Investigate

The Office investigates complaints from suppliers about procurement practices associated with specific contracts, and reviews procurement practices which may be systemic in nature.

The Investigative Approach

In instances where the Office receives a complaint filed in accordance with the Procurement Ombudsman Regulations, the complaint is assessed by a team of federal procurement experts and a senior legal advisor. The assessment ensures adherence to the prescribed criteria of the Regulations (see sidebar on next page). Only when a complaint meets the prescribed criteria is the Procurement Ombudsman permitted to launch an investigation.

In 2011-12, of the 36 complaints filed in accordance with the Regulations, 6  met all of the prescribed regulatory criteria. As a result three investigations were launched while three complaints were withdrawn. The Office also completed two investigations on work that carried over from the previous fiscal year.

The remaining 30 complaints did not meet the prescribed regulatory criteria. The most common regulatory criteria not met, which resulted in the complaint being outside  the Office's jurisdiction, entailed the following:

• The service was not covered by the Agreement on Internal Trade (for example, Aboriginal set-aside programs);
• The complaint dealt with a standing offer or supply arrangement; or
• The contract was above OPO's dollar value thresholds ($25K for goods, $100K for services).

Despite issues falling outside the OPO prescribed regulatory criteria, the Office strives to help address complaints. With the written permission of the complainant, the Office submits the complaint to the attention of the deputy head of the federal organization involved. In addition, and in keeping with the Office's motto "We are here to help," OPO staff work with the federal organization involved to try and help resolve the complaint. In one instance, a complaint was received with respect to the award of a contract for services. Specifically, a supplier alleged that the contract had not been awarded to the lowest cost proposal, as per previous solicitations issued by the same department for similar services. Although the value of the contract in question exceeded OPO's regulatory threshold for investigating complaints regarding the award of a service contract, the Office raised the issue with the department in question. As a result, the department terminated the contract and issued a revised solicitation. The following summarizes the five investigations completed in 2011-12, all dealing with the award of contracts.

The following summarizes the five investigations completed in 2011-12, all dealing with the award of contracts.

Investigation Summaries

1. Bid evaluation criteria were not restrictive but the department did not share contract award information in a timely manner
   

   OPO investigated a complaint received regarding a Request for Proposal (RFP) and the subsequent award of a contract for services.  One of the allegations was that the department's mandatory and rated bid evaluation criteria unfairly limited the opportunity to specific bidders. The supplier also alleged that the department refused to provide information regarding when and to whom the contract was awarded in an effort to delay the complainant's  raising the issue with OPO.

   The investigation found no basis for  concluding that the department unfairly limited the opportunity as alleged. In fact, evidence demonstrated that the department adjusted the RFP to allow for a broader range of bidders. The Office did, however, recommend that in the future the department provide timely information on when and to whom the contract was awarded.

2. The department's actions did not favour a particular supplier, even though some aspects of the requirement were not disclosed
   

   A supplier alleged that a department intentionally issued the solicitation just before a long weekend to discourage participation in a bidding process and that certain bid evaluation criteria favoured a particular supplier.

   The investigation that found the department provided 15 calendar days to all suppliers to submit proposals, consistent with federal practices, and no evidence to support the complainant's allegations.

   OPO noted, however, that the department did not disclose the full extent of the service requirements and recommended that this be done in the future as it could influence potential bidders' decisions on whether to submit a proposal.

3. The department evaluated all proposals in the same way but did not inform suppliers of changes to selection methods
   

   OPO investigated a complaint regarding the award of a contract for consulting services. A department's evaluation process ranked the complainant's proposal second. The complainant raised several issues with OPO, including allegations that the department applied a revised selection method, which had not been stated in the bid solicitation document or conveyed to bidders at any point.

   The investigation concluded that although all proposals were rated and evaluated in the same manner, the failure to communicate the selection method compromised the integrity and transparency of the procurement process. In addition, the department did not have adequate file documentation to support decisions and actions taken. The Office recommended that the department: (i) ensure all criteria are provided to potential bidders and applied as part of the evaluation; and (ii) ensure required documents are included in procurement files.

4. The department followed the terms of the Request for Proposal in assessing proposals, but used undefined adjectives in describing the requirements
   

   OPO investigated a complaint regarding the award of a contract for services following a competitive Request for Proposal (RFP) process wherein nine suppliers were invited to submit proposals. The complainant alleged that the department did not follow the terms of the RFP in assessing its proposal and did not apply the same bid evaluation criteria to assess all proposals.

   The investigation found that the department followed the terms of the RFP and applied the same criteria and standards to assess all the proposals in a consistent manner. However, the Office recommended against the use of undefined adjectives (such as "extensive" when describing experience) for bid evaluation criteria that are subjective.

5. The complainant receives compensation for the cost of submitting its bid where the contract was awarded using undisclosed bid evaluation criteria
   

   OPO received a complaint regarding the award of a contract against a National Master Standing Offer for the provision of services. This arrangement involved a list of pre-qualified suppliers with a "right of first refusal" clause whereby the supplier with the lowest rate is required to be approached first by the department and offered the work. If the supplier cannot fulfill the requirement, the next ranked supplier on the list is provided with the opportunity.

   The supplier was asked by the department to submit a proposal and then advised by the department that the proposal did not meet the mandatory criteria of "extensive knowledge" in a particular area. The supplier contacted OPO alleging the mandatory requirements were not clearly identified.

   OPO's investigation concluded the mandatory requirements must be assessed on a pass/fail basis, and failure to define "extensive knowledge" did not allow for an objective assessment. Moreover, by not defining the word "extensive" in describing knowledge, the department applied undisclosed criteria in evaluating the proposals.

   The circumstances surrounding this case met the requirements of the Procurement Ombudsman Regulations, whereby OPO can recommend payment of compensation to the supplier. Accordingly, OPO recommended that the department pay the supplier compensation equal to the cost of submitting the bid. Financial compensation was negotiated and agreed to by the supplier and the department.

Addressing Systemic Issues

Many procurement issues brought to OPO's attention are isolated to a specific procurement process. Sometimes, however, the Office becomes aware of issues that are systemic in nature and can affect the federal procurement system more broadly. As a means to help preserve the integrity and accountability of federal procurement, the Office reviews procurement practices of a federal department(s) to assess their fairness, openness and transparency and, where warranted, recommends improvements.

Procurement Practices Review Summaries

In 2011-12, OPO released three procurement practices reviews. The full version of each report is available. A summary of each review follows.

1. Selected Advance Contract Award Notices
   

   Based on a complaint from an OPO stakeholder who raised concerns about favouritism and tailored requirements, the Office reviewed four Advance Contract Award Notices (ACANs) issued by the Public Service Commission (PSC). An ACAN is used to advertise a department's intention to direct the award of a contract to a specific supplier, under certain circumstances.

   OPO assessed whether the PSC's activities supported fairness, openness and transparency and adhered to applicable policies regarding the use of an ACAN. In each of the four ACANs for the services of four external members of the  Independent Audit Advisory Committee, the PSC claimed only one individual could perform the required work.

   OPO found that the PSC knew there was more than one supplier who could do the work and therefore  had no basis for directing the four contracts to those individuals or for using the ACAN process; the ACANs were missing information that would have assisted other potential suppliers in determining whether they were capable of performing the work; and the PSC favoured the existing committee members by tailoring requirements to match their capabilities. The Office made several recommendations designed to increase the accountability, fairness and transparency of future directed-contracting processes. The PSC agreed with OPO recommendations and did not exercise the option to renew the four contracts.
2. Professional Services Online
   

   Professional Services Online (PS Online) is an electronic procurement tool with a database of pre-qualified suppliers that provide professional services. Departments can use this tool to reduce the amount of time normally required for a competitive procurement process for low dollar value procurements (i.e. for service contracts under $100K).  The Office interviewed nine departments and received survey responses from 22 of the 30 suppliers contacted.

   OPO's review sought to: assess whether Public Works and Government Services Canada's (PWGSC's) management of PS Online; the extent to which selected departments made use of the tool, support fairness, openness and transparency; and, obtain the views of suppliers.

   OPO observed that PWGSC did not have any means of capturing data on the number and dollar value of contracts awarded through PS Online, thus limiting its ability to ensure optimal usage of the tool and promote it to departments not currently using it. Also, departments are using PS Online inconsistently or not at all as they have a choice among many procurement tools. Finally, the results of the review indicated the pre-qualification process worked well and suppliers are generally happy with it.

   OPO recommended that PWGSC continue with plans to update PS Online support systems to make it easier for departments to use the tool, and continue with efforts to minimize the overlap with other methods of supply for professional services.
3. Follow-up on 2008-09 Reviews of Procurement Practices
   

   Follow-up reviews are an annual activity undertaken by OPO to determine what action federal departments have taken with regard to the Office's recommendations. OPO's review assessed recommendations contained in five reports on procurement practices reviews  conducted in 2008-09 involving 16 federal departments.

   All 16 departments participated in the follow-up process, with many providing comprehensive action plans and reporting on the implementation of significant changes designed to improve their procurement practices. The majority of planned departmental actions were near completion. The report informed stakeholders of specific actions being taken by departments to improve fairness, openness and transparency in procurement. Several examples of positive initiatives were found, including increased consultation with suppliers, enhanced post-contract procedures for debriefing unsuccessful suppliers and strengthened governance for procurement review committees. The review activity also served to share information on improvements being implemented in the 16 departments reviewed, which may facilitate the introduction of similar advances in other departments. Information on the nature and extent of the changes being introduced in response to OPO recommendations provides the Office with an indicator of the usefulness and relevance of its work.

Additional Analysis

There are occasions where procurement issues are brought to the Office's attention and it is not apparent at the outset whether they necessitate a practice review. In those instances, the Office may undertake additional analysis of the issue to determine if it is systemic in nature, if it is relevant to OPO stakeholders and if reasonable grounds exist to launch a review. This additional analysis is exploratory in nature and allows the Office to determine if more in-depth work should be undertaken on the issue. In 2011-12, the Office undertook additional analysis in two areas.

Advance Contract Award Notices

Following the publication of OPO's review on the use of Advance Contract Award Notices  by the Public Service Commission , a complainant indicated that the issues identified in the report were "the tip of the iceberg" in the misuse of ACANs. This allegation resulted in the Office's monitoring of all ACANs published on MERX™, Canada's electronic tendering service, for a six-month period to determine the validity of the complainant's allegation.

OPO reviewed 442 ACANs published between July 2011 and January 2012 using a combination of objective and subjective criteria to assess whether they met Treasury Board and Public Works and Government Services Canada policy requirements. More specifically, the monitoring focussed on whether it appeared the information contained in the ACANs: (a) was so specific that it suggested requirements were being tailored to a specific supplier's goods or services; (b) could be construed as a true "market test" to evaluate whether another possible source of supply existed; and (c) was sufficiently complete to allow a challenge (i.e. another supplier could submit a statement of capabilities demonstrating that it is  capable of meeting the requirements of the ACAN). The Office also examined data elements to ensure they were properly included in the monitored ACANs (e.g. the closing date of the ACAN, the contact point for questions, the name and address of the proposed supplier). This process enabled OPO staff to identify cases where the ACAN did not appear to have been used as intended and/or policy requirements did not appear to be fully respected.

The results of the monitoring revealed that just over half of the 442 ACANs appear to contain enough information to allow another supplier to submit a statement of capabilities, and that less than one quarter appear to be a legitimate attempt by the contracting department to test the market for an alternative source of supply.

While OPO could not substantiate or refute the complainant's allegation based on this monitoring exercise, the results of this analysis raise questions about whether the policies governing the use of ACANs are sufficiently explicit and unambiguous to allow ACANs to be used as intended.

Monitoring of MERX™ Postings

The Office was contacted by a stakeholder alleging an apparent "growing number of misclassifications" of solicitations on MERX™. MERX™ is Canada's electronic tendering service that enables suppliers to search, view and bid on federal, provincial and municipal procurement opportunities. The stakeholder highlighted the potential for solicitations to be intentionally misclassified by a public sector organization in order to provide a preferred supplier with an opportunity to furtively respond to the organization's solicitation with little to no competition.  Specifically, the stakeholder alleged bid opportunities related to road work were improperly categorized under the category of "communications, photography, mapping, printing and publishing services". While the "misclassification" examples provided by the stakeholder were not of federal government solicitations, the Office undertook an assessment of a sample of MERX™ postings from July to November 2011 to determine the potential for this allegation to apply to federal procurement.

The analysis revealed that the association of the numbers used to identify a good or service (i.e. the Goods and Services Identification Numbers, or GSINs) to their corresponding category or categories is beyond the control of the contracting organization. While an organization can select the identification number that most closely matches the required good or service, the associated category(ies) is automatically generated by the system. We did however find that the process of selecting identification numbers can be subjective, potentially leading to inconsistencies in the categorization of postings for similar requirements. For example, identification number J17220A (Carpet, Installation) linked to the category Furniture, whereas identification number 5169FC (Carpet Laying/Instillation) is linked to the category Construction Services. In both cases the requirement is the same: laying carpet.

The results of the assessment did not uncover any evidence to substantiate the allegations of potential misclassifications at the federal level. The perception of misclassification may be a result of the fact that identification numbers are often associated with more than one category, a practice that results in broader advertisement of the opportunity.

Date modified:

2018-11-01