Follow-up Report to the 2017-2018 Procurement Practice Review: Review of the Procurement Management Control Framework of the Courts Administration Service

March 2021

Main points

What we reviewed

1. In 2017-2018, the Office of the Procurement Ombudsman (OPO) conducted a procurement practice review entitled Review of the Procurement Management Control Framework of the Courts Administration Service.

2. In September 2020, OPO asked the Courts Administration Service (the Department) to provide information regarding actions taken in response to the recommendations in the above-noted review.

3. The purpose of the follow-up exercise was to determine whether the Department considered and took action, or developed plans, in response to the Procurement Ombudsman’s recommendations. In this regard, OPO assessed the information provided by the Department for overall reasonableness and credibility. This report provides a summary, as well as specific examples, of progress made by the Department in implementing the recommendations from the original review.

Why it’s important

4. There are three main reasons why reporting on progress made in response to the Procurement Ombudsman’s recommendations is important:

  • It informs interested stakeholders of specific actions organizations have taken to improve procurement practices
  • By sharing information on changes being implemented by the organizations whose practices were reviewed, OPO facilitates other federal organizations’ ability to introduce similar improvements
  • The information on the nature and extent of responses to the recommendations provides an indication of the usefulness of OPO’s reviews in promoting fairness, openness and transparency in federal procurement

What we found

5. The Department stated it took action in response to the six recommendations made in the original review. Using a scale provided by OPO, the Department self-assessed the level of implementation of these actions as “full implementation” (Level 5). When asked for documentation to substantiate this assertion, the Department provided OPO with supporting documentation for each action with the exception of one recommendation.

Introduction

6. OPO published the following report in 2018-2019:

Objectives

7. The objectives of this follow-up review were to determine:

  • whether the Department considered the recommendations made by the Procurement Ombudsman in the September 2018 review with respect to its procurement practices
  • whether action plans to respond to the recommendations were prepared and approved; and
  • what actions were undertaken in response to the recommendations, and the extent to which each action had been monitored and completed

8. OPO expected the Department to have introduced changes to improve its procurement practices in response to the Procurement Ombudsman’s recommendations.

Scope, methodology, and timing

9. OPO requested the Department provide information on actions planned or implemented as a result of the recommendations in the original (i.e. September 2018) review. This report reflects actions reported to OPO by the Department up to November 2020.

10. The approach used for follow-up exercises differs from the approach used in OPO’s procurement practice reviews. The assessment of progress made against recommendations was based upon the Department’s self-assessment and assertions regarding its plans and actions coupled with supporting (i.e. substantiating) documentation. For each recommendation in the original review, OPO reviewed the information provided for overall reasonableness and credibility. This was done by:

  • verifying whether any contradiction existed between the Department’s assertions and information available from publicly accessible sources or obtained during the original review;
  • analyzing the Department’s responses to understand how its actions addressed the recommendations and whether there were plans to monitor the results or effectiveness of these actions or changes; and
  • seeking clarification, as required, to ensure a clear understanding of the information and supporting documentation provided by the Department.

11. This report provides an overview of the Department’s assertions, as well as OPO’s assessment, on progress in implementing changes in response to the recommendations contained in the original review.

Assessment of implementation of the department’s actions

Summary of original review findings

12. OPO reviewed 30 sample contract files, their related program files, and relevant Department procurement policies to determine whether the Department’s management control framework (MCF) was in place, functioning as intended and in a manner consistent with applicable sections of the Financial Administration Act, the regulations made under it, and the Treasury Board Contracting Policy (TBCP), and in a manner that supports the principles of fairness, openness and transparency.

13. The review found the Department had established a Contract Review Committee (CRC) to review its proposed contracts over $10,000, with some exclusions (e.g. contracts for legal services). However, the CRC’s Terms of Reference was not adequately up-to-date and did not fully define its list of members, its members’ roles and responsibilities, or its meeting processes and procedures.

14. Monitoring activities identified by the CRC’s Terms of Reference had not been performed, including reports to the Department’s Executive Committee on the CRC’s activities, and providing CRC meeting minutes on a quarterly basis to the Department’s Internal Audit Division. Since moving from holding in-person meetings, CRC meeting minutes were no longer taken; however, no alternative to this monitoring control had been established.

15. The Department had documented its procurement controls, roles, responsibilities, and accountabilities in a draft Procurement and Contracting Policy and draft Procurement and Contracting Guidelines. At the time of the review, neither had been approved nor formally implemented.

16. The draft Procurement and Contracting Policy referred to a departmental procurement plan that would be presented to senior management and updated semi-annually. While senior management did receive information on individually planned procurements, a departmental procurement plan was not created and could not be formally monitored.

17. The draft Procurement and Contracting Guidelines did not have guidance on what was expected from staff in order to identify, and be accountable for, procurement risks. While staff were provided a Request for Proposal (RFP)/Contract Checklist for procurements over $10,000, this also lacked information about underlying risks and how they were being managed. Overall, OPO found the Department’s procurement risk assessment process to be more informal than formal.

18. OPO found a significant number of omissions in the Department’s proactive disclosure reports. Government-wide changes to the proactive disclosure process that came into effect on January 1, 2018 would need to be reflected in any adjustments to the Department’s proactive disclosure controls.

19. Because contracts for legal services are not subject to the Government Contracts Regulations or the TBCP, there are no formal requirements to solicit bids. The Department’s draft Procurement and Contracting Policy encourages, where possible, soliciting multiple quotes when the value is over $5,000; however, the vast majority of the Department’s contracts for court usher services were sole-sourced $25,000 contracts, including many reissued to a supplier without competition.

20. Contracts for legal services are excluded from the CRC’s review, given the solicitor-client privilege and often sensitive nature of the contracts involved. As a good practice, the Department requires documented justification for contracts of this type, which must then be approved and retained in the contract file.

Original review conclusion

21. OPO’s review found the Department’s MCF had benefitted from a demonstrated commitment to values and ethics, as well as support for employees’ participation in procurement-related training. The oversight provided by the CRC served a formal challenge function within the Department. Procurement controls, roles, responsibilities and accountabilities had been documented in draft form.

22. The Procurement Ombudsman concluded the Department had a procurement MCF in place. For the most part, this MCF was functioning as intended and in a manner consistent with applicable authorities, but could have mitigated potential risks to fairness, openness and transparency by strengthening the components identified by OPO’s review.

Original review recommendations

23. Six recommendations were issued by the Procurement Ombudsman in the review; specifically, that the Department:

  1. Amend the Contract Review Committee’s Terms of Reference to clearly describe the Committee’s role, responsibilities of members, membership, and processes and procedures, including the methods by which the Committee will report to Senior Management on its activities and results.
  2. Formally document, approve and implement departmental procurement guidance, including procedures and guidelines. Consideration should also be given to documenting the process and controls for contracting for legal services.
  3. Document the process for assessing procurement risk and the use of risk information to support decision making.
  4. Develop, implement and maintain a departmental procurement plan.
  5. Establish formal documented mechanisms for monitoring procurement activities.
  6. Review controls in place to ensure proper disclosure of contracts under the Treasury Board Secretariat Guidelines on the Proactive Disclosure of Contracts, which came into effect January 1, 2018.

Summary of Department response

24. The Department stated it took action on all six recommendations made in 2017-2018 review, with all six reported as fully implemented and validated by its Internal Audit section. The following summarizes the actions taken by the Department.

Department response to recommendation A

25. The Department updated the CRC’s Terms of Reference with respect to its members’ roles, responsibilities, procedures, and reporting to senior management. In its Internal Audit section’s subsequent follow-ups to the Department’s Management Action Plan, in-person meetings were noted to have been occurring.

26. The Department provided its updated Terms of Reference to substantiate its actions.

Assessment of Department response

27. The function of the CRC is appropriately defined by what it does and does not include, providing a clear and specific scope overall. Levels and equivalencies are set for each of its roles, and an approved replacement is required ahead of any member’s absence.

28. Responsibilities are defined according to each role, including those for preparing meeting minutes, reports to senior management on CRC activities, and proactive disclosure reports, as well managing the associated deadlines.

29. Processes exist to schedule meetings, maintain a weekly procurement log, and address conflicts of interest. The process for reporting to senior management has been divided across each role, emphasizing their respective responsibilities. Finally, the Department has an onboarding process for its new CRC members, including an orientation meeting and a review of relevant documents.

Department response to recommendation B

30. The Department’s Executive Committee formally approved its Policy on Procurement, Policy on Contracting for Legal Services and Legal Services Contractual Procedure. All executives on the departmental Senior Management Committee were said to have been advised. This action was also subject to the Department’s internal follow-up in December 2019, for which Management requested an extension to integrate the approval of its procurement policy with the planned integration of a new financial system.

31. The Department provided the final documents to substantiate its actions.

Assessment of Department response

32. All three documents (i.e. Policy on Procurement, Policy on Contracting for Legal Services, and Legal Services Contractual Procedure) were approved by the Department’s Executive Committee in August 2020.

33. The Policy on Procurement gives a comprehensive list of responsibilities for Responsibility Centre Manager Authorities and the Procurement Division, complete with procedures for how certain responsibilities must be fulfilled (e.g. defining requirements using a life cycle approach). The specificity helps ensure all procurement personnel stay consistent, and is further supported by an intranet link to departmental forms and procedures related to procurement activities.

34. The policy also describes the departmental authorities and dollar limits for procurement, the order of priority in choosing a method of supply, and considerations that must be included before making these determinations. This guidance helps support procurement personnel in their professional judgement by defining the Department’s needs in a wider variety of scenarios.

35. The Policy on Contracting for Legal Services defines the Department’s unique context and conflicts of interest surrounding this type of contract, and the case-by-case considerations required before a contracting decision is made. This includes a mandatory set of considerations to be made over sourcing and selection, helping maintain the Department’s commitment to the spirit of the Government Contracts Regulations and TBCP, which would otherwise not apply.

36. To support this policy, the Department’s Legal Services Contractual Procedure clearly details the individual steps, templates, controls and approvals necessary to contract for legal services, as well as document the contract file for future review.

Department response to recommendation C

37. The Department shared its Guidelines on Procurement Risk Management with CRC members and procurement officers. The Department provided this document to substantiate its actions.

Assessment of Department response

38. The Guidelines on Procurement Risk Management broadly lists the risks that may appear at each step in the Department’s procurement process, and the associated actions a procurement officer must complete.

39. The document provides a Contractual Risk Matrix “to determine how necessary a risk assessment would be” based on the number of potential risks identified after completing a checklist. This checklist also identifies consequences of the potential risks, as well as the actions available to help procurement officers mitigate the impact or occurrence.

Department response to recommendation D

40. The Department initiated a procurement plan as part of its initial budget exercise of fiscal year 2018-2019. At the start of each fiscal year, this would identify a list of planned procurement to help personnel set priorities based on the initial budget, importance of each procurement, timeframes, and feasibility. The plan would also be brought up-to-date at least once throughout the year.

41. The Department provided an initial 2018 procurement plan to substantiate its actions while noting that a more robust strategic plan was under development and set to be finalized in Q1 of 2021-2022.

Assessment of Department response

42. The initial document provided did not reflect the Department’s clear definition of a procurement plan. Instead of a forward-looking list of procurements identified for that fiscal year, the document gave a partial record of past procurements from 2015-2016 to mid-2018-2019. Dates and commitments were often incomplete or blank, including those described as one-time purchases or beginning in an earlier fiscal year. Although a 1–5 scale for risk was set, no risk levels had been assigned. A description, however, was consistently provided for each procurement.

43. The Department has since developed a new, more strategic plan that outlines how procurement can support Courts Administration Service (CAS) and its ambitious transformation agenda, as well as identifies the procurement needs that will require interface with Public Services and Procurement Canada (PSPC). Based on this additional effort which has resulted in updated and more detailed information, the document will likely be sufficient to provide enough detail for personnel to prioritize based on budget, importance, timeframe, or feasibility.

Department response to recommendation E

44. The Department outlined the roles for monitoring procurement activities in its Policy on Procurement, which were further detailed in its sampling plan. The Department provided its Policy on Procurement and 2020-2021 Account Verification Sampling Plan to substantiate its actions.

Assessment of Department response

45. The Department’s Policy on Procurement gives a short overview of the roles involved in monitoring procurement activities, and its sampling plan comprehensively details each role’s responsibilities. This includes each role’s priorities, procedures, and mandatory follow-up across the relevant steps of the Department’s procurement process.

46. The sampling plan further documents the Department’s rationale for having put its monitoring in place, helping staff contextualize their responsibilities within the process overall. This includes a summary of the transactions the Department considers high, medium, and low risk, which helps in guiding staff to larger areas of concern and improves the efficiency of monitoring overall.

Department response to recommendation F

47. The Department performed a review of its internal processes in place for reporting contracts over $10,000 on a quarterly basis, and made changes to its procedures for managing proactive disclosures.

48. The Department provided this review, its process flowchart, and a control matrix to substantiate its actions.

Assessment of Department response

49. The Department’s internal review identified omissions in its proactive disclosure of contracts over $10,000, as well as weaknesses in the Department’s proactive disclosure controls. This included inconsistent data entry, the lack of a documented process, multiple sources of contract information, and timeliness.

50. From these observations, the Department created a process flowchart and control matrix in line with federal quarterly requirements for proactive disclosures. The review did not address federal annual requirements overall, but in its control matrix, did refer to a process in place to annually disclose acquisition card transactions.

51. The Department’s internal review also referred to a new procedure written to ensure all information required by the Treasury Board Secretariat was disclosed with accuracy, completeness, and on a timely manner.

Conclusion

52. The Department has implemented a series of measures to update the CRC’s Terms of Reference, formally approve its departmental procurement policies, document the steps of its procurement risk assessment process, define the purpose of its procurement plan, outline its roles for monitoring procurement activities, and complete a review of its controls in place to ensure the proper disclosure of its contracts.

53. The Department self-assessed the implementation of each of its six actions as “full implementation” (Level 5), however OPO assessed five of the six actions as having met this definition. The actions required to be taken in response to Recommendation D remain outstanding.

54. With respect to Recommendation D, the Department clearly defined the purpose of a departmental procurement plan; however, the Department would benefit from complete and up-to-date procurement information to set out its upcoming procurement priorities and allow for the proper planning and management of ongoing procurement and contracting activities. To this end, the Department has recently drafted a more strategic procurement plan that will be finalized in Q1 of 2021-2022. It is likely that, once approved, this new document will be sufficient to fully address the recommendation.

55. OPO is encouraged by the fact the Department has responded to the recommendations and taken many significant steps to strengthen its procurement practices. Full implementation of the associated actions should improve the strength of the Department’s MCF.

Annex A—The Procurement Ombudsman’s recommendations and the Department’s responses

Recommandations and responses
OPO Recommendations Department’s Responses
Amend the Contract Review Committee’s Terms of Reference to clearly describe the Committee’s role, responsibilities of members, membership, and processes and procedures, including the methods by which the Committee will report to Senior Management on its activities and results.

Contract Review Committee’s Terms of Reference updated accordingly:

  • Role
  • Responsibilities
  • Procedures
  • Reporting to senior management

Validated by the CAS Internal Audit as part of December 18 Management Action Plan Follow-up process, and presented to the Audit Committee.

In subsequent follow-ups, it was also noted that in-person meetings had been occurring. Terms of Reference provided as supporting documentation.

Introduction Meetings were hosted virtually with new CRC members where the Terms of Reference was provided and explained.

Formally document, approve and implement departmental procurement guidance, including procedures and guidelines. Consideration should also be given to documenting the process and controls for contracting for legal services.

Procurement policy approved by Executive Committee and departmental Senior Management Committee (all executives) was advised.

Validated by CAS Internal Audit Directorate as part of August 20 Management Action Plan Follow-up process, presented to the Audit Committee and approved by the Chief Administrator.

Was also subject to follow-up in December 2019. Management had requested an extension, to integrate with the planned implementation of the new financial system (SAP-GCFM, led by TBS).

Final policies (procurement and legal procurement) provided as supporting documentation.

Document the process for assessing procurement risk and the use of risk information to support decision making.

Guideline on Procurement Risk Management was shared with CRC members and procurement officers.

Validated by CAS Internal Audit as part of December 18 Management Action Plan Follow-up process, and presented to the Audit Committee.

Procurement risk-management guideline provided as supporting documentation.

Develop, implement and maintain a departmental procurement plan.

Procurement plan initiated as part of initial budget exercise of 2018-2019.

Validated by CAS Internal Audit as part of December 18 Management Action Plan Follow-up process, and presented to the Audit Committee.

2018 CAS procurement plan provided as supporting documentation.

The purpose of the procurement plan is to help the Cost Centre Manager and their Financial Management Advisor identify a list of planned procurement as per their initial budget.

The procurement plan helps them prioritize according to their budget and the level of importance of each procurement.

The plan is initiated at the beginning of the year and updated at least once throughout the year to make sure it is still aligned; or, to modify according to departmental changes. The Procurement Plan is provided to Procurement once it’s completed for input on timeframes required and feasibility.

Establish formal documented mechanisms for monitoring procurement activities.

Role outlined CAS procurement policy, and further detailed in sampling plan.

Validated by CAS Internal Audit Directorate as part of August 20 Management Action Plan Follow-up process, presented to the Audit Committee and approved by the Chief Administrator.

Was also subject to follow-up in December 2019. Management had requested an extension, to integrate with the planned implementation of the new financial system (SAP-GCFM, led by TBS).

Review controls in place to ensure proper disclosure of contracts under the Treasury Board Secretariat Guidelines on the Proactive Disclosure of Contracts, which came into effect January 1, 2018.

Review performed in August 2018 and changes were made to procedures for managing proactive disclosures.

Validated by CAS Internal Audit as part of December 18 Management Action Plan Follow-up process, and presented to the Audit Committee.

Review documented by Finance provided as supporting document.

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