Mandate Issues: Additional Measures Report by the Sussex Circle

Rick Smith and Jim Mitchell
October 7, 2013

Executive Summary
1.0 Introduction
2.0 What is the Current Recommendations Mandate?
3.0 What is the Impact of the Current Recommendations Mandate?
4.0 How Does the Procurement Ombudsman Mandate Compare With the Mandates of Other Oversight Organizations?
5.0 What are the Advantages and Disadvantages of Additional Measures?
6.0 Recommendation
Annex 1: Compulsion Powers of Selected Federal Organizations
Annex 2: Who did we talk to?

Executive Summary

This report presents our assessment of the advantages and disadvantages of expanding the mandate of the Procurement Ombudsman to include measures to ensure government departments address the recommendations and issues identified by the Procurement Ombudsman in the course of his Office's work.

Context

The position of Procurement Ombudsman was established under the Federal Accountability Act to help promote fairness, openness and transparency in federal procurement. To do that, the Ombudsman's Office conducts reviews of the practices of departments for acquiring goods and services, and investigates complaints from suppliers concerning the award of contracts within certain dollar value thresholds and concerning the administration of contracts regardless of value.
These reviews and investigations identify issues and contain recommendations. There is no requirement for departments to implement recommendations made by the Procurement Ombudsman. But the majority have been accepted and acted upon.
Nevertheless, the recent Formative Evaluation of the Office of the Procurement Ombudsman found that some suppliers did not feel that the Ombudsman had sufficient power to bring change to federal procurement because he does not have the authority to impose corrective actions.

Advantages and disadvantages of additional measures

The Formative Evaluation set out the potential advantages of additional compulsion measures for the Ombudsman. Specifically, some suppliers felt that because the Ombudsman did not have the authority to order corrective actions it was of limited utility. In their view, expanding the mandate to include additional measures to ensure departments address the Ombudsman's recommendations would better respond to the concerns of small- and medium-sized businesses regarding government procurement.

During the course of our interviews with federal officials, we found little support for this view.

The current process whereby the Ombudsman's Office conducts reviews and investigates complaints seems to work reasonably well. Most of the recommendations are agreed to, and action plans are developed and then implemented. There does not appear to be a compelling reason for making the implementation of recommendations mandatory.
Making implementation of the recommendations mandatory would, however, represent a significant change in the relationship between the Ombudsman and departments. For a variety of reasons, not all recommendations are supported by departments, and officials said that there needs to be some room for disagreement. At the end of the day it is the department that is responsible for managing its procurement.

Our review of the mandates of other oversight bodies also suggests disadvantages associated with an expanded mandate for the Procurement Ombudsman.

Additional powers for the Ombudsman may not be consistent with those of other oversight organizations. Most of them are in the recommendations business and make good use of the powers of analysis and persuasion to bring about change. The Ombudsman's current powers are consistent with an organization that is neither an agent of Parliament nor a quasi-judicial tribunal.
Additional powers may not be consistent with the role of an ombudsman. According to the International Ombudsman Association's Standards of Practice, an ombudsman does not make binding decisions, mandate policies, or formally adjudicate issues for the subject organization.

Recommendation

In our view, the disadvantages of such a change in mandate outweigh the advantages. Based on our analysis, we do not recommend that the Procurement Ombudsman seek additional powers to require government departments to address the recommendations and issues identified by Ombudsman in the course of his work. There does not appear to be a compelling reason why the Ombudsman's recommendations should be mandatory. Such a power would be inconsistent with its status as an ombudsman organization and with the powers of similar oversight bodies.

We note, however, that the Office has included follow up of its previous review recommendations as part of its work plan. These follow-up reports provide an important overview of the government's progress in addressing systemic problems identified by the Ombudsman's reviews, and are themselves an important mechanism of influence.

1.0 Introduction

Sussex Circle was engaged to undertake an analysis of the advantages and disadvantages of expanding the mandate of the Procurement Ombudsman as recommended by the Formative Evaluation conducted in 2012.^{Footnote 1} This report presents the second part of that analysis - potential additional measures that could be undertaken to ensure government departments address the recommendations and issues identified by the Ombudsman - along with the conclusions and recommendations that stem from it.^{Footnote 2}

The introductory section of the report provides background information on the assignment, the approach used, and the challenges and limitations associated with it.

1.1 Background

The position of Procurement Ombudsman was established under the Federal Accountability Act to promote fairness, openness and transparency in federal procurement by, among other activities, providing an avenue for suppliers to have procurement-related concerns addressed by a neutral and independent body. In particular, the government sought to help Canadian suppliers address procurement-related issues associated with lower dollar value contracts. Suppliers of these contracts are typically small- and medium-sized enterprises across Canada.

The Ombudsman's mandate is to:

Review any complaint with respect to the award of a contract for the acquisition of goods below $25,000 and services below $100,000;
Review any complaint with respect to the administration of a contract, regardless of dollar value;
Review the practices of departments for acquiring goods and services to assess their fairness, openness and transparency and make recommendations to improve those practices; and
Ensure that an alternative dispute resolution process is provided, if requested and agreed to by both parties.

In 2012, the Ombudsman launched an independent, third-party Formative Evaluation to assess whether the Office's mandate had to date been implemented as intended. Although the Evaluator found that to be the case, he made recommendations to strengthen the Office's operations. One of those recommendations was that additional analysis be undertaken to assess the advantages and disadvantages of expanding the Ombudsman's mandate. In particular, the report stated that:

A significant number of suppliers and some government officials indicated that the mandate of the OPO should be expanded to better address the complaints of small and medium sized businesses regarding federal procurement. Because the Canadian International Trade Tribunal (CITT) process is more formal and time consuming, it might be more expeditious for both the federal government and suppliers to slightly increase the maximum threshold of OPO. This would allow the slightly larger contracts to be handled by the OPO thereby enabling the resolution of procurement disputes in a more informal manner and reducing the time and effort required by suppliers and the federal government to settle their disputes. In addition, suppliers felt that additional measures should be undertaken to ensure government departments address the recommendations and issues identified by OPO.^{Footnote 3}

1.2 Approach

To prepare this report, we reviewed:

The Formative Evaluation Final Report.
The legislative authority of the Procurement Ombudsman and the policy rationale for providing the Ombudsman with the mandate to review complaints.
The mandates and enforcement powers of similar federal oversight organizations.

We also consulted with other federal officials to gather information on the desirability and implications of additional steps that could be taken by the Government of Canada and/or the Ombudsman to ensure government departments address the recommendations and issues identified by the Ombudsman in the course of his work. These officials included representatives from five federal organizations that together account for approximately 60 per cent of the volume of lower value goods and services purchases (those under $25,000).

1.3 Challenges and Limitations

In conducting this engagement, we did not consult suppliers. Rather, we relied upon their views as captured in the Formative Evaluation, upon which this report builds.

2.0 What is the Current Recommendations Mandate?

Under the Procurement Ombudsman Regulations (2008), the Ombudsman may make recommendations flowing from his office's review of:

the practices of departments for acquiring goods and services in terms of their fairness, openness and transparency, and make recommendations to improve those practices;
complaints with respect to the award of a contract for the acquisition of goods below $25,000 and services below $100,000; and
complaints with respect to the administration of a contract, regardless of dollar value.

Before making any recommendations concerning departmental practices, the Procurement Ombudsman must take into consideration consistency with relevant cabinet and multi-departmental policies and procedures; national security; the Financial Administration Act and regulations made under it; the seriousness of any inconsistency with the principles of fairness, openness and transparency; and the potential impact that the recommendations could have on the government's operations or resources.^{Footnote 4}

For founded complaints with respect to the award of a contract, those recommendations may include (within limits) financial compensation in respect of the profit that the complainant would have realized and for the costs of submitting the bid.^{Footnote 5}

For those dealing with contract administration, the Procurement Ombudsman may not make recommendations altering the terms and conditions of a contract, or providing a remedy other than as specified in the contract.^{Footnote 6}

There is no requirement for departments to implement recommendations made by the Procurement Ombudsman.

3.0 What is the Impact of the Current Recommendations Mandate?

Like other offices with an audit-like mandate, the Office of the Procurement Ombudsman (OPO or the Office) follows up on the progress departments and agencies have made in implementing the recommendations from its procurement practice reviews. It does this in order to:

inform interested stakeholders of specific actions the government has taken and will take to improve the fairness, openness and transparency of its procurement practices;
facilitate the introduction of similar improvements in other federal organizations, through information sharing; and
provide the OPO with indications of the usefulness of its reviews.

Since it was established, the Office has conducted two follow-up reviews: the first covering the practice reviews it reported in 2008-09^{Footnote 7}, and the second covering those reviews reported in 2009-10.^{Footnote 8} In both cases the Office asked the departments and agencies included in the scope of the reviews to provide information about their actions taken in response to the OPO's recommendations.

The follow-up reports concluded that many of the actions were completed, but that others were not finalized. Departments were encouraged to monitor the progress of any outstanding actions and complete these actions within a reasonable period of time.

The Formative Evaluation went further, asking to what extent departments had accepted the Ombudsman's recommendations resulting from procurement practice reviews and from investigations resulting from complaints. The evaluation concluded that Ombudsman recommendations had been accepted to a significant extent by the federal government organizations surveyed.^{Footnote 9} Nevertheless, the evaluation found that some suppliers did not feel that Ombudsman had sufficient power to bring change to federal procurement because he does not have authority amongst government departments to compel them to take corrective actions.^{Footnote 10}

4.0 How Does the Procurement Ombudsman Mandate Compare With the Mandates of Other Oversight Organizations?

There are several organizations within the federal government with investigation powers of various forms. These include ombudsmen, quasi-judicial tribunals and agents of Parliament. Summary information concerning some of those organizations is presented in Figure 1, and more detailed information in Annex 1. They provide a summary of their respective mandates and indicate whether their recommendations are binding.

The Procurement Ombudsman's powers are similar to those of other federal ombudsmen. They conduct investigations, audits or inquiries, present their findings and seek a response. Recommendations are not binding; whether or not the recommendations are accepted and improvements are made depends on the quality of their analysis, their powers of persuasion and a host of other factors. At the end of the day, accountability and responsibility for departmental activities rests with the deputy heads of each organization; they are the "decision makers" regarding what is best for their organization.

Other measures that encourage departments to address recommendations and issues identified in our analysis include:

Reports to the Minister on the results of specific investigations concerning organizations for which the Minister is responsible;
Annual reports to Parliament on the overall activities of the oversight body;
Reports to Parliament on the results of specific investigations;
Legislative requirements that departments will implement recommendations to the greatest extent possible;
Rights of approval or rejection of terms of a settlement; and
Rights to make an application to a tribunal for a determination and a remedy order.

The first measure is widely used, and reflects the fact that the Minister is ultimately responsible for departmental activities. For ombudsmen with mandates specific to individual departments, it also tends to be the final step in the process.

Annual reports to Parliament and reports on the results of specific investigations are also common for organizations with a cross-government responsibility. These are also the final steps in the process for agents of Parliament. At the end of the day, it is Parliament that holds the government to account.

The final three measures are limited to organizations exercising quasi-judicial responsibilities, and differ from organization to organization depending on their specific mandates. They issue decisions on the basis of a legal review.

**Figure 1: Compulsion Powers of Various Federal Organizations**
Organization	Nature of the Organization	Compulsion Powers
Office of the Procurement Ombudsman	Ombudsman	Makes recommendations to departments/agencies Recommendations are not binding
Office of the Veterans Ombudsman	Ombudsman	If the management response is considered unacceptable or is not received within a reasonable time, the Ombudsman may submit the report to the Minister Recommendations are not binding
National Defence and Canadian Forces Ombudsman	Ombudsman	Makes recommendations to the lowest level of authority that can effect the change considered necessary by the Ombudsman Recommendations are not binding
Taxpayers' Ombudsman	Ombudsman	Makes recommendations directly to the Minister of National Revenue Recommendations are not binding
Office of the Auditor General of Canada	Agent of Parliament	Audit findings - which include good practices, areas requiring attention, and recommendations for improvement - are reported to Parliament Reports may be reviewed by Parliamentary committees, which conduct hearings and make recommendations for action Recommendations are not binding
Office of the Commissioner of Lobbying of Canada	Agent of Parliament	Reports on investigations conducted in relation to the Code are tabled in Parliament as they are completed Power to advise a peace officer having jurisdiction to investigate an alleged offence Reports present conclusions but not recommendations
Office of the Public Sector Integrity Commissioner of Canada	Agent of Parliament	Reports of founded wrongdoing are presented to both houses of Parliament with recommendations and the department's response Investigator may recommend to the Commissioner that a conciliator be appointed to attempt to bring about a settlement Terms of a settlement must be referred to the Commissioner for approval or rejection and the Commissioner must so certify In case of reprisal, may apply to the Public Servants Disclosure Protection Tribunal for a determination and a remedy order
Canadian International Trade Tribunal	Quasi-judicial tribunal	May order the government institution to postpone the awarding of a contract until the Tribunal determines the validity of the complaint Under legislation, the government institution shall implement Tribunal recommendations to the greatest extent possible Government institution shall advise the Tribunal of the extent to which it intends to implement the recommendations and, if it does not intend to implement them fully, the reasons for not doing so Government institution that intends to implement the recommendations in whole or in part shall advise the Tribunal of the extent to which it has then implemented the recommendation

5.0 What are the Advantages and Disadvantages of Additional Measures?

The Formative Evaluation set out the potential advantages for suppliers of additional enforcement measures for the Ombudsman.^{Footnote 11} Specifically, some suppliers felt that because the Ombudsman did not have the authority to order corrective actions it was of limited utility. In their view, expanding the mandate to include additional measures to ensure departments address the Ombudsman's recommendations would better respond to the concerns of small- and medium-sized businesses regarding government procurement.

During the course of our interviews with federal officials, we found little support for this view.

The current process whereby the Procurement Ombudsman's Office conducts reviews and investigates complaints seems to work reasonably well. Most of the recommendations are agreed to, and action plans are developed and then implemented. There does not appear to be a compelling reason for making the implementation of recommendations mandatory.
Making implementation of the recommendations mandatory would, however, represent a significant change in the relationship between the Ombudsman and departments. For a variety of reasons, not all recommendations are supported by departments, and officials said that there needs to be some room for disagreement. At the end of the day it is the department that is responsible for managing its procurement.

Our review of the mandates of other oversight bodies also suggests disadvantages associated with an expanded mandate for the Procurement Ombudsman.

Additional powers for the Ombudsman may not be consistent with those of other oversight organizations. Most of them are in the recommendations business and make good use of the powers of analysis and persuasion to bring about change. The Ombudsman's current powers are consistent with an organization that is neither an agent of Parliament nor a quasi-judicial tribunal.
Additional powers may not be consistent with the role of an ombudsman. According to the International Ombudsman Association's Standards of Practice, an ombudsman does not make binding decisions, mandate policies, or formally adjudicate issues for the subject organization.^{Footnote 12}

6.0 Recommendation

In our view, the disadvantages of such a change in mandate outweigh the advantages. Based on our analysis, we do not recommend that the Procurement Ombudsman seek additional powers to require government departments to address the recommendations and issues identified by Ombudsman in the course of its work. There does not appear to be a compelling reason why the Ombudsman's recommendations should be mandatory. Such a power would be inconsistent with its status as an ombudsman organization and with the powers of similar oversight bodies.

We note, however, that the Ombudsman has included follow up of its previous review recommendations as part of its work plan. These follow-up reports provide an important overview of the government's progress in addressing systemic problems identified by the Ombudsman's reviews, and are themselves an important mechanism of influence.

Annex 1: Compulsion Powers of Selected Federal Organizations

Organization	Mandate	Comments on Compulsion Powers
Office of the Procurement Ombudsman	The mandate of the Procurement Ombudsman is to: review procurement practices across government on an ongoing basis to ensure fairness and transparency; make recommendations for improvements to the relevant department; review complaints from potential suppliers after contract award with respect to procurements of goods and services that are covered by the Agreement on Internal Trade (AIT) but which are below the monetary thresholds of that agreement ($25,000 goods and $100,000 for services); review complaints with respect to the administration of contracts; and ensure the provision of an alternative dispute resolution process for contract disputes.	The Ombudsman's recommendations are not binding. The Procurement Ombudsman does not have the authority to cancel or change the terms and conditions of contracts, nor to impose sanctions, penalties or remedies where departments are found to have not followed the rules. However, the Procurement Ombudsman can recommend a department compensate a supplier for complaints regarding the award of a contract. Once the investigation is complete, the final report, including recommendations, is provided to the Minister of the relevant department, the Minister of Public Works and Government Services and to the complainant. The results are summarized on the Ombudsman's website and reported in the Annual Report.
Canadian International Trade Tribunal	The Canadian International Trade Tribunal (CITT) is the main quasi-judicial institution in Canada's trade remedy system with authority to: conduct inquiries into whether dumped or subsidized imports have caused, or are threatening to cause, material injury to a domestic industry; hear appeals of decisions of the Canada Revenue Agency made under the Customs Act, the Excise Tax Act and the Special Import Measures Act; conduct inquiries and provides advice on such economic, trade and tariff issues as are referred to the Tribunal by the Governor in Council or the Minister of Finance; conduct inquiries into complaints by potential suppliers concerning procurement by the federal government that is covered by the North American Free Trade Agreement, the Agreement on Internal Trade and the World Trade Organization Agreement on Government Procurement; and conduct safeguard inquiries into complaints by domestic producers that increased imports are causing, or threatening to cause, serious injury to domestic producers and can conduct investigations into requests from Canadian producers for tariff relief on imported textile inputs that they use in their production operations.	Where the Tribunal decides to conduct an inquiry into a complaint that concerns a designated contract proposed to be awarded by a government institution, the Tribunal may order the government institution to postpone the awarding of the contract until the Tribunal determines the validity of the complaint. The Tribunal does not have the power to delay the performance of any contract already awarded. Where the Tribunal determines that a complaint is valid, it may recommend such remedy as it considers appropriate, including any one or more of the following remedies: that a new solicitation for the designated contract be issued; that the bids be re-evaluated; that the designated contract be terminated; that the designated contract be awarded to the complainant; or that the complainant be compensated by an amount specified by the Tribunal. Where the Tribunal makes recommendations to a government institution under section 30.15 of the Act, the government institution shall, subject to the regulations, implement the recommendations to the greatest extent possible. Where the Tribunal makes recommendations to a government institution under section 30.15 of the Act, the government institution shall: advise the Tribunal in writing, within 20 days after receipt of the recommendations, of the extent to which it intends to implement the recommendations and, if it does not intend to implement them fully, the reasons for not doing so; and where the government institution has advised the Tribunal that it intends to implement the recommendations in whole or in part, advise the Tribunal in writing, within 60 days after receipt of the recommendations, of the extent to which it has then implemented the recommendations. The Tribunal's determination may be judicially reviewed by the Federal Court of Appeal.
Office of the Veterans Ombudsman	The mandate of the Veterans' Ombudsman is to: review and address complaints by clients arising from the application of provisions of the Veterans Bill of Rights; identify and review emerging and systemic issues related to programs and services administered by the department that impact negatively on its clients, including individual decisions related to the programs and services for which there is no right of appeal to the Veterans Review and Appeal Board; review and address complaints by clients related to programs and services; review systemic issues related to the Board; and facilitate access by clients to programs and services.	The Ombudsman's recommendations are not binding. The Ombudsman may request a management response from the Department that indicates what action is contemplated or being taken with respect to the report's recommendations or explains why the recommended action will not be taken. If the management response is considered unacceptable or is not received within a reasonable time, the Ombudsman may submit the report to the Minister. To bring closure as quickly as possible, every attempt is made to resolve complaints informally and at the lowest level possible, most often through inquiries and mediation with service providers.
National Defence and Canadian Forces Ombudsman	The Ombudsman investigates complaints and serves as a neutral third party on matters related to the Department of National Defence and the Canadian Forces.	The Ombudsman's recommendations are not binding. The Ombudsman attempts to resolve problems at the level at which they can most efficiently and effectively be resolved and makes recommendations to the lowest level of authority that can effect the change considered necessary by the Ombudsman.
Taxpayers' Ombudsman	The Taxpayers' Ombudsman is an independent and impartial officer who operates at arm's length from the Canadian Revenue Agency (CRA) and reports to the Minister of National Revenue. The Taxpayers' Ombudsman is charged with: reviewing service-related complaints about the CRA and upholding the Taxpayer Bill of Rights with regard to service matters; and serving as the final level of review in the CRA complaint resolution process, including the CRA - Service Complaints program.	The Ombudsman's recommendations are not binding. The Ombudsman makes recommendations directly to the Minister of National Revenue to correct any systemic service and fairness problems discovered at the CRA.
Office of the Auditor General of Canada	The Auditor General is an agent of Parliament. The Office of the Auditor General (OAG) audits federal government operations and provides Parliament with independent information, advice and assurance to help hold the government to account for its stewardship of public funds. The OAG is responsible for performance audits and studies of federal departments and agencies. It conducts financial audits of the government's financial statements (public accounts) and performs special examinations and annual financial audits of Crown Corporations.	The Auditor General's recommendations are not binding. Audit findings—which include good practices, areas requiring attention, and recommendations for improvement—are reported to Parliament. The Auditor General's reports may be reviewed by Parliamentary committees, which conduct hearings and make recommendations for action. The government has the opportunity to respond to the findings, and may implement recommended changes.
Office of the Commissioner of Lobbying of Canada	The Commissioner is an independent agent of Parliament with the mandate to: oversee the enforcement of the Lobbying Act and ensure that all aspects of the lobbyists registration regime are adhered to, by establishing and maintaining a registry of lobbyists, a publicly accessible on-line database of information on all registered lobbyists and their activities; determine when there are grounds to investigate an alleged breach of the Lobbying Act or of the Lobbyists' Code of Conduct; initiate investigations in the same manner and to the same extent as a superior court of appeal; and advise a Peace Officer when there are reasonable grounds for believing that a contravention of the Lobbying Act has occurred.	Reports present conclusions but not recommendations. The Commissioner reports annually to both houses of Parliament. Reports on Investigation conducted in relation to the Code are tabled in Parliament as they are completed. If, during an investigation under this section, the Commissioner believes on reasonable grounds that a person has committed an offence under this or any other Act of Parliament or of the legislature of a province, the Commissioner shall advise a peace officer having jurisdiction to investigate the alleged offence and immediately suspend the Commissioner's investigation.
Office of the Public Sector Integrity Commissioner of Canada	The Commissioner is an independent agent of Parliament with the mandate to: review and investigate disclosures by public servants and members of the public about wrongdoing in the federal public sector; review and investigate reprisal complaints from current and former public servants.	Reports of founded wrongdoing are presented before the House of Commons and the Senate with recommendations and the department's response. At any time during the course of the investigation into a complaint the investigator may recommend to the Commissioner that a conciliator be appointed to attempt to bring about a settlement. The terms of a settlement must be referred to the Commissioner for approval or rejection and the Commissioner must, without delay after approving or rejecting them, so certify and notify the parties to the settlement. The Commissioner may apply to the Public Servants Disclosure Protection Tribunal for a determination of whether or not a reprisal was taken against the complainant and, if the Tribunal determines that a reprisal was taken, for an order respecting a remedy in favour of the complainant; or an order respecting a remedy in favour of the complainant and an order respecting disciplinary action against any person or persons identified by the Commissioner in the application as being the person or persons who took the reprisal.

Sources: Governor in Council Appointments, Federal Organizations Alphabetically and individual organizations' websites.

Annex 2: Who did we talk to?

The people

Denis Bombardier, Acting Chief Financial Officer, Fisheries and Oceans Canada

Desmond Grey, Acting Director General, Services and Specialized Acquisitions, Public Works and Government Services Canada

Frank Jeffries, Director General, Administrative Services and Property Management Branch, National Research Council and Robert Hart,

Director, Administrative Services

Todd Mitton, Comptroller, Correctional Services Canada

Nadir Patel, Assistant Deputy Minister and Chief Financial Officer, Corporate Finance and Operations, Foreign Affairs and International Trade Canada

Joe Wild, Assistant Secretary to the Cabinet, Machinery of Government, Privy Council Office

The questions

What do you see as the advantages and disadvantages of increasing the dollar-value thresholds for complaints subject to OPO investigation?
If the thresholds were to be increased, what levels do you think would be appropriate?
Do you think that additional steps should be taken by the Government of Canada and/or the OPO to ensure government departments address the recommendations and issues identified by the OPO in the course of its work? If so, what steps would you envisage?
What do you see as the advantages and disadvantages of compelling federal organizations to address the recommendations made by the OPO in their investigation and practice review reports?
Are there any other comments that you would like to make?