Module 2

Purchasing Objectives and Processes

• Public Sector Purchasing Objectives
• VANOC Core Purchasing Objectives
• Value in Kind
• VANOC Sustainability Objectives
• VANOC Purchasing Process

PURCHASING OBJECTIVES AND PROCESSES

This module outlines the basic purchasing objectives and processes of VANOC (many of which apply to public sector purchasers as well), including provisions for meeting sustainability commitments of the Vancouver 2010 Olympic and Paralympic Winter Games.

Public Sector Purchasing Objectives

Public sector agencies have various objectives when they are seeking bids for products and services, and it’s not always about getting the lowest price. Most governments have a variety of objectives that seek to achieve the best overall value by looking at factors such as price, delivery capabilities, after-service care, warranties and the ability to supply one or more geographic locations. They also must ensure that the process by which they purchase goods and services is open, fair, transparent and meets any legal requirements around unrestricted trade between provinces or countries. However, each purchasing agency has somewhat different specific objectives and processes; you should review the specific policies of each organization and find out what is particularly important for each buyer.

VANOC is an incorporated not-for-profit organization. As outlined in the following, VANOC’s purchasing objectives and processes are quite similar to those of many public sector purchasing agencies, but they have some unique elements as well.

VANOC Core Purchasing Objectives

VANOC has two sets of purchasing objectives: core objectives and complementary objectives. The two purchasing objectives make the organization unique, and it is important to understand what is expected for each objective — particularly VANOC’s complementary objectives. VANOC has the following set of standard core purchasing objectives:

1. Product Effectiveness, Efficiency and Affordability — Goods and services must meet the specified performance standards for their particular function and be delivered on time and within budget.
   
2. Transparency and Accountability — The purchasing process needs to be transparent, fair and respectful of vendors through open bidding and equitable opportunities. The integrity of the process should be supported by clear accountabilities and authorities that are regularly monitored.
   
3. Legal Compliance — Meeting all applicable regulatory and trade requirements is mandatory, as is adhering with the host city agreement, agreements for utilizing the COC licensees, and other applicable IOC or member partner requirements.
   
4. Socially Responsible Sourcing — VANOC believes that products and services delivered through the supply chain should be manufactured and distributed ethically and with regard for international standards of human and labour rights. In addition, VANOC has specific sustainability objectives in the areas of environmental performance, Aboriginal participation, social inclusion and accessibility.

When responding to bid requests, it is critical to think about how your product or service solution will help VANOC achieve its purchasing objectives — especially with issues such as on-time delivery and risk minimization.

In addition to these core purchasing objectives, which are quite similar to the purchasing objectives of many public sector agencies, VANOC has important complementary objectives relating to value in kind and sustainability.

Value in Kind

The high profile of the Vancouver 2010 Winter Games (and the high value of the Olympic and Paralympic “brand”) provides the opportunity for VANOC to acquire many goods and services from the business sector in exchange for marketing and licensee rights.Wherever possible, VANOC will seek to obtain goods and services without the expenditure of cash, through value-in-kind (VIK) provisions of corporate sponsorship agreements. Most or all requirements will be evaluated for potential VIK acquisition. Bid requests are typically issued after it is determined that a sponsorship opportunity is not available for that particular product or service.You can learn more about VIK on the VANOC website (www.vancouver2010.com).

Remember that VANOC does not provide suppliers with the right to advertise or promote themselves as official suppliers, nor does it allow suppliers to claim any official affiliation with VANOC or with the Vancouver 2010 Winter Games. The right to advertise or promote oneself as an “official supplier” belongs to sponsor organizations, as do the rights to use the official marks or symbols associated with the 2010 Winter Games.

VANOC Sustainability Objectives

Sustainability is a vital element of the Vancouver 2010 Winter Games. VANOC identifies sustainability as one of its core values and makes explicit reference to sustainability in its vision statement.

Sustainability at VANOC means managing the economic, environmental and social impacts and opportunities created by the 2010 Winter Games in ways that will produce lasting benefits — locally and globally. VANOC intends to demonstrate how sustainability, in all its aspects, can be incorporated throughout an Olympic and Paralympic Games to bring about lasting environmental, economic and social improvement.

VANOC’s plan for the 2010 Winter Games contains specific initiatives to ensure that the Games leave a positive legacy, not just for sport, but also for Canada’s environment, economy and local communities. These initiatives are based on the principle of maximizing opportunities and minimizing or eliminating negative impact on people and the environment.

In collaboration with its partners and sponsors, VANOC is implementing a comprehensive sustainability plan to achieve specific objectives in three primary areas:

• environmental performance
• Aboriginal participation
• social inclusion and accessibility

For each of these areas, purchasing is a fundamental mechanism by which VANOC plans to achieve its objectives.

ENVIRONMENTAL PERFORMANCE

VANOC plans to ensure that Games construction and events leave the lightest possible environmental “footprint.” Wherever possible, the 2010 Winter Games will conserve resources such as energy and water, prevent pollution, and protect and enhance natural marine and forest ecosystems. VANOC is working with its partners and sponsors to reach ambitious environmental performance targets and to showcase leading environmental innovation in such key areas as:

• green buildings and clean energy
• clean transportation
• zero waste

From a purchasing perspective, this means that VANOC (and to varying degrees its partners and sponsors) will be particularly interested in doing business with companies that can:

• provide leading environmental products, services, technologies and expertise that VANOC (or its partners or sponsors) requires specifically to achieve its environmental performance targets (e.g., environmental assessment or green building design expertise, clean energy technology, recycling technology)
• provide required products or services with demonstrated environmental advantages over competing products/services (e.g., lower energy use, less packaging, less polluting)
• demonstrate that their own operations are managed in an environmentally responsible manner (e.g., environmental management systems, eco-efficiency initiatives, sustainable purchasing practices)

ABORIGINAL PARTICIPATION

VANOC is committed to unprecedented Aboriginal participation in the 2010 Winter Games. This includes economic participation as employees and entrepreneurs. VANOC is seeking to create opportunities for Aboriginal people to find jobs and for Aboriginal businesses to expand, diversify and reach new markets across the country and around the world.

VANOC is actively encouraging Canadian Aboriginal-owned businesses to bid on contracts and pursue purchasing opportunities. VANOC is also interested in purchasing from non-Aboriginal businesses that:

• form joint ventures or strategic alliances with Aboriginal businesses
• create training and employment opportunities for Aboriginal people (First Nations, Inuit and Métis)

The Vancouver 2010 Winter Games will recognize and celebrate the rich history, arts and culture of Aboriginal people in Canada. VANOC and its partners and sponsors will have a particular interest in Canadian Aboriginal businesses that can provide authentic Aboriginal cultural products and designs.

SOCIAL INCLUSION AND ACCESSIBILITY

The Vancouver 2010 Winter Games will be “barrier free,” i.e., as accessible as possible to people who have a disability. Venues and transportation systems are being designed according to universal design standards to provide physical accessibility. For athletes, employees, volunteers or visitors, the goal is to reduce physical barriers for people that have mobility limitations and to improve access to information for people that have a visual or hearing impairment.

VANOC is committed to social inclusion, with a particular focus on Vancouver’s inner city. Efforts focus on providing volunteer positions, jobs and business opportunities for people and enterprises in the inner city, regardless of cultural background or physical ability.

This means that VANOC will be interested in purchasing from businesses that:

• can provide the specialized facilities, products, technologies and expertise required by VANOC and its partners to achieve barrier-free access
• provide training and employment for target social groups (such as the chronically underemployed, persons with disabilities, inner-city residents or youth at risk)
• source from, or joint venture with, social enterprises that hire target groups
• participate in inner-city economic development programs
• have formal programs that improve conditions for target groups through charitable contributions or employee volunteering

As noted in the preceding section on VANOC core purchasing objectives, VANOC (and many of its partners and sponsors) also practises environmentally and socially responsible sourcing to ensure that products and services it purchases are manufactured and distributed ethically, with regard for international standards of human and labour rights and for local environmental regulations and best management practices.

You can expect that almost every VANOC bid request will have a requirement for suppliers to provide information about sustainability. Consult the “Sustainability” section of the VANOC website (www.vancouver2010.com) for more information and to stay informed about specific sustainable purchasing guidelines and practices as they are introduced and modified. Sustainability is an area of potential competitive advantage for you. Think carefully about how your business can contribute to VANOC sustainability goals, and use this to your advantage as you prepare your bid. (This will be discussed further in “Module 6: Preparing Successful Bids.”)

VANOC Purchasing Process

The following is an overview of all the steps in the VANOC purchasing process. This will provide you with a general picture of bid solicitation, evaluation, negotiation and contract management as it is conducted by VANOC.

1. Functional Plans — Development and approval of a functional plan activates a project or program by identifying the need for goods and services.
   
2. Specifications and Criteria — Functional plans will identify milestones and deliverables that in turn indicate goods and services required for project or program implementation. Product and service criteria are developed to specifically define VANOC requirements and performance expectations, and to set out expectations regarding supplier relationships. These criteria include core objectives and complementary objectives that are appropriate to the particular opportunity.
   
3. Value in Kind (VIK) — Before initiating the formal purchasing process, the requirements will be assessed to determine if the good or service required could be obtained from a sponsor as part of a sponsorship or VIK opportunity.
   
4. Bid Solicitation — Procurement solicits bids and prices from vendors and suppliers.
   
5. Evaluation and Award Process — A VANOC evaluation and selection committee evaluates prices and bids against specified criteria using the predetermined evaluation criteria and weighting scheme specified in the bid document. The evaluation committee approves bids and prices that best meet specifications and provides guidelines for negotiation (in consultation with key organizational stakeholders, as required).
   
6. Negotiation — Procurement negotiates a final agreement for goods and services.
   
7. Contracts — Purchasers and suppliers execute contracts that document the terms and conditions for the provision of goods and services.
   
8. Receipt of Goods — VANOC receives goods and services, and documents that they meet specifications and contractual terms and conditions.
   
9. Contract Management — Business units and procurement staff monitor to ensure that terms, conditions and milestones identified in contracts are actively applied and met.
   
10. Payment — Upon satisfactory performance or delivery of goods, payments are released to vendors according to terms outlined in contracts.
    
11. Evaluation — Ongoing evaluation of product and vendor performance is conducted to provide guidance on future purchasing decisions.
    
12. Records Management — Contracts and other process documentation are maintained according to financial policies and procedures that ensure transparency and to ensure ease of overall contract administration.

If you want to do business with VANOC, familiarize yourself with this purchasing process beforehand. Other purchasing organizations will have a somewhat similar process.