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PROVINCE OF BRITISH COLUMBIA Ninth Annual Report of the Purchasing Commission January 1st, 1951, to December… British Columbia. Legislative Assembly 1952

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 PROVINCE OF BRITISH COLUMBIA
Ninth Annual Report of the
Purchasing Commission
January 1st, 1951, to December 31st, 1951
VICTORIA, B.C.
Printed by Don McDiarmid, Printer to the Queen's Most Excellent Majesty
1952  Victoria, B.C., January 31st, 1952.
To His Honour Clarence Wallace, C.B.E.,
Lieutenant-Governor of the Province of British Columbia.
May it please Your Honour:
Herewith I beg respectfully to submit the Annual Report of the Purchasing Commission of the Department of Finance for the period January 1st, 1951, to December
31st, 1951.
B. I. JOHNSON,
Minister of Finance.
The Honourable B. I. Johnson,
Minister of Finance, Victoria, B.C.
Sir,—We have the honour to submit the Ninth Annual Report of the Purchasing
Commission, covering the period January 1st, 1951, to December 31st, 1951.
R. H. SPECK,
Chairman.
R. M. BURNS,
Member.
C. D. CAMPBELL,
Member.  Ninth Annual Report of the Purchasing Commission
For the Year Ended December 31st, 1951
This is the second Annual Report presented by the present Commission since it
took office on April 1st, 1950. The past year has been a period of reorganization,
following on the recommendations made by the investigators as outlined in the Report
presented last year.
A great deal has been accomplished, and we feel that a study of the activities of
the Commission shows that there have been many tangible results in increased efficiency
and in monetary savings, though there still remains much to be done. As was pointed
out last year, the Commission felt, on presentation of the investigators' report, that
insufficient weight had been given to the difficulties of purchasing for a widespread
organization of very diverse functions, such as in the Provincial Government. These
views have been substantiated by our experiences in the past year, for certain of the
proposed alterations in procedure have been of necessity modified or postponed for
the reason that they could not be adapted to the requirements of other branches of
Government.    On the whole, however, most of the proposals have been put into effect.
A study of the recommendations as listed in the last Report indicated the following
action to date as to implementation:—
(1) That the Commission assume full control of all Government purchasing
as soon as properly organized, including that presently carried out more
or less independently by the King's Printer, Text-book Branch, Provincial
Library, and Public Library Commission.
It has not been considered desirable yet to assume the purchasing
directly for these special branches, but the Commission is exercising more
supervisory control and has confined such internal purchasing to the
limits of the special functions of the branches concerned.
(2) That the regular meetings of the Commission be held at least weekly.
Fully implemented.
(3) That greater attention be given to encouraging planning and co-ordination
of requirements in the departments.
This receives constant attention.
(4) That, where possible, all purchase orders be pre-priced, and that broadened
purchasing activities be undertaken in Vancouver where a majority of
the suppliers are located. *
Implemented as to pre-pricing wherever possible. Vancouver purchasing has been undertaken as broadly as possible wherever suitable
and within the limits of administrative control.
(5) That greater attention be given to specifications and standards.
This is being given constant attention, although it is a complex
problem that will take some considerable time to solve satisfactorily.
(6) That the Purchasing Commission assume responsibility for shipping routes
and shipping charges.
Limited action only to date, due to lack of specialized staff.
(7) That unit price records be kept.
Fully implemented.
(8) That stricter control of "emergency " purchasing be exercised.
Fully implemented. DD 6 BRITISH COLUMBIA
(9) That purchasing procedures be simplified, and that the Purchasing
Commission undertake the preparation of all vouchers in payment of
invoices.
Implemented except for Departments of Public Works, Health and
Welfare, and Lands and Forests.
(10) That statistical reporting be simplified.
Fully implemented.
(11) That Langford Warehouse be used as a " scarce supply " depot and
for disposal of surplus material, but not as a general warehouse.
Fully implemented.
(12) That  greater  control  be  exercised  over   departmental   stores   by   the
Commission.
This is under active study at the present time.
(13) That simplification of methods in inventory records be considered in
future cases.
Action is being taken along the lines recommended.
(14) That the structural organization of the Commission be reconstructed
and clarified.
Fully implemented.
(15) That the Chairman assume full administrative responsibility.
Fully implemented.
(16) That careful attention be given to staff selection and training.
Fully implemented.
Several of the recommendations require further comment. That concerning
specifications and standards (5), has been the subject of much thought and active
investigation both by the members of the Commission and the Purchasing and Stores
Co-ordinator. The matter is considerably simpler on paper than in actual practice, as we
have found that not only are we faced with a lack of standards in very many products
but we are also up against long-standing prejudices on the part of some operating
officials as to products of particular manufacturers. Due to these difficulties, in many
cases it is practically impossible for the buyer on the basis of the requisition submitted
to issue a purchase order or request for quotes properly framed as to specification
and standards. Further, while we endeavour to use Dominion Government specifications wherever possible, we find that these often are special orders which cannot be
duplicated in the quantities we require. This is a matter for education and gradual
development, but we have every hope of consistent advance along the desired lines.
As to assuming all responsibility for vouchering (9), it had been intended originally
that all departments would be taken over by April 1st, 1952; however, it was found
that internal conditions in Lands and Forests, largely occasioned by the extreme pressure
of an unusually heavy fire season, have forced postponement of the assumption of
vouchering there for about four months, and that the internal accounting organization
in Public Works and Health and Welfare makes no change desirable in those departments
at the present time.
It was originally intended to reduce the function of Langford Warehouse very
considerably (11), however, increasing scarcity of supplies, particularly in the metals
and certain chemicals, has indicated the wisdom of continuing its function on a
substantial scale. No longer are items purchased where they can be shipped readily,
direct to the user from the wholesaler or manufacturer, but considerable savings are
still being effected by judicious bulk buying. The Warehouse stocks proved invaluable,
especially in the fire season in outfitting crews with the least possible delay.
The control of stores and inventories in departments (12 and 13) has been
receiving much attention, and while considerable progress had been made in standardization of methods, some departments had very sketchy ideas on their inventories and REPORT OF THE PURCHASING COMMISSION DD 7
the control of them and as a result we have had to start from the beginning, not only
in requiring that inventories be compiled but that proper systems of control be instituted.
This is a field in which much remains to be done and in which the co-operation of the
Comptroller-General will be required.
The year 1951 saw the supply situation ease in many lines without, however,
concurrent reductions in prices. However, in many of the products in which we are
vitally interested, such as steel and copper, the situation has become progressively
worse from month to month. Substitution of other materials has been instituted where
possible, but we anticipate continued difficulties along these lines in the year to come
as defence demands for metals and machinery become increasingly urgent. We have
been forced, in a few cases, to use forward orders on structural steel material due to
our inability to assure ourselves of supplies when required. This method had, however,
been held to an absolute minimum.
Automobiles and trucks, of which we are large buyers, having purchased 321 new
units during the year, should continue to be available, although further price advances
appear indicated. In this connection, we put forward as our considered opinion that
our requirements here could be substantially reduced if some effective form of central
control was instituted.
Food prices have continued a gradual upward movement in the past year,
availability being about the same, that is entirely adequate at a price. Wool prices
soared during the year and a subsequent levelling-off has not yet been felt. Pharmaceuticals were steady and in certain special lines substantial price reductions were
recorded.
The rapid expansion in many of the branches of the Government service resulted
in fairly heavy buying in the line of office furniture and equipment. Many of the offices,
especially in the outlying districts, have been handicapped by out-moded equipment.
This has been gradually replaced over the past three years until the situation is largely
satisfactory at this time. The opening of the Douglas Building resulted in heavy
demands from departments for new equipment, and while these were controlled as
far as efficiency indicated, many replacements and additions were required as offices
took up new and more adequate quarters. The situation now is that most of the heavy
capital charges have been made as far as Government offices are concerned, but with
the continuing expansion in the institutional and hospital field we look for continued
heavy demand in equipment and furnishings for several years to come. Every encouragement has been given provincial manufacturers to compete in this field, especially in
wooden office furniture. Very excellent results have been shown and as a result most
of our standard office furniture is now of British Columbia manufacture.
In all lines, effort has been made to assist British Columbia manufacturers and
distributors in so far as is possible within reasonable limits of price differentials.
The Commission has continued its efforts to provide all departments of the
Government with an efficient buying service at a minimum cost. Except for a few
hardy individualists who either are unable to forecast their requirements or are of the
opinion that purchasing offices are superfluous, we have had most helpful co-operation
from the operating departments. We believe they realize that through modernized
methods we are conserving their appropriations, permitting them to carrv on activities
which would otherwise be curtailed by lack of funds. It is not possible to illustrate
or produce mathematical proof but we are quite convinced that our policy of requiring
competitive bidding wherever possible has resulted in a saving of several hundred
thousand dollars in prices paid over the year.
The Commission feels that it has made some progress in the past year due to a
planned programme faithfully executed by a competent and faithful staff with the
co-operation of the departments and of the commercial concerns with whom we deal.
Much remains to be done in the field, particularly of inventory control and standards
and specifications, but at least a start has been made. DD 8
BRITISH COLUMBIA
As was pointed out last year, the " Purchasing Commission Act" places very
heavy responsibilities on the Commission, which in certain cases have not been
assumed to the extent we would desire. It is our hope that in the next report we will
be in a position to suggest possible changes in responsibilities which we think will tie
in better with the financial control vested in the Department of Finance under other
statutes.
STATISTICAL RECORDS
Statistical records were maintained under the following headings, which, for
information, are recited herewith:—
A. Competitive.—On   contract,   quotation   (written   or   verbal),   or   prices
awarded on, and governed by, previous quotation.
B. Restrictive.—Specified commodities sold exclusively by a particular manu
facturer, wholesaler, jobber, or agent.
C. Controlled.—Includes set prices where no advantage accrues in calling for
competitive tenders on commodities sold at controlled prices.
D. Non-competitive.—Requisitions issued without stated prices and controlled
by checking or test-checking prices when invoices are submitted.
E. Retail.—Includes semi-retail, or where prices are greater than might be
secured from manufacturer or wholesale (local purchases).
F. Emergency.—(1)  Retail.     (2)  Wholesale.
Comparative figures for the fiscal years 1947-48, 1948-49, 1949-50, and 1950-51
are set forth hereunder:—
1947-48
1948-49
1949-50
1950-51
A. Competitive   —	
B. Restrictive  .—	
C Controlled   	
$1,797,963
3,171,273
1,017,471
2,046,113
151,388
301,377
472,359
98,693
$2,390,495
4,539;397
1 976,648
3',400,000
153,048
310,000
620,584
23,375
$2,559,522
4,076,441
879,601
4,025,594
233,043
274,451
788,211
$3,864,870
3,347,926
931,224
2,770,719
E. Retail                 	
178 460
F. Emergency—
(1) Retail    ..
(2) Wholesale	
225,886
694,309
	
$9,056,637
$13,413,547
$12,836,863
$12,013 394
Number of purchase orders issued	
30,390
33,315
37,306
37,221
It will be noted from these records that the Commission's policy of insisting on
competitive prices wherever possible has resulted in " Competitive " orders exceeding
" Restrictive " for the first time. " Non-competitive " orders have been very substantially
reduced.
From April 1st, 1951, a new classification system was adopted, as follows:—
A. Competitive.—Purchases from manufacturers and wholesalers which are
placed on a basis of competitive quotes on prices, including those
purchases made on the basis of information obtained from unit
price cards.
B. Restricted.—Purchases from manufacturers or wholesalers for which unit
prices are fixed (gasoline, milk, etc.), or for some special condition
of source of supply the buyer is limited to one supplier. REPORT OF THE PURCHASING COMMISSION DD 9
C. Retail.—All purchases from retail establishments including retail emer
gency purchases.
D. Wholesale Emergency.—Orders placed with a wholesaler or manufacturer
-by means of emergency purchase order.
April—December, 1951
A. Competitive  $4,523,426
B. Restricted     2,059,073
C. Retail        231,304
D. Wholesale Emergency        285,936
$7,099,739*
Purchase Orders issued  32,551
Figures for the first nine months show continued improvement along the desired
lines and we find that 64 per cent of the orders are now competitive as against less
than 20 per cent in each of the three years between 1947 and 1949. This, of course,
all results in increased work in processing requisitions, but there would appear to be
no doubt whatsoever that the trend is highly desirable in every way.
In a further attempt to reduce unnecessary processing, the Commission authorized
departments to buy on their own without purchase order in amounts up to $10 instead
of $5 as formerly. It is felt that any saving that could be made through central
buying on orders of this size would be more than offset by the costs involved in
handling the orders.
VICTORIA, B.C.
Printed by Don McDiarmid, Printer to the Queen's Most Excellent Majesty
1952
345-252-3110   

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