attempt to modernize the government’s procurement policies, the goal is to achieve “social, environmental and economic benefits” and then return those benefits to British Columbians.

“Our new approach is based on listening to businesses that have experience working with the public service, our employees who see procurement from the buyer’s perspective, and other jurisdictions to see what’s worked elsewhere,” Sims notes. Adding later in her preamble: “Our goal is to improve procurement, realize value for money, and create benefits for communities.”

For Paterson, all signs point to cost-efficiencies at the expense of truly knowledgeable service providers who know the community.

“What they don't seem to see is what they are giving up with this model; things like community-based services that actually reflect and know the communities they work in, the reinvestment in community,” she says.

Paterson also thinks this is an issue that could impact other provinces, if it hasn’t already.

An Eastern view

Over in Toronto, Trina Foster, CEO of Onestep Ontario, a resource for the province’s employment and training sector, has similar worries.

She says her organization is very interested in what the Ontario government plans to do with procurement practices in her province. Foster also notes that she’s not the only one, saying the subject is now “on everyone's radar.”

“Ontario has moved towards an open, competitive process that places no limitations on the eligibility of organizations by sector or type. The process itself - i.e., commissioning - is not uncommon in the social services space and can be very effective,” Foster says. “But a lot comes down to the eligibility and adjudication criteria that are outlined in the Request for Proposals (RFP). With the coming transformation of employment services, Ontario has an opportunity to find the right balance between ensuring a fair and contestable market with meeting community-level needs and priorities. The process is [in] early days and still in the design phase.”

She adds that her organization is keenly observing the situation in BC, with a desire to learn from what is happening on the west coast of the country to “make sure Ontario comes out of its transformation with the system it needs to drive meaningful employment outcomes for Ontarians. And that won't happen without strong leadership from the community-based employment and training sector.”

Given the recent election of a new government in Ontario, many sector stakeholders are waiting to see what a new Market Sourcing Exercise, being led by the Ministry of Training, Colleges and Universities (MTCU), will lead to for procurement.

The current procurement regulations for Ontario can be found on its Supply Chain Ontario website run by the Ministry of Government and Consumer Services.

A national procurement perspective

Earlier this year, Brian Emmett, Imagine Canada’s chief economist for Canada’s charitable and nonprofit sector, released a discussion paper on this issue, titled Unfair or Unwanted? Competition Between Charities and For-Profit Businesses in Canada. You can find that paper here for download.

While the paper discusses tax advantages/disadvantages between for-profit and nonprofit entities, Emmett raises some thought-provoking issues.

In the first chapter of his paper, Emmett takes a more middle-ground position and tees-up the situation as follows:

“This paper will argue that competition between charities and for-profit businesses is a fact of life that is not going away; that tax support for charities is broadly comparable to subsidies provided to for-profit businesses; that tax policy has little, if any, effect on the market shares and earnings of for-profit businesses; and that the relative positions of charities and for-profit business in social markets is determined by the nature of the market and the people in it rather than by the character of the services brought to it. The ‘levelness’ of the playing field is not a major or even important factor. Rather, the essential policy question facing governments is what set of policies will best serve the needs of Canadians both now and in the future.’”

The paper is well worth the read for anyone interested in getting a handle on how this subject is evolving across the charitable sector in Canada.

Andy Levy-Ajzenkopf is a professional writer living in Toronto. He can be reached at aajzenkopf@yahoo.com.

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