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October 31, 2020 October 31, 2020

Small town Alberta businesses shut out of government purchasing

Posted on August 19, 2020 by Taber Times

Febuary 2020 marks 35 years since I opened my business is Taber. We have enjoyed much prosperity in this great little town. I have had the opportunity to travel as well as serve on an international trade association for many years. I always tell stories to my international friends and colleagues about the economic engine that is Taber.

However, we have seen some significant changes in just the last few years. The so-called retail apocalypse has taken a bite out of Taber. One has only to drive the few streets of downtown to see the closed stores and the lack of options.

One of the other things I have noticed in my business is change in local government purchasing. We used to get a significant amount of business from the cities of Lethbridge, Medicine Hat, Brooks, towns like Bow Island, Picture Butte, Raymond, MDs and counties of Warner, Taber, Cardston, Willow Creek, Cyprus and others supplying them with parts and testing and repairing engine components. In the last few years the business from these governments has gone to almost nothing. Of note the MD of Taber has spent less than $650 here in the past five years, and nothing since 2017.

I reached out to the people in the public works departments in some of these cities, towns, MDs and counties. Almost universally they all said the same: We cannot use or buy from you because we are part of a buying group and your company is not an “approved supplier.”

I did a little research and found that the RMA (Rural Municipalities of Alberta) headquartered in Nisku has established a buying group. A look at the RMA website shows numerous programs offered to members for everything from office supplies to fuel. I inquired about becoming an “approved supplier” with the RMA, however I was told that this can only happen if my company is successful with a bid for products or services.

If one looks at Alberta Government purchasing connection website you will find numerous announcements from cities, towns, MDs and counties stating their “intent to use collaborative procurement” or “notice of proposed purchase through RMA buying group.”

Currently there is an RFP (Request for Proposals) posted for automotive parts from the RMA listed on the Government of Alberta purchase connection website. This 51 page RFP states the contract will be at least three million per year for three years with a two year extension option.
Potentially a $15 million contract for parts to keep all the various RMA member government fleets serviced.

I looked at putting together a proposal for this, however after reading these 51 pages a few times it became clear. It is simply impossible for an independent company like mine to compete. This RFP is simply written for a multinational corporation.

The question, then, is if this is only for a big corporation to bid on how does the RMA save its members money? Big publicly traded corporations are by their nature profit driven. There are questions in the pages of the RFP regarding sales staff, electronic ordering, electronic invoicing, etc. To quote on a bid like this a company requires big infrastructure to support the requirements listed. On top of this the RFP requires the successful vendor to pay an administrative fee or kickback to the RMA to offset costs to administer this program.

After more than 40 years in the automotive business this whole process does not pass the smell test. Governments have never been good at administering and saving taxpayer’s money. Asking a vendor to cover the cost of this simply adds cost to the goods. Since when has there ever been a free lunch? I would place a significant wager that at the end of this contract the municipalities who use this program will incur more, not less cost for these goods. Common sense, which seems to be in short supply these days, says that someone has to pay for all the requirements in the RFP and you can bet that it will not be the multinational corporation who is awarded the contract. These are simple facts and on top of them is the fact the taxpayer money will be leaving the municipality where it is so badly needed to keep small business running, particularly considering the current pandemic.

I understand that taxpayer dollars need to be used prudently, I expect that elected officials should do all they can to save money. However it seems they cannot trust the local automotive parts store to supply an oil filter or a wheel bearing at a competitive price!

Over the last months we have experienced never-ending messages on TV, online and in print to shop local and to support small business due to the effects of the pandemic on business, particularly small independent business. This message has come from local chamber of commerce offices to the Prime Minister and every elected official in between. My question is how does the MD of Taber or the County of Cardston or the City of Medicine Hat buy their repair parts from a large multinational through the RMA support local business? Spending your tax dollars out of the jurisdiction is not in tune with the narrative.

It seems that municipal governments throughout Alberta have been sold the idea that Amazon-styled purchasing is the answer to their budget issues. They are simply building a mousetrap so big that it becomes a monopoly. It will be interesting to see if the company who gets this parts contract will support the local sports teams, clubs and other non-profits who are part of the fabric of communities throughout Alberta like local business have done for years.

Cam Mandel
Taber Diesel Services Ltd.

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