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DN Editorial: EDS & MEDS - JUST A PHASE: By buying local, institutions could give a boost to city finances

CITY CONTROLLER Alan Butkovitz calls it his "Anchor Procurement Initiative," which is a real mouthful that needs to be translated:

CITY CONTROLLER Alan Butkovitz calls it his "Anchor Procurement Initiative," which is a real mouthful that needs to be translated:

Anchor means the large universities and teaching hospitals that anchor the city's Eds & Meds sector. Combined, these institutions spend $14 billion each year, much of it on salaries, but billions more on commodities - goods such as paper, office supplies, surgical equipment and so on.

Procurement means purchasing. Each institution has a procurement department that fulfills the institution's needs by purchasing goods and services.

Initiative is the controller's word for a program to increase the local share of goods and services procured by anchors.

All jargon aside, the Butkovitz report makes a strong case that by buying locally, institutions such as the University of Pennsylvania, Drexel, Temple and the city's 27 other educational institutions could play a major role in creating opportunities for the city's manufacturing segment and also could create new manufacturing jobs.

A look at the facts laid out in the report buttresses the controller's case:

Of the $3 billion these institutions spend on goods a year, about $800 million goes to Philadelphia-based vendors. That is equal to 27 cents on every dollar spent.

If the institutions increased their local buying, it would give a boost to local firms that produce the goods.

Two examples:

The institutions spend $113.5 million on general office supplies (that's a lot of paper clips) but only $19.8 million goes to local firms. That's 24 cents on the dollar.

The institutions spent $16.8 million on sports equipment (they have a lot of teams that need to be uniformed and equipped) and $1.5 million goes to Philadelphia-based companies. It works out to nine cents on the dollar.

The controller's study identified $500 million in promising growth opportunities in 13 manufacturing subsectors - in other words, in products already manufactured by local firms. The list includes surgical equipment and supplies, HVAC and commercial refrigeration, office supplies, scales and balances and printing.

No one is suggesting that these institutions buy locally as an act of charity. The local firms would have to compete on quality and price.

Nor is any of this going to happen without some coordination. This report recommends creation of an organization called PHASE, which stands for Philadelphia Anchors for a Strong Economy. This organization would identify vendors and get the institutions to combine their procurement efforts so that the money can be targeted to local firms.

The anchor institutions themselves are enthusiastic about the idea - and that is a big plus.

But, change in large bureaucracies doesn't come easy. Part of the job of PHASE would be to push institutions to rethink some of their purchasing practices and redirect the money to local firms that can do the job.

If the anchors could direct an additional $500 million to local manufacturing firms, it would deliver a real shot in the arm to a sector that has been on the decline for decades.

It would be a win-win for the Eds & Meds sector and the manufacturing sector if that shot was administered with a locally made needle.

Making it happen should be on the agenda of the next mayor.