The call to reform procurement methods to support innovative sectors
Environments that drive innovation are usually described as places that combine fiscal incentives with infrastructures and programs such as business incubators, technology clusters, leading-edge universities, and robust communication and transportation networks.
But a key factor that’s often overlooked is government procurement from domestic companies that provide innovative products and services.
“Simply put, procurement isn’t a hot or flashy topic, but it could be,” says Sandro Perruzza, CEO of the Ontario Society of Professional Engineers (OSPE). “Governments need to put their money where their mouths are, so to speak, and start actively reforming procurement methods to not only support innovative sectors and their broader innovation agendas and strategies, but also to deliver better value for money to taxpayers.”
Mr. Perruzza’s observations are backed by numerous studies, including a Swedish government study that looked at procurement practices in a neighbouring country and uncovered an intriguing fact: between 1948 and 1998, public procurement accounted for almost half of projects that led to successful innovation in Finland.
This issue is particularly important to the engineering profession, because engineering and entrepreneurship have always gone hand in hand.
Engineers have the trained ability to evaluate current trends and predict future societal needs. They have the technical expertise to develop new technologies and services to meet those needs, and the analytical mindset to continually make improvements, so that new ventures remain competitive and relevant. OSPE’s role involves consistently reminding government that with over 200,000 engineers and engineering alumni in the province, Ontario has a lot to give. Ontario’s engineers are taking on today’s challenges to further a sustainable society that brings a high quality of life to its citizens, while protecting the land on which we live.
“Engineering has a very rich history in this province, both in terms of innovation and the quality of work that is done,” says George Comrie, M.Eng, P.Eng., CMC, FEC, president of Professional Engineers Ontario, whose mission is to regulate and advance the practice of engineering to protect the public interest.
“Through their licence, professional engineers make a commitment to enhancing people’s quality of life, health, safety and well-being, and a dedication to protecting the environment.”
Another study, conducted by Deloitte about seven years ago for the Ontario Environment Industry Association (ONEIA), points to opportunities for the provincial government to lead in the adoption of new technologies and set efficiency, waste and emissions targets for public contracts and public buildings.
“We need to the get to the point where innovative and environmentally progressive purchasing is the norm and not something that’s considered novel,” says Alex Gill, ONEIA’s executive director.
“Governments are the biggest procurer of services and goods, but they still haven’t realized the full breadth of what they could be doing.”
The imperative to allocate more of the public purse towards locally supplied innovative products and services is underpinned by two key issues, notes Mr. Perruzza. The first is the need to fuel full-time job creation in the face of declining foreign direct investments from large international companies that set up shop in Ontario or other parts of the country.
The second issue stems from the fact that many of today’s innovations flow from individual entrepreneurs or small startups – and governments need to demonstrate that their jurisdictions are where these successful businesses of the future need to be today.
“The innovative outputs of these fledgling entrepreneurs are moving faster than government decision-making has been able to capitalize on it,” says Mr. Perruzza. “Government procurement is a clear opportunity to signal to business that Ontario is the place for innovative entrepreneurs, and it could spur the development of wholly new industries and the next ‘big companies’ of this era to call Ontario home.”
Mr. Gill at ONEIA says governments’ role as market makers go beyond their own jurisdictions. Government procurement and use of a product or service are, in essence, endorsements that boost credibility among other potential buyers, including those in other foreign markets.
“Within the environment industry, prospective buyers will typically ask about usability case studies for a particular technology,” says Mr. Gill. “To be able to say it’s been adopted by a government in Canada – that’s a big plus.”
So given the solid arguments for public procurement as a driver of innovation, why aren’t governments in Canada buying more groundbreaking technologies from domestic companies?
“The biggest barrier is the phrase ‘but we’ve always done it this way,’” says Mr. Gill. “And one of the things governments have always done is look at initial pricing, full stop, instead of factoring in lifecycle and total ownership costs to determine the best value for taxpayer dollars.”
As an example, he cites high-tech heating and lighting controls that automatically adjust temperatures and switch lights on and off based on real-time usage.
“Those have higher upfront costs, but over the lifetime of that facility will result in significant savings,” says Mr. Gill.
Mr. Perruzza agrees. Innovative new technologies are, in general, more efficient and robust than their conventional counterparts, he says. So while they may come with a higher price tag, they cost less to operate and maintain, and will also last longer.
With the Ontario and federal governments poised to stimulate economic growth through massive infrastructure investments, public procurement policies should be reviewed – and adjusted – to ensure purchase decisions are made with innovation as a key metric as well as an end-goal.
“Ontario is home to many innovative companies that have longer-lasting, stronger, smarter and scalable, interchangeable technologies that won’t be used for our own investments unless government acts to recognize their value-add and reform the current lowest-bid procurement methodology,” says Mr. Perruzza. “It takes a leap of faith for some, but for technical audiences like the engineering community, the decision could not be more clear: invest in what will last, invest in what is equipped for where technology is headed – not just where it is now – and in doing so, you will build a showcase to the world for our home-grown businesses.”
2016 Ontario Professional Engineers Awards Gala
Since 1947, the Ontario Professional Engineers Awards have recognized professional engineers in Ontario who have made outstanding contributions to their profession and their community. Professional Engineers Ontario and the Ontario Society of Professional Engineers are proud to co-host the awards gala in celebration of the very best of engineering. This year’s gala will feature keynote speaker John Molloy, managing director of Southeastern Ontario Angel Network (SOAN) and chairman of the Regional Innovation Centre, Launch Lab. Awards will be presented for young engineer, research and development, engineering excellence, in addition to the Citizenship Award and Gold Medal.
For more information, please visit www.ospe.on.ca/opea.
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