Tuesday, January 24, 2012

Check a history book, Halifaxians

Our northern neighbors are considering shooting themselves in the ski boot.

The city council in Halifax, Nova Scotia is looking at establishing a local purchasing preference for city bids.

The buy local motion was brought forward by District 12 Councillor Dawn Sloane.

Sloane took up the cause after a Dartmouth firm, Intelivote Systems Inc., lost the bid to provide telephone and e-voting for the next municipal election. A Spanish firm said it could to the job for $553,007, a full $330,000 less than Intelivote's bid. Although Intelivote had done the work previously, the Spanish firm won the contract.

Dawn Sloane says the city should have a scoring process that gives extra points to local companies, but given the huge difference in price, it's hard to think of any buy local policy that would have awarded this contract to the local bidder.

But what if the difference isn't as pronounced? Recently a local company lost a bid to provide work boots to the municipality. The Halifax-based firm put in a bid of $72,431. The contract was awarded to a New Brunswick company that bid $69,801 - a difference of just 3.76%.

The question is - where do you draw the line? Should the local company win the bid if its price is 5% higher than the lowest bid, or 10% or 15%, or in the case of Intelivote 60% higher? And what about the quality of the goods and services being offered? Should the local business win the contract even if its product is slightly inferior?
I'm sympathetic to the politicians this time around because they do understand that major savings are worth importing. They want to find an algorithm to learn at what point they should change directions and be willing to pay more under the assumption that buying from local businesses is good for the community.

Unfortunately, that assumption still makes the same old bogus assumptions. You are still instructing local people to do things they are not skilled at performing. The government could still be paying more taxpayer money for inferior service.

The Halifaxians should consider learning from our mistakes, such as the Smoot-Hawley Tariff Act from 1930.

However, if they'd prefer local information, they can look to the west and read what Karen Selick of Ontario had to say on the "Buy Belleville" campaign.

Update: A resident of Halifax wrote to inform me they are called Haligonians, not Halifaxians. I was wrong.


  1. Selick's piece is very good, attacking the myth from a bunch of angles in simple writing. What struck me was the notion that what you want local is value (happiness, time savings, ability to enjoy more, etc.), not currency.

  2. What if it is established that the local company must have as good of a reputation/be as skilled as the foreign company?

  3. Mr. Hawkins, if they are unable to compete with the price, that is usually a result of being less efficient, This entire idea is to radically change the bidding system to use a semi-arbitrary adjustment system.

    The way most municipal bidding systems work is by setting minimum standards that all potential bidders must meet as part of the contract, thus ensuring minimal quality.