Local Procurement Global Insights into Challenges and Opportunities February 21, 2017 Presented by: Bruce Marsh

Bruce Marsh 25+ years business and supply chain management experience – consulting and industry Have worked on over 50 procurement and supply chain projects, from strategy development to process design, technology selection, and implementation Have worked with YG Highways & Public Works on various projects since mid-2015 Frequent speaker/instructor on Procurement and related topics

Project Mandate To look outside of the Yukon to see what other public sector bodies are doing about Local Procurement

Key Research Sources Talked with Procurement Leaders from: BC Northwest Territories Nova Scotia P.E.I. Canada

Key Research Sources Detailed review of publicly available information, including reports; studies; policy papers; and websites, with a focus on the UK, Australia, the US, and Canada

Today’s Session What is Local Procurement? Benefits of Local Procurement Procurement - 2017 Global Insights Challenges and Opportunities Conclusions

What is “Local Procurement”? Local starts with a geographical boundary – province or territory; municipality; community; etc. Some businesses are “more local” than others - % of business activity, infrastructure, and employees that are locally based Buying local is a strategy and set of tactics aimed at increasing the flow of business to local suppliers and keeping the dollars local

Benefits of Local Procurement The research strongly supports the idea that Local Procurement has a positive economic impact (and potentially social) within the region – assuming the dollars stay “inside the bucket”. “Leaky Bucket” Economics

Public Sector Procurement is going through transformational change Streamlining policies and processes; Enhancing access to procurement opportunities for Small & Medium Enterprises (SME’s) Adopting value criteria and focusing more on buying solutions; and Leveraging public procurement to achieve positive economic, social, and environmental benefits Public Sector Procurement is going through transformational change

Sustainable Procurement “buying goods and services in a way that not only achieves value for money for the organization, but also generates benefits to the economy and society, while protecting the environment” Economic Social Environment

Innovation Supporting local business in developing new technologies, products, and services that will be of value to not only local government, but potentially also to other jurisdictions across Canada and abroad.

Global Insights - US “at least 45 states have procurement policies designed to give a preference to businesses that meet certain characteristics, such as those owned by veterans, pay certain wages, use environmentally sustainable practices, or manufacture within the state” Institute for Local Self-Reliance (ILSR)

Global Insights - UK Key observations and learnings from the UK: Initiatives focused on supporting SME’s Use of Community Benefit Agreements (CBA’s) Overall focus on Social Procurement Ongoing effort to navigate trade agreement restrictions Enhancing public sector procurement effectiveness

Global Insights - Australia Government of Western Australia – Local Procurement Policy “Local businesses employing local people, creating new skills and generating economic growth in servicing the Western Australian Government’s requirements” Supporting Local Procurement – Setting “local content” as a significant selection criteria for awarding business; and Utilizing price preferences based on both geographic location and content

Local Insights - Canada Procurement transformation is well underway Policy; technology; practices; organization Social/Sustainable procurement is becoming increasingly relevant and a factor in awarding business Social Procurement Guidelines (BC); Community Engagement (NWT) Juggling trade agreements and Local Procurement is an ongoing issue Work is well underway to make it easier for SME’s to compete Moving to a greater emphasis on value over price as award criteria

Challenges and Opportunities Lack of a Local Procurement Strategy Define what “Local” means Set targets for Local Procurement - $’s and sectors Select the tools and tactics that will work best within the unique local environment Ensure sufficient resources in place to drive the strategy Measure and report on progress

Challenges and Opportunities Navigating the Agreement on Internal Trade (AIT) Fully leverage below-threshold procurement Appropriately unbundle large contracts/projects Support and enable local businesses to provide competitive responses to tenders Add social/community benefit requirements to tenders Base procurement strategies on a deep understanding of the AIT

Challenges and Opportunities Supplier-Side Challenges Reluctance to respond to public tenders Too complex Low chance of success Not enough time to respond Not enough capacity or the right set of capabilities Lack of time/incentive to expand internally, or to partner with other suppliers

Challenges and Opportunities Buyer-Side Challenges Lack of resource capacity and/or capability to develop and execute a Local Procurement strategy A continued focus on price over value

Conclusions Local Procurement is an evolving trend, wrapped up with social and sustainable procurement, and other transformational changes Local Procurement delivers local benefit – economic and social Success with Local Procurement requires efforts from both buyers and suppliers Local Procurement can coexist with trade agreements – but effort and innovation is required Local Procurement requires a degree of sophistication and expertise to achieve, as many tool and approaches are available

Questions?