Procurement is the process used by large organizations such as governments to buy goods and services. There is an expectation – and a requirement – that purchasing goods and services in the public sector will be in a competitive, open and transparent environment so that best value is delivered for taxpayers.
Key to this is that phrase, “Best value.”
Procurement departments exist in municipal, provincial and federal governments to deal with everything from pencils and toilet paper to professional services such as architecture and engineering.
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That’s, of course, one of the challenges: buying pencils isn’t like buying architectural services. We can describe a pencil down to the nth degree: It’s a hexagonal strip of wood with a graphite core that can be sharpened and has a metal tab at the back holding a pink eraser.
We know pencils, and we can ask suppliers to give a price for one box, or 100 boxes of the same, identical pencil. But we can’t do that with buildings.
No two buildings are exactly alike. The sites, context and requirements are different. The design has to be different. And even where they are similar, they are fundamentally different. If they weren’t, then all our libraries, schools and community centres would look exactly the same, all across the city, province and country.
Unlike “stuff,” architecture doesn’t come out of box, neatly packaged and ready to go. It’s an iterative process that takes skill, effort and time to get right.
And that is the challenge: procurement seems to be being managed by risk transfer specialists who routinely redefine standard words, modify terms and conditions of standard contracts to contradict laws and regulations as well as to narrowly define scope and deliverables in an attempt to control an outcome.
Part of the problem is that once the procurement is done, and the contract is awarded, the end user or client is stuck with the decisions of the procurement office.
One of the goals of most procurement departments – as mandated by politicians, planners and users – is quality. Everyone wants a high-quality building. So what defines that quality?
In addition to beauty, durability and budget, the building has to work: it has to perform the function for which it was designed. The building has to have lasting value, because it’s going to be here for generations. The building also needs to fit with its context, and respect how a community might change over time, and anticipate the context of tomorrow.
Many RFPs, and departments, state that quality is the goal and that they use Quality Based Selection with only a small part of the fee score of an RFP being price. Small might be 10 to 30 per cent of the total.
But here is how that’s flawed: As soon as any price component is considered in evaluating services, it becomes a fee-based procurement.
Suppose there are three respondents to an RFP where 70 per cent of the score is technical and 30 per cent is price.
One person is very qualified, and gets 68 out of 70. Another gets 66. Suppose I go into the RFP knowing my technical qualifications aren’t as strong and get 62.
But because I know this, I lowball the price. So I get the most points for price with a total score of 92.
That means the most technically competent needs to lower their price in order to get 25 points and beat me with a score of 93 or higher. If they are the most qualified, why should they lower their fees to reduce their value?
You could say that this is the architect’s problem; if they want to keep cutting fees to win work, that’s up to them. But by driving fees to the basement, we lower the level of effort that goes into design ideas that innovate.
Without designs that innovate, we don’t get the great buildings we need.
Without designs that innovate, we don’t get the great buildings we need. And because solving problems on paper – before something gets built – is always cheaper than fixing it after the fact, cutting back on design services is the last place it makes sense to reduce efforts, especially when we remember that they constitute less than one per cent of the lifecycle cost of operating, designing and constructing a building.
Put another way: reducing the services in design can have an enormous impact on the lifecycle cost. Cutting back on design services will cost more in the long run.
But it gets worse.
Quality Based Selection
Many RFPs fail to understand that this is a relationship. They use terminology that makes no sense, and borders on the illegal, or uninsurable, and sets up conflict from the start of what can be a multi-year relationship.
For example, the use of the word “ensure” is often used to ask that the architect carry out certain tasks. But it has a specific legal and insurance definition. So it’s impossible to ensure that a building permit is issued. What if there is an outstanding legal challenge to the ownership of the property?
Some procurement departments say that this isn’t what is meant by the use of the word ensure, but then why say it? That would be like asking a lawyer to ensure the outcome of a trial. Is it reasonable, or fair, that an RFP ask that the architect provide services that our unreasonable or border on the illegal?
Let’s take a look at LEED, in procurement. LEED (Leadership in Energy and Environmental Design) is a well-known framework for understanding and recognizing sustainability. It’s been widely adopted and has great brand recognition. It is points-based, so one gets a point for each measure taken.
For example, if you add a bike rack, you get a point. But what if the building doesn’t need a bike rack? What if no one will use it because it’s a secure site or military campus? That bike rack, and the shelter around it, costs money not only up front, but over the long term to maintain.
When an RFP asks that the architect ensure LEED Gold, the architect is going to do all they can to make sure the points are reached, even if the building doesn’t need that bike rack.
In a conventional RFP, there is no opportunity to talk about why LEED Gold is the standard and what alternatives there might be.
Under a Quality Based Selection (QBS) model, architects could propose options and alternatives that might be in the client’s best interests.
The RFP could state that the objective is a highly sustainable building that shows a lasting value for the investment. In a QBS model, I could propose that the building could meet LEED Gold. Alternatively, I could propose reaching current net zero target of an 80-per-cent reduction in greenhouse gases.
I might be able to propose that a modest two per cent budget increase might result in a 100 per cent reduction in greenhouse gases, demonstrating leadership in climate action. Showing how achieving a complete net zero results in better value, with zero utility operating costs over the lifecycle of the building could be better overall quality in the built environment.
This is the sort of value and quality that our governments are looking for. And governments are ideally positioned to make that investment because they are going to own, operate and maintain these buildings for generations.
But current procurement models prevent that interaction. They do this because the RFP model is set up to score points for procurement departments and get the lowest price.
A better way
We know that there is a better way to do this. In 1972, the Brooks Act was implemented in the United States. For 45 years, it has been illegal to use price in scoring RFPs in all federal government procurement, across 49 of 50 U.S. states and hundreds of municipalities. The track record for quality in procurement is well known, and well documented.
The Federation of Canadian Municipalities, in its Decision Making and Investment Planning Guide, notes that there is an 11-fold increase in lifecycle value by using Quality Based Selection. The case studies, examples and reports showing that this results in better procurement are exhaustive.
Canada is lagging behind, stifling innovation in public sector procurement and devaluing the contributions of leading innovators in climate action with outdated, inefficient and sometimes illegal procurement practices.
If we want better outcomes, we need better input. Improving procurement to deliver better value results in better buildings that meet the challenges of innovation, lasting quality and better value for all Canadians.
Toon Dreessen is president of Ottawa-based Dreessen Cardinal Architects and past-president of the Ontario Association of Architects.