Introduction to the Treasury Board

Procurement Policies

November 2012

Glenn Richardson

Senior Analyst

Office of the Comptroller General

2

Outline

• General

• The Rules

• FOT (Fairness, Openness and Transparency)

• Treasury Board Oversight

• Key risk areas

• The Future

3

FEDERAL WATCHDOG FINDS MORE COOKED

CONTRACTS AT AGENCY THAT TEACHES ETHICS OTTAWA - A federal

watchdog has blown the

whistle on a series of

cooked contracts at a

government agency that

teaches ethics to public

servants.

The blistering findings

mark the second time in

less than a year that

Canada's procurement

ombudsman has

discovered bureaucrats

carefully tailoring contract

requirements to get the

suppliers they prefer.

Brunetta's report cites

inappropriate sole-source

contracts awarded

repeatedly, even after key

officials at the school

warned against the

practice.

The Canada School of

Public Service is a federal

agency that, among other

things, provides values and

ethics training to federal

public servants.

The latest case involves a

dozen training contracts

— together worth

$170,000 — awarded by

the Canada School of

Public Service between

2009 and 2011.

Ombudsman Frank

Brunetta found that the

school split contract

amounts and generally

stacked the deck so that a

retired public servant who

was already collecting a

pension could get all the

work.

4

General Remarks

• Government procurement is complex

– Multiple players

– Multiple rules

5

6

Federal Procurement and Contracting:

Roles and Responsibilities

• Ministers are ultimately responsible to Parliament for all

contracting activities that occur under their authority

• Some deputy heads have contracting authority that is independent

of a minister

• Contracting authorities act on behalf of the Minister or the deputy

head

• Accounting Officers are accountable before Parliament for

contracting decisions made in their organizations

7

Framework for Federal Procurement

Law &

Legislation

Regulation

Policy, Standards & Directives

Requirements

move from

broad to

specific, from

overarching

principles to

specific

direction

Federal procurements are governed by a combination of

Legislative, Regulatory, and Policy requirements.

8

Policy objective

The objective of government procurement

contracting is to acquire goods and services and to

carry out construction in a manner that enhances

access, competition and fairness and results in

best value or, if appropriate, the optimal balance

of overall benefits to the Crown and the Canadian

people.

9

Policy Statement

Government contracting shall be conducted in a manner that

will:

• stand the test of public scrutiny in matters of prudence and

probity, facilitate access, encourage competition, and reflect

fairness in the spending of public funds;

• ensure the pre-eminence of operational requirements;

• support long-term industrial and regional development and

other appropriate national objectives, including aboriginal

economic development;

• comply with the government's obligations under the North

American Free Trade Agreement, the World Trade

Organization - Agreement on Government Procurement and

the Agreement on Internal Trade.

10

Fairness, Openness and

Transparency

• Fairness, openness and transparency, both real and perceived, are paramount

• Seeking bids from suppliers is required except:

– For a pressing emergency

– For low value contracts (below $25,000)

– When it is not in the public interest

– When there is only one supplier

• When covered by a trade agreement: a limited tendering provision must apply

• The use of the exceptions must be justified on the contract file

11

The Procurement Process

• Pre-contractual phase: requirements definition

and procurement planning

• Contracting phase: from bid solicitation to

contract award, including TB approval

• Contract administration phase: monitoring

progress, acceptance and payment action

• Post-contractual phase: client satisfaction survey,

audits, return of performance bonds and file close-

out checks

12

Pre-contractual phase

• Make or Buy

• Procurement Strategy

– General description of the expected deliverables

– Financial or time constraints

– Investment planning

– Project management

– Competitive or non-competitive approach

– Use PWGSC, SSC or another department

– Trade and socio-economic considerations

• Statement of Work (detailed description of deliverables,

evaluation criteria, selection methodology and the basis of

payment)

13

Contracting phase

• Certification that funds are available (FAA s.32)

• Government Electronic Tendering System (MERX)

14

15

Contracting phase (continued)

• Certification that funds are available (FAA s.32)

• Government Electronic Tendering System (MERX)

• Contract A - Contract B

• TB approval

16

Treasury Board Oversight

• Ministerial Authority vs. Treasury Board Approval

• Approval is based upon

– the contract value,

– the nature of the thing to be purchased,

– whether bids were sought,

– the nature of the supplier,

– Limiting liability

– Scoring of socio-economic benefits

• Designed to encourage departments to use a

competitive process and PWGSC

17

Treasury Board approval (continued)

GOODS MERX –

competitive

Non-MERX

competitive

Sole

Source

All Dept

PWGSC

-

40M

400K

10M

40K

2M

CONSTRUCTION MERX -

competitive

Non-MERX

Competitive

Sole

Source

All Depts

PWGSC

400K

40M

400K

20M

40K

1M

The Contracting Policy sets out

limits up to which departments

may contract without seeking

TB approval. These limits vary by

contract type – goods, services,

or construction. The limits also

vary by bid solicitation type –

electronic competitive, standard

competitive, or sole-source (non-

competitive). Departments may

always choose to seek TB

approval for complex contracts,

regardless of the value being

within their authority limits,

based on a risk assessment.

Departments may pursue procurements above their contract entry limits provided they seek Treasury

Board approval prior to entering into any contracts or arrangements.

SERVICES MERX -

competitive

Non-MERX

competitive

Sole Source

All Dept

PWGSC

2M

20M

400K

10M

100K

3M

18

Key Risk Areas

• Contract splitting

• Wiring a contract and payrolling

• ACANs

• Verbal contracts and amendments

• No communication with suppliers during the

tender period except through the contracting

officer

• Mandatory Standing Offers

19

The Future

• Working on a renewed Contracting Policy since

the late 1990’s

• Draft Policy on Managing Procurement

– Draft Directive on Crown Procurement

Contracts

– Draft Directive on Contracting Approval

– Draft Directive on Limiting Contractor Liability

• Procurement will not change the day after these

policy instruments come into effect

20

The Future: Policy on Managing

Procurement

• Principles-based, aimed at deputy heads

• Focus on planning

• Value for money and sound stewardship

21

The Future: Directive on Crown

Procurement Contracts

• Contains the requirements set by the Treasury

Board that apply to contracts

• Will be supported by guidance

22

The Future: Directive on Contracting

Approval

• Identifies contracts that require TB approval

• Exceptional limits listed by department

23

Thank you

Questions?