Does your procurement policy suck? Probably.
Welcome back to our blog series on procurement and equity. In our first article, we explored the fundamental role of procurement in shaping economic opportunities and its impact on equity. In this instalment, we’ll get into the specific equity issues inherent in procurement policies and examine how they can perpetuate disparities or build equity.
Procurement policies are the rules and guidelines that govern how organizations acquire goods and services. These policies are designed to ensure transparency, fairness, and efficiency in the procurement process. As part of our process of complicating perceived neutrality, it’s important to ask, who does your policy ensure transparency, fairness and efficiency for? Without a deliberate focus on equity, these policies can inadvertently reinforce existing inequalities. The key issues in procurement policies can be summed up in a few areas:
Access to Opportunities
Bias in Evaluation Criteria
Lack of Supplier Diversity Initiatives
Insufficient Outreach and Support
Let’s get into it
Access to Opportunities
Many procurement policies are structured in ways that favour established, larger businesses. For instance, complex bidding processes, stringent qualification criteria, and extensive documentation requirements can be overwhelming for small, minority-owned, and Indigenous businesses. These barriers to entry can prevent diverse suppliers from even participating in the procurement process.
According to the Canadian Federation of Independent Business, small businesses often find government procurement processes too complicated, with 45% citing complexity as a significant barrier. This complexity disproportionately affects minority-owned businesses, which may lack the resources to navigate these processes.
Bias in Evaluation Criteria
Procurement policies often include evaluation criteria that may unintentionally favour certain types of businesses over others. Criteria such as past performance, financial stability, and scale of operations can disadvantage smaller and newer businesses, which are more likely to be owned by racialized and marginalized entrepreneurs.
A review of procurement contracts in Ontario revealed that contracts often went to larger firms with extensive previous contracts, making it difficult for smaller firms to compete. This has led to a concentration of contracts among a few large players, leaving minority-owned businesses with limited opportunities.
Lack of Supplier Diversity Initiatives
Many procurement policies do not explicitly include provisions for promoting supplier diversity. Without targeted initiatives to encourage the participation of diverse suppliers, the procurement process can continue to favour businesses owned by non-racialized individuals.
The Government of Canada has recognized this issue and launched the Black Entrepreneurship Program, which includes a procurement component to increase the participation of Black-owned businesses in federal procurement. However, similar initiatives are not universally adopted across all levels of government or the private sector.
Insufficient Outreach and Support
Minority-owned and Indigenous businesses often lack access to the networks and resources that help them succeed in procurement processes. Effective outreach and support programs are essential to ensure that these businesses are aware of procurement opportunities and are equipped to compete.
A survey by the Canadian Council for Aboriginal Business found that 57% of Indigenous businesses were unaware of federal procurement opportunities. This lack of awareness and support highlights the need for more proactive engagement with diverse suppliers.
Ignoring equity in procurement policies can have several negative consequences from real economic disparities to social fragmentation. Inequitable procurement policies contribute to the concentration of wealth and opportunities among a few, exacerbating economic disparities. This can limit the economic growth of underrepresented communities and perpetuate cycles of poverty and exclusion. Diverse suppliers bring unique perspectives and innovative solutions to the table. By excluding these businesses, organizations miss out on the potential for innovative products and services that can enhance value and effectiveness. When procurement processes are perceived as unfair, it can erode trust in public institutions and create social divisions. Ensuring equitable procurement practices is essential for fostering social cohesion and trust within communities. A diverse supplier base contributes to the resilience of the economy by ensuring a broader distribution of economic activity. Equitable procurement policies help build a more robust and resilient economy that can better withstand economic shocks.
To address these equity issues, organizations can implement several strategies:
Simplify and Streamline Processes: Simplifying bidding processes and reducing unnecessary documentation can lower barriers to entry for smaller and diverse suppliers.
Equitable Evaluation Criteria: Incorporating criteria that value diversity and equity, such as social value and community impact, can help level the playing field for underrepresented businesses.
Supplier Diversity Programs: Establishing and promoting supplier diversity programs can ensure that minority-owned, indigenous, and disabled-owned businesses are actively included in procurement opportunities.
Proactive Outreach and Support: Engaging with diverse supplier communities through outreach programs, training, and capacity-building initiatives can enhance their ability to compete in procurement processes.
Data, Monitoring and Accountability: Regularly collecting disagregated data, monitoring procurement outcomes and holding organizations accountable for meeting equity goals can drive meaningful change.
Procurement policies are powerful tools that can either perpetuate inequality or shift the needle towards equity and economic growth. By addressing equity issues within these policies, we can create stronger procurement processes that benefit all segments of society. In our next article, we will explore the wild world of RFPs and a vision for the future.
Reach out with any questions or suggestions as we continue to understand and improve procurement practices for a more equitable future. If you’re looking for support reviewing and redesigning procurement processes that are efficient, equitable and data informed, get in touch!
References
Canadian Federation of Independent Business. (2022). Barriers to Government Procurement. Retrieved from https://www.cfib-fcei.ca.
Government of Canada. (2021). Black Entrepreneurship Program. Retrieved from https://www.canada.ca.
Canadian Council for Aboriginal Business. (2020). Survey on Indigenous Business Awareness. Retrieved from https://www.ccab.com.
Statistics Canada. (2021). Income and Labour Market Data. Retrieved from https://www.statcan.gc.ca.
Office of the Procurement Ombudsman. (2019). Study on Supplier Diversity. Retrieved from https://opo-boa.gc.ca.
