Tuesday, April 28, 2015

Province of New Brunswick Deficit - SOLVED

Working for a New Brunswick owned and operated company, of course, like most other small to medium sized businesses, I view the Provincial Government as my largest potential customer. The spending power of the government, could on its own fuel an incredible boom to locally owned businesses. A small to medium size business, does not require tens of millions of dollars in contracts to thrive, expand, and employ New Brunswick's. But a steady flow of business from the provincial government would be enough to feed many a NBer and family.

A quick lesson on Government purchasing processes
Large purchases, must go through Department of Supply and Services. These tenders are available to any organization world wide to bid and potential win. This requires no changes. It is easily accesses information to NB companies and the lowest bid that meets all of the requirements is awarded the contract - Fair and equal bidding, and a responsible process for the government to spend our money. Again.. I suggest no changes to this.
What I wish to address in this solution are those purchases that are made outside of this process, almost without exception less money involved, and below the threshold of value that requires the mandatory bidding process. For small purchases, $5,000-$15,000 (this number varies depending on the nature of the product or service). The purchases are made from individuals within government departments. Some are awarded without the requirement of comparing different vendors products and pricing, and others are required to get 3 prices from different vendors.

The Solution:
The simplicity of my solution is so simple that it requires no changes of process, no additional administration, no tears of planning and meetings.. it would require only an email from a minister to all employees.. and I will even write it:


To: All Government of New Brunswick Employee 
From: Minister Bigwig 
Re: New Purchasing Mandate 
In order to help our economy and to spend taxpayers money wisely, starting immediately, all LPO's (Local Purchase Orders), must be issued based on a comparison of at least 3 vendors. But it is now MANDATORY that at least one vendor must be a locally owned and operated business. 
There shall be NO preferential treatment for New Brunswick Companies, in regards to value bid, or quality of service. Lowest price meeting the requirements will be awarded the purchase. 
Random audits of expenditures and proof of a bid received from a New Brunswick Company will be required. 
Thank you
Mr. BigWig - Minister of Brilliant Ideas

Seems simple right, well there is no reason that it is not as easy as the email I have even helped write.

Protectionism Fears:
It has, in the past that provinces have provided preferential purchasing tactics in teh past, such as being allowed a high price and still be awarded purchases. But this is doomed to fail, as if we offer preferential buying from out companies then other provinces will do the same and make us unable to win contracts in other provinces (protectionism). BUT, BUT, BUT.. I am only suggesting that NB companies are well equipped to compete on quality, price and delivery in a lot of cases, but are simply unaware of the opportunities.

Small to Medium businesses are not equipped to be able to stay in contact with every GNB employee that could potential purchase their product. Therefore as it exists now, a buyer will simply order from a company that they have done business with in the past, or reacting to an ad, or google. IF that buy were required (from the email below), spend 10 minutes before ordering something from a company in the, take the time to find one company that provides these good and services from NB, and contact them. This NB company will provide costing, quality etc.. if neither of these are better, then the buyer can proceed with the US purchase. At minimum the NB company had an opportunity. My instinct tells me, that local NB companies would bend over backwards for pricing and quality if only given the chance.

Millions and Millions of our taxpayer dollars are being spent outside of the province when our businesses struggle to keep the lights on. Just bringing GNB opportunities to NB companies would reap incredible financial rewards.

Financial Impact:
I dislike spoon-feeding the obvious, but how does this fix the NB economy overnight?

  • $10,000 paid to a firm from the USA for good and services -> $10,000 gone out of province
  • $10,000 paidd to a NB firm for the same products - $10,000 is dispersed (several times over actually) in Provincial Taxes, Home and Business Taxes, Employee Taxes, HST paid on purchases, Disposable money spent in NB, and that money go to Provincial Taxes, Home and Business Taxes, Employee Taxes, HST paid on purchases - I think you get it.

So, a simple mandate to give NB companies a seat at the table for small government purchases, in the simplest math, the government (in time) gets virtually every penny spent back in their coffers.

Private Organizations: 
For all the family owned international mega-companies that in the press endlessly state that their roots are in New Brunswick and they are proud to be and thank New Brunswick for their success.. how about they enact the same policy as above. It would only take a quick look at payable accounting records to see annual expenditures that are awarded outside of the province that have companies within NB that could be equally as competitive - but were never made aware of the opportunities.