Office of the Procurement Ombudsman Annual Report 2008-2009

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SECTION 1 - THE FIRST STEPS

Building the Office

With Royal Assent given to the Federal Accountability Act, the government initiated two key, interlinked lines of activity: the search for the first Ombudsman, and the development of the Procurement Ombudsman Regulations.

The Government announced that it was seeking qualified candidates for the position of Ombudsman on February 22, 2007. A number of candidates came forward. Following interviews and a thorough review, on September 19 of that year Shahid Minto was appointed the Procurement Ombudsman Designate.

The term "designate" is important. By law the Ombudsman must carry out his mandate "...in accordance with the regulations...," and at the time of the appointment those regulations were in the early stages of development by the government. That development process was completed soon thereafter: the Regulations came into effect on May 5, 2008. On May 15, 2008, Mr. Minto was officially appointed the Procurement Ombudsman by Order in Council.

The intervening months were used to start building the Office.

Principles

The foundation of the Office rests on a core set of basic principles. The Office must be, and must be seen to be:

• independent – operating at arm's length from government;
• neutral – neither a lobbyist for suppliers nor an apologist for the government; and
• helpful – seeking to improve procurement to the benefit of all stakeholders.

To achieve this, the Office must be:

• knowledgeable – about the workings of the Canadian market, government procurement legislation, policies and practices, and the issues and concerns that need to be addressed; and
• responsive – quick to act in a non-judgmental manner.

The objective is to be part of the solution:

• to seek to resolve individual concerns to the satisfaction of all involved; and
• to make balanced and useful recommendations to strengthen the fairness, openness and transparency of government procurement as a whole.

Ensuring Independence

In his appearance before the Standing Committee on Government Operations and Estimates on May 27, 2008, Mr. Minto emphasized the need for the Office to be clearly independent of government departments and agencies.

The Office was not set up as an Officer of Parliament or as a separate entity under the Financial Administration Act. The Ombudsman reports directly to the Minister of Public Works and Government Services, and the Office budget is part of the Public Works and Government Services Canada (PWGSC) appropriation. How then do we ensure that the Office operates, and is seen to operate – in this clearly independent manner?

A number of steps have been taken:

• a Memorandum of Understanding has been signed by the Ombudsman and the Deputy Minister of PWGSC to clearly identify the roles and responsibilities of the Office and the Department: it clearly recognizes and states the independence of the Ombudsman from the Department;
• the proposed budget for the Office was approved directly by the Treasury Board, separately from the departmental budgeting process;
• in order to conserve Office resources for operational work, the Office has negotiated service-level agreements with PWGSC for such core services as human resources, financial and information technology: these services are provided on a 'fee for service' basis, and the Office retains responsibility and accountability for all decisions;
• following consultations with the Department of Justice, the Office has retained its own legal advisor;
• the Office is responsible for its own internal audits and risk management;
• the Office is also responsible for its own communication services; and
• in what may be the most visible sign of independence for the supplier community, the Office moved in early spring 2009 to permanent accommodation in a commercial building – physically separate from PWGSC, but more importantly providing easy access to suppliers with issues to discuss.

Corporate Management

Having established that broad framework for and commitment to independence, we faced the daunting task of moving from essentially no staff, no facilities, no internal policies or practices and no supporting infrastructure to a fully-functioning organization.

Creating a new office is more than drawing an organization chart. It involves classifying new positions (including five executive positions) and recruiting staff; ensuring that we have adequate office facilities and security clearances; getting furniture, supplies and computers.

To this end, the Ombudsman recruited in the fall of 2007 a small group of five professional and support staff. By April 2008 the number had grown to 10, and as of March 31, 2009, the total staff complement was 22, organized into five operating units.

This structure was chosen to provide clear internal responsibilities and accountabilities. In particular, it emphasizes what are expected to be the three principal areas of activity: reviewing government procurement practices, responding to individual supplier inquiries, and providing Alternative Dispute Resolution (ADR) services.

Case Management System

Using and managing information is key to the business activities of the Office. Accordingly, the Office required an automated Case Management System designed to house information needed for effective decision making and reporting.

Three options for fulfilling this requirement were considered and analyzed: the development of a custom solution, the purchase of a commercial off-the-shelf solution, and the purchase of the case management system developed by the Ombudsman of British Columbia. The third option was found to be the most effective solution. It presents the best value for money by taking advantage of a product already developed. The system has been in use for over ten years and has been successfully implemented in other Ombudsman offices in federal departments and agencies, such as the Department of National Defence and the Canada Revenue Agency.

The system is currently being modified to meet the specific requirements of the Office and will be ready for implementation in early Summer 2009. It will track information pertaining to all our business lines.

The Business Model

The case management system is one tool that supports and informs our business model. Throughout, we emphasize the importance of continuous feedback from the supplier and government procurement communities – continuously seeking constructive commentary that permits us to improve all aspects of our operations.

We take a very broad approach to the subject matter of our practice reviews. A core element of our mandate, they are proactive and focused on the prevention of problems.

Practice reviews may be undertaken to examine a range of issues affecting multiple departments and suppliers – or have a direct focus on a single issue affecting one department. A review can also take the form of a research study that may identify effective practices and/or issues for a future review. Reviews may be:

• "one-off": self-contained and independent;
• part of a series examining different aspects of a particular situation; or
• cyclical, designed to be updated on a regular basis to determine degrees of change.

Whatever the approach, our reviews always seek to emphasize finding the solutions to improve the fairness, openness and transparency of procurement.

We developed standard operating procedures for strategic planning and the selection of review topics, a process for review planning, a framework for the actual conduct of the reviews, a selection of report structures to be applied according to the subject matter of each review, and an approach to reporting the results of our work in the Annual Report.

One element of our approach needs to be highlighted. When we complete a practice review, we send it to the department(s) concerned for consideration and comment. When we have this feedback, we finalize the review and send it to the appropriate Minister(s) and to the Minister of Public Works and Government Services.

Details on our review activities are provided in Section 2.

Our approach to inquiries and investigations is based on high standards of conduct, and clear criteria: our objective is to facilitate communications and provide practical remedies to address issues quickly and efficiently. From the outset, we encouraged suppliers to try to resolve any issues with the relevant Department. A formal investigation – the application of the formal process set out in the Act and Regulations – is undertaken only where we cannot assist in resolving issues through cooperation and dialogue.

The new case management system will record our work in this area, permitting us to analyze all contacts from suppliers and other stakeholders.

As prescribed in the Department of Public Works and Governments Services Act, the Office's findings and recommendations concerning a complaint are provided to the complainant, the relevant Minister and the Minister of Public Works and Government Services.

Details on our inquiry and investigation activities are provided in Section 2.

Alternative dispute resolution is expected to be a significant part of our work as more and more suppliers and departments become aware of this service. Having analyzed various possible options for the provision of effective dispute resolution processes, we selected our approaches, developed a process map, and established standards for the use and services of facilitators, mediators and arbitrators.

Details on our alternative dispute resolution work are provided in Section 2.

We have paid particular attention to ensuring that we have strong and effective quality assurance and risk management measures in place. Our quality assurance function will ensure that our practice review reports and investigative activities and recommendations are based on sound factual evidence and meet the highest professional standards.

The extensive and detailed work we did in this area is reported in Section 1 - Quality Assurance and Risk Management.

Program Evaluation

We are well on our way to having in place a comprehensive program evaluation framework to evaluate the effectiveness of the Office. Our goal is to have and use two objective and repeatable measures:

• the quality of our work, in and of itself, and
• the effect we have on the overall fairness, openness and transparency of federal procurement.

To that end, we developed a comprehensive evaluation framework. Presented to the Treasury Board Secretariat in November 2008, and subsequently accepted by the Secretariat, the framework was developed after a review of relevant documents on the Procurement Ombudsman and the Office, and after interviews with a number of key stakeholders/parties with an interest in the activities of the Office.

A number of elements pertaining to the operation of the Office will be assessed and measured.

Measuring our operational efficiency and effectiveness is not enough. We need to know whether through our recommendations we are succeeding in improving federal procurement in general. To that end, the Evaluation Framework also seeks to determine:

• the extent to which the fairness, openness and transparency of procurement has been enhanced as a result of our work;
• the extent to which the knowledge and confidence of suppliers and the procurement community has been enhanced, again as a result of our work; and
• the extent to which professionalism in the procurement community has been enhanced as a result of the Office.

Formative and Summative Evaluation

In addition to giving us a basis for evaluating our work on an ongoing basis, the Program Evaluation Framework provides for two major milestones:

• a formative evaluation, to evaluate the extent to which our program has been implemented, and to ensure that we are proceeding according to our mandate and expectations, will be carried out in 2010; and
• a summative evaluation, to measure the extent to which we have achieved our intended objectives, results and outcomes, will be carried out in 2013.

The Framework will be fully in place in mid-2009. Our first formal reporting of performance against it will be in our Annual Report for 2009-2010.

Promoting the Office

The first year of operation of a new function creates special challenges in communications.

Outreach

An essential first step for the Office was to make sure that all stakeholders were aware of its existence, and the services it provides.

Suppliers need to know that they can count on us to be receptive and sensitive to their inquiries and concerns, so that they will not hesitate to contact us. The government procurement community needs to know that we are professional and committed to improvement, so that we can work together in a spirit of cooperation. Supplier associations have to trust us to address their concerns from a truly independent and balanced perspective, and departments must know our principles, values and approaches, so that we can work together in an atmosphere of shared commitment to improvement.

Our Communications and Corporate Management team is the focal point of our communications and outreach activities. During our first year of operation – starting well before the Regulations came into force – the team implemented a dynamic communications outreach initiative to introduce the Office.

As early as November 2007, we launched our toll-free number (1-866-734-5169). Almost immediately people started to call. By March 31, 2009, we had recorded 355 contacts by telephone and e-mail. Details on these contacts are reported in Section 2.

We also have an internet presence. Our website came on line on May 15, 2008, and provides a permanent window to our activities and services. On it:

• we explain who we are and what we do, and we try to answer the questions we deal with most often;
• we highlight our toll-free telephone number, to make it easy for people to contact us; and
• we provide a link to the Regulations, so that suppliers can see how we operate, and what they can expect if they contact us.

As our Office evolves, the amount of information that Canadians can access through the website will grow. Specifically, our internal policies and procedures, annual reports, practice review reports, and summary information on our inquiries, investigations and alternative dispute resolution activities will be published on the site as they become available. As new insight on procurement practices emerges, we will publish and present success stories and lessons learned, and suggest ways in which both the government procurement and supplier communities can improve procurement practices and the overall effectiveness and efficiency of the procurement system.

The degree of interest that people have in our work is evidenced by the number of visits to the site:

OPO Website - Total Hits From May 2008 to March 2009

Text description of this Line Graph is available on a separate page.

For the same period of time (May 2008 to March 2009) the total number of visits from Canada was 85,331, with an average of 7,757 hits per month. The extent of international interest, shown in the chart below, is particularly obvious.

OPO Website - Total Web Hits (May 2008 to March 2009)
Top 20 excluding Canada

Text description of this Bar Graph is available on a separate page.

We are pleased that so many people outside the government already know about us. In large part this is due to our efforts to make ourselves known, specifically:

• an article in The Lawyers Weekly in July 2008;
• an interview with the Ombudsman published in Summit magazine in September 2008;
• publication of public notices in major daily and weekly newspapers in all provinces and territories in July 2008;
• We have also made presentations across the country:
  • 2008 Public Sector Financial Leadership Conference: Maintaining the Momentum for Change (Ottawa, The Conference Board of Canada, May 2008);
  • Association of Suppliers to the Federal Government (Ottawa, September 2008);
  • "Building Trust Together: The Public and Private Sector Experiences," a symposium organized by Public Sector Integrity Canada (Ottawa, September 2008);
  • The Public Procurement Conference (January 2009);
  • Alberta Ombudsman Office (March 2009);
  • The Board of the Association of Consulting Engineers of Alberta (March 2009);
  • The Canadian Public Procurement Council in Calgary (March 2009);
  • Canadian Society of Association Executives (March 2009);
  • Procurement Lawyers of Ottawa (March 2009);
  • Association des manufacturiers et exportateurs du Québec (March 2009); and
  • Réseau des conseillers en management du Québec (March 2009).
• Our communication group developed a brochure describing the mission, vision and services of the Office.
  • This brochure was given wide distribution throughout the supplier community, including:

    » Canadian Aboriginal and Minority Suppliers Council;
    » Canadian Chamber of Commerce;
    » Canadian Federation of Independent Business;
    » Building Owners and Managers Association; and
    » Canadian Youth Business Foundation.

• copies of the brochure were provided to the constituency offices of all Members of Parliament in July 2008 and to the new Members elected in the Fall 2008 election; and
• copies were also given to the regional offices and headquarters of the Office of Small and Medium Enterprises (OSME).

We have also made efforts to become known within the government. The Ombudsman has personally led our work in this area: by the end of the fiscal year he and the senior staff had:

• met with more than twenty-five deputy ministers and heads of agencies, to explain the mission, principles, values and planned approaches of the Office;
• met with senior officials of the Treasury Board Secretariat, the Office of the Auditor General and the Canadian International Trade Tribunal to confirm the distinct but complementary mandates of the other offices; and
• given presentations describing the vision and work of the Office to the federal community:
  • The Materiel Management Institute: the National Workshop in Ottawa in May 2008, and regional workshops: Winnipeg (September 2008); Halifax (November 2008); Vancouver (December 2008); and Toronto (February 2009);
  • National Defence – Material Group Management Committee (February 2008);
  • Small Agency Finance Action Group (November 2008);
  • Department of Foreign Affairs and International Trade Procurement Community Learning retreat (January 2009);
  • Federal Government Acquisition and Procurement Community of the Prairies (Alberta, March, 2009); and the Office of Small and Medium Enterprises (OSME), Public Works and Government Services Canada (January 2009); and
  • Department of Justice Commercial Lawyers Practice Group (February, 2009).

The Ombudsman and members of his senior staff have appeared before the Standing Senate Committee on National Finance (February 2008) and the House Standing Committee on Government Operations and Estimates (May 2008) to update members on the creation and evolution of the Office. We were encouraged by the positive and supportive reception of both of these committees. Both committees noted that we face significant challenges in pursuing our goal of strengthening the confidence of Canadians in federal procurement.

Also, the Office is starting to be recognized worldwide for its expertise. We have met with representatives from the office of the Hearing Officers of the European Commission to share information. Also, the Global Fund to Fight AIDS, Tuberculosis and Malaria wrote to the Office for advice in the areas of procurement, risk management and auditing in the summer of 2008. Based in Geneva, Switzerland, the Global Fund is one of the largest multinational financiers of international AIDS, Tuberculosis and Malaria programming. It has disbursed over $5.5 billion to date, and half of these funds are spent on the procurement of commodities, including drugs. Canada, a leading donor to the Global Fund, contributes over $150 million annually, and has played a key role since the inception of the Global Fund in 2001. The Office has assisted the Global Fund on several occasions in 2008-2009.

What we have heard

While making ourselves known we have also had the opportunity to listen. Everyone we have talked to has told us something, and that information – what we have heard – is the foundation for our work to improve federal procurement.

At a high level, we have heard the same message from suppliers and government: there is work to be done, and people are looking to us to act as facilitator for change. We have heard that our Office is looked upon as a neutral and independent body, and that stakeholders are willing to work with us in a spirit of mutual cooperation to make improvements.

We received comments from suppliers doing or seeking to do business with the federal government, who were frustrated by government processes and approaches. In seeking to assist them, our Office found that federal program managers were also frustrated by procurement processes that are complex and slow. Initial comments indicated that the federal procurement community feels shackled by rules that inhibit their ability to quickly and effectively provide their services. More specifically, we heard about issues and concerns falling in the broad categories set out in the table below:

Supplier Issues	Government Issues
Contract award process Supplier debriefing Delays in payment Standing offers Communication issues between suppliers and government authorities Information on how to do business with the federal government	Capacity Time consuming processes Inconsistency Complexity of procurement tools Too many rules

Quality Assurance and Risk Management

The Quality Assurance and Risk Management team ensures that the work carried out by the Office meets the highest standards of quality.

We divide our activities into two broad areas:

• quality assurance and risk management; and
• continuous improvement.

The team also provides leadership to ensure that the Office adheres to its Code of Values, Ethics and Professional Conduct. Being built on and complementary to the Code of Values and Ethics for the Public Service, our Code sets out requirements such as taking pride in each other's accomplishments, treating our colleagues and stakeholders with respect, and ensuring that diversity and quality of life are part of the Office culture.

Quality Assurance & Risk Management

We are establishing a system to ensure that: quality is built into all of our processes; controls are in place to identify and respond to risks in a timely manner; responsibilities are clearly defined and communicated; and all staff members participate in continuous improvement.

In keeping with those principles, the policies and procedures that have been developed for each business line incorporate risk management and identify the quality required at each step of the process and specify when a quality review is to be conducted. Similarly, the tools developed to assist staff in their work, such as templates, checklists and reference materials, were designed to assure quality and manage risks on a continuous basis.

Our standards are also put into practice using peer reviews. Every plan and report produced by one of our business lines is reviewed by a colleague within the business unit or one of the senior staff of the Office, including the Ombudsman, Deputy Ombudsman and Principals/Directors.

At key points in our work, a member of the Quality Assurance and Risk Management team conducts a formal quality control review. These reviews are objective verifications that the work meets the specific criteria described in our policies and procedures, and will include considerations such as:

• whether sufficient and appropriate documentation is on file to support analysis, recommendations and decision making;
• that risk and legal issues have been addressed;
• that actions align with legislative requirements, professional standards, Office policies and procedures;
• whether matters requiring senior management attention have been properly identified; and
• that content, format, and presentation are consistent, accurate, complete and relevant;
• that the appropriate level of approval authority is being sought.

Continuous Improvement

We have established the basis for an extensive and ongoing liaison program with government departments, central agencies, suppliers, academic institutions, and professional associations to ensure that we maintain a current awareness of procurement practices, risks, interests and concerns.

A program of research activities has also been initiated. We assess market and socio-economic developments, as well as legislative and policy trends that have or could have an influence on federal government procurement practices and the activities and interests of suppliers.

The results of our research are shared with the departments and within the Office to keep staff up-to date on trends and developments. Our research might also be used to support recommendations made in our procurement practice review reports. Publication of the practice review reports will be one of our key methods for sharing information widely, which in turn contributes to broadening the knowledge base of all stakeholders.

We note here that depending on the subject matter, our research work could evolve into a practice review.

Both our liaison and research activities will include national and international perspectives in order to identify and share effective practices, success stories and lessons learned.

The Quality Assurance and Risk Management team provides training, coaching and support to staff within the Office to ensure a current and balanced understanding of developments in the field of procurement.

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