Time To Clean Up Procurement

Last weekend I bought some soap. Two bars of soap cost $5.49, six bars cost $11.99, and, on sale, 12 bars cost $13.99. The price per bar worked out to $2.75, $1.99, and $1.16 respectively. This is how buying in bulk works and makes obvious sense. If you have the cash, and a place to store a dozen bars of soap, the answer is obvious.

Suppose I knew I was going to need 48 bars of soap a year. Presumably, I could find a package of 48 bars and they would be somewhat less than a dollar each. But suppose I told the grocery store that I was going to buy this many over a year but wanted them in packs of two every few weeks. Should I still expect the same discount?

Now, imagine bringing a dozen bars of soap to the cashier and demanding another discount on the spot. Suppose the store doesn’t want to lose a customer, so they lower their price on the spot. Imagine the look on the store manager’s face if you said you wanted another discount if you paid for the soap on the spot, instead of sending a cheque four weeks later.

Sounds absurd, doesn’t it?

When the City of Ottawa hires an architect or engineer for a project, they bid on the scope of work that is provided through a Request for Proposal (RFP). That’s how the City shops for services. That RFP asks for a specific series of ideas or solutions, designed to solve a problem or address a need. To try and make it easy for staff to compare bids, they create an RFP with narrowly defined criteria and outcomes: only THIS many meetings; meet that MINIMUM code requirement; do ONLY two public workshops.

When the City accepts bids in response to their RFP, a team of staff score the responses and assign points for how well the bidder responded. The highest scoring teams all get similar scores; they have experience, have training, insurance and meet other requirements. Teams with similar experience, but who might not have done the exact same thing get fewer points. If the RFP is for a library, but you’ve only done school libraries, you get fewer points.

That means a new firm can effectively never get experience.

What sets the highest scoring firms apart, and ultimately makes the decision, is the lowest price. A lower fee means less time spent on the project. Less time means less time for creativity and ideas, less time spent solving problems, less innovation, less support to solve problems or proactively look for solutions.

Politically, we say we believe in supporting small businesses and talk about them being the engine of the economy. But because of procurement processes, we make it effectively impossible for a small business, or a new business, to obtain work with our own government, even though a whole section of the City of Ottawa website is devoted to starting or growing your business.

The City of Ottawa doesn’t build airports, hospitals, nuclear reactors, or other technically complex buildings. Community centres, libraries, public parks, fieldhouses and affordable housing projects are not technically rich projects only a few firms can deliver. Alex Bozikovic talks about this in his article last year, noting that “Nearly every thoughtful architect in the city [of Toronto] would love to do a library…The problem is in procurement…If you haven’t done it already, you can’t do it.”

What makes a fieldhouse in Edmonton different from a fieldhouse in Ottawa is the procurement process. In Edmonton, the consultants are paid a reasonable fee that allows them to do their best work. They spend more time on the design, work harder to deliver quality because they feel appreciated by their client and feel like they are contributing a service to make Edmonton a better place. It isn’t about better fees to do the same work, but about better fees to do better work.

And the result is astounding. Edmonton routinely is recognized, internationally, for the quality of their public buildings, which are delivered for the same budget as a regular building. It is recognized that the work delivers value, and there is a level of trust between the City and their consultants. Fair fees result in better work that benefits the public in buildings that work better, that perform better, that create better community and social value.

That stems from a procurement model that recognizes that fees are a fraction of the total cost of a project, as little as 0.2 per cent of the lifecycle value of the building.

Imagine hiring an employee and, on day one, demanding a cut to their salary and a further cut to their paycheque if it is delivered on time. We don’t do this when we hire employees. We don’t demand discounts like this when we buy soap.

But this is fine when we hire consultants.

The City of Ottawa generally expects an immediate discount on fees when the contract is awarded. On top of that, even though the City is legally obligated to pay its invoices promptly, if they pay on time, they expect a further discount.

Similar discounts are embedded in our procurement bylaw. If a firm is on the City’s roster of approved consultants (a “standing offer”), their contract allows their hourly rates to be increased, recognizing that the Consumer Price Index (CPI) is a valid measure of how costs change on a regular basis. But the City limits those increases to half the CPI. No matter how much the cost of running a business might change, consultants are kept in their place by an arbitrary cut off.

The way architects and engineers are hired by the City of Ottawa needs to change.

Instead of being treated like a product that is cheaper in bulk, or encouraged to produce the least effort that complies with the narrowest definition of a project, professionals need to be hired for their talent and skill. They can find ways to maximise effective use of a project’s budget with creative ideas to increase value. This embedded the Federation of Canadian Municipalities guideline on how to hire a professional.

Architecture contributes to 14 per cent of Ontario’s GDP. It affects climate change, can have transformative social outcomes and is a significant contributor to tourism. Spending on design is not a cost, its an investment.

Architects and engineers want to work for the City because they live here and want to be part of Our Best Ottawa. It is time the City harnessed their talents and reformed its approach to procurement.

Toon Dreessen, OAA, FRAIC is president of Architects DCA, an Ottawa-based architecture practice. Toon served six years on OAA council, two years as president and received the Order of DaVinci in 2020. Toon is a noted public speaker, writer and advocate for architecture and serves on numerous regulatory and advocacy committees.