Analysis of Postings on the On-Line Electronic Tendering Service (MERX™) From a Category Perspective
Table of Contents
1. On July 4th, 2011, the Office of the Procurement Ombudsman (the OPO) received information from a stakeholder raising concerns regarding an apparent "growing number of misclassification of [Request for Proposals] on MERX [TM]."
2. MERX™ is Canada's on-line electronic tendering service that allows Canadian suppliers to search and view requirements published by federal, provincial and municipal organizations. It is owned by a subsidiary of Mediagrif Interactive Technologies Inc., and is operated under a contract from the federal government. Suppliers can purchase subscriptions allowing them to preview and order tender packages, as well as opportunity-matching services. In addition to Canadian public tenders, MERX™ can also be used by suppliers to review private tenders, United States tenders and private construction services.
3. In keeping with its obligations under Trade Agreements , the Government of Canada has implemented policies requiring some requirements to be posted on MERX™. In addition, Treasury Board's Contracting Policy states electronic bidding is a procurement method which promotes suppliers' access to, and transparency in, the procurement process. This method facilitates the government's receipt of best value as it enhances access, competition and fairness in government procurement.
4. Government contracting authorities classify their requirements on MERX™ by selecting Goods and Services Identification Numbers (GSINs). GSINs are based on an international standard coding system established by the North American Treaty Organization (NATO) and are used by the federal government to identify generic product descriptions for its procurement activities.
5. Each GSIN is tied to one category on MERX™. Therefore, the selection of a GSIN will automatically classify the requirement in the pre-established MERX™ category to which the GSIN is linked. For example, the selection of GSIN T000C (Communication Planning and Development) will automatically result in a posting of the requirement in the category Communication, Photographic, Mapping, Printing, and Publication Services. Contracting organizations can select more than one GSIN, and as such, the same posting may appear on MERX™ under several categories (as determined by the selected GSINs).
6. In addition to the categories linked to the GSIN(s) selected, MERX™ also allows adding a specific category. This can only be done if at least one GSIN is already selected. The Notice of Proposed Procurement (notice appearing on MERX™) lists all the GSINs selected, yet only one category is identified. Nevertheless, the posting appears in all categories linked to the GSINs selected.
7. Tutorials, an indexed help system and a Buyer reference guide to assist buyers in posting notices are available on MERX™. Buyers can access these tools once they have entered their buyer profile on MERX™.
8. Suppliers can search MERX™ using GSINs, categories, or keyword text search. Online tutorials are available to suppliers explaining how searches can be conducted. These tutorials can be accessed directly through the MERX™ homepage by suppliers without logging into their profile.
9. The stakeholder alleged postings were misclassified and "riddled with errors" without specifying the nature of those errors. The examples provided by the stakeholder to illustrate the "misclassification" were not federal postings. The stakeholder specifically highlighted the possibility of a requirement being intentionally misclassified to hide it. In the alleged scenario, a preferred supplier having been alerted to where to find the misclassified requirement on MERX™ would be uniquely positioned to respond to the requirement with little to no competition.
10. While the examples provided by the stakeholder related to provincial procurements, and therefore are not part of the OPO mandate, it raised the potential of misclassification occurring in federal procurement. As such, the OPO monitored MERX™ postings to explore the likelihood of potential misclassifications occurring at the federal level.
Why It Matters
11. The OPO's mission is to promote fairness, openness and transparency in federal procurement. The misclassification allegation raised issues regarding access, competition and equity in federal government procurement. Therefore, the OPO conducted this study to assess the validity of the allegation specifically as they applied to federal procurement posted on MERX™.
12. The OPO examined the 16 postings provided by the stakeholder as examples of "misclassified" requirements.
13. In addition, the OPO monitored all federal government procurements posted on MERX™ between July 4 and November 28, 2011. These postings were analysed using a two-stage process:
Stage 1 The OPO reviewed all requirements posted by the federal government and selected for analysis those which appeared to be anomalous. Postings were considered "anomalous" when they appeared, on the surface, in an unrelated category.
Stage 2 - For those postings selected in Stage 1, the OPO reviewed the following information: client department(s); region(s) of delivery or of opportunity; posting product(s); GSINs and categories. This information was analyzed to identify potential trends in the categorization of requirements on MERX™.
Observations and Analysis
a) Analysis of the stakeholder's examples
14. The 16 postings provided as examples of misclassifications were published between July 11, 2011 and July 22, 2011. All appeared in the Communications, Photographic, Mapping, Printing and Publication Services category. Seven were published by an Atlantic provincial government, eight by a Western provincial government and one by a University.
15. Eleven of these 16 postings did not represent issues. These 11 postings contained more than one GSIN. In each case, the GSINs used were analysed and it was determined most GSINs were in line with the requirement. For those cases where a GSIN was not in line with the requirement, at least one of the other selected GSINs was related and therefore, the posting appeared in an appropriate category.
16. Only five postings raised issues, and all five were published on behalf of an Atlantic provincial Department. They all related to road work, however only appeared in the Communications, Photographic, Mapping, Printing and Publication Services category. The same contracting authority prepared all five postings and the same GSIN (T: Communications) was used in all cases.
17. To understand why the postings for road work appeared in this category, the stakeholder contacted the Atlantic provincial Department in summer 2011. The stakeholder provided the OPO with the response given by the Department, which stated "We post our tender on the [provincial] Opportunities Network […] which is maintained by the Department of Supply and Services. I understand that MERX™ gathers information from this site, and then posts it independently of [the Atlantic provincial Department]."
18. Although this organisation is outside of the OPO mandate, we monitored postings on MERX™ of this organization for road work. It was noted the road work requirements posted after the end of September 2011 by the Atlantic provincial government appeared in the category Construction Services.
b) Analysis of federal procurement postings
19. Between September 7, 2011 and November 28, 2011 , the federal government published an average of 40 to 50 postings on MERX™ each business day. It is therefore estimated the federal government published between 4080 and 5100 postings on MERX™ during the July 4 to November 28, 2011 period monitored by the OPO.
20. Of the postings on MERX™ monitored by OPO, a total of 30 met the OPO anomalous criteria and were selected for further analysis. The 30 selected anomalous postings represent approximately 0.65% of all the postings published during the period of this study. Given this low number, it was not possible to detect trends regarding: client department(s); region(s) of delivery or of opportunity; requirement(s); GSINs and categories.
21. On the surface, these postings appeared to be classified under unrelated categories. For example, a requirement to upgrade playground structures appeared in the Textiles and Apparel category. However, after further review, the OPO noted this category was associated in MERX™ to GSIN N7830C (Playground Equipment) which is an accurate representation of the requirement. 24 of the 30 postings identified belong to this "on the surface" group. However, the other six postings revealed the following two issues:
1) Potentially Inappropriate Categorization Based on the GSIN(s) Selected
22. The first cluster consisted of four postings appearing to be posted in an inappropriate category based on the GSIN(s) selected:
- Posting 1
The requirement was for drawing, designing and machining services related to laboratory instruments and tools. A total of five GSINs were selected for this posting. Given the GSINs used, the posting appeared in both Construction Services and Information Processing and Telecommunication Services categories. None of the five GSINs are an accurate representation of the requirement. The OPO searched for other, more precise GSINs to better represent this requirement but was unsuccessful. GSINs were found for design services or laboratory instruments, but we did not find one GSIN with both components.
- Posting 2
The requirement was for the purchase of kerosene lanterns which appeared in the Electrical and Electronics category. The selected GSIN, N6260 (Nonelectrical Lighting Fixture), which represents the requirement, is associated with the category Electrical and Electronics. After review of other GSINs available, the OPO noted the GSIN N6260BB (Lantern, Kerosene) could also have been considered. However, this GSIN is also linked to the category Electrical and Electronics.
- Posting 3
The requirement was for a freefall parachute instructor. Insofar as this requirement is for training services, one would expect to find it under the Educational and Training Services category. However, GSIN V204IAl (Parachute Operations) was used in this posting, which matches the requirement's description. This GSIN rolls-up to the category of Transportation, Travel and Relocation Services. Furthermore, the OPO did not find a GSIN describing this requirement with more precision, including all GSINs associated with the Educational and Training Services category.
- Posting 4
The requirement was for the purchase of cleaning supplies. At first glance, the classification of the requirement under the Office Equipment category seemed inappropriate. However, the OPO notes the GSIN N7920BL (Brush cleaning, tools and parts, nylon bristles) matches the description of the requirement. The OPO reviewed other GSINs but was unable to find a more appropriate representation.
2) Inconsistencies in Categorization
23. The second cluster included postings for similar requirements appearing in different categories.
- Postings 5 and 6
The requirement in both cases was for the purchase of bottled water. However, the GSIN used for one requirement was N4110J (Dispensers, Drinking Water, Mechanically Cooled) which is tied to the Air Conditioning and Refrigeration Equipment category, while GSIN N8960B (Water, Distilled) linked with the Food category was used for the other requirement.
24. Our analysis has shown that given the large number of GSINs, several relevant GSINs could be used for the same requirement. For example, the OPO found GSIN JI7220A (Carpet, Installation) linked to the category Furniture whereas GSIN 5169FC (Carpet Laying/Installation) is linked to the category Construction Services. In both cases the requirement is the same: laying carpet. However, depending on the GSIN selected, this requirement would appear in different categories. Conversely, a precise GSIN does not exist for some requirements, as it was the case for posting 1. In either scenario, the process of selecting GSINs can be subjective, leading to inconsistencies in the categorization of postings for similar requirements.
25. The OPO did not find misclassification of requirements in federal procurement. Further, the OPO could not identify trends related to departments, regions of delivery or of opportunity, or requirements. In addition, it is also worth noting the number of postings which required in-depth analysis represents 0.65% of all the postings done by the federal government during the review period.
26. After more in-depth analysis of federal procurement postings analysed in stage 2, it was determined the GSINs used were in line with the requirements. The perception of misclassification can be explained by the link between some GSINs and their associated category (e.g. N6260 Nonelectrical Lighting Fixture in the category Electrical and Electronics). Moreover, the roll-up of the GSIN to its category is beyond the control of the contracting organization.
27. It is worth noting MERX™ is a tool used to both search and publish contracting opportunities. Tools are available to both suppliers and buyers on how to conduct searches and how to publish contracting opportunities. Given the number of GSINs available, the lack of training could lead to inconsistencies in their selection and, as a result, to the perception of anomalies in categorization of requirements.
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