Message from the Procurement Ombudsman

It is a pleasure to submit the Annual Report for the Office of the Procurement Ombudsman. This report presents a summary of the activities undertaken by my Office in the 2014-2015 fiscal year.

One of my priorities since being appointed Ombudsman has been on broadening the Office’s outreach activities and on listening to and building relationships with key stakeholders. This effort has been necessary to raise awareness of the Office and our services among Canadian businesses that supply goods and services to the federal government. Each year we have introduced new initiatives to enable us to engage in meaningful dialogue with people involved in federal procurement. This year alone we participated in nearly one hundred meetings with suppliers, federal procurement officials, business and procurement associations, and offices of Members of Parliament across the country. We used social media more than ever before to connect with Canadian businesses and to share our “we are here to help” message. We published articles, newsletters and advertisements to raise awareness of the Office and leveraged our Web presence to provide easier access to our services. With 577 contacts to the Office, an increase of 74% since 2011-2012, it is clear that this outreach work is paying off. More businesses than ever before are turning to us when they experience issues with federal procurement. And while there is always more to be done, I’m proud of what we have done to reach out to those who can benefit from our services.

As in past years, I am using my annual report message to highlight some of the more prominent supplier concerns that we have heard through this outreach activity. This year, the three most notable topics raised to me were: the fallacious economics of lowest cost purchasing; unabated frustration with the security clearance process; and the impact of changes occurring in federal procurement.

The first topic is the belief that departments are not obtaining best value with an over-reliance on lowest price. We heard several variations of this issue, but one of the most effective explanations was from a paving contractor at a town hall. He pointed out the false economics of a department’s decision to award a contract to pave a federal parking lot based exclusively on cost. He explained that the lot was paved by the contractor who submitted the lowest bid but that the focus on obtaining a low cost solution also resulted in a short life expectancy. He pointed out that a slight modification to the amount of required aggregate and to the thickness of asphalt would result in a modest increase in cost, but it also would result in almost doubling of the life expectancy of the parking lot. The department certainly received the lowest price he said, but did the taxpayer receive the best value in the long run? Suppliers also shared examples of “predatory pricing” or “price cutting”, whereby competitors, knowing the department would likely default to the lowest-priced bid, low-ball bids to win the contract only to subsequently provide sub-standard materials or services or under-qualified resources and then obtain contract amendments. Suppliers openly questioned why departments have not caught on to this blatant tactic and have not taken action to curb the practice. Numerous suppliers called for improved bid evaluation models, in particular simpler low-dollar-value solicitation models. Models which place a greater emphasis on delivery capacity and quality (two components of best value currently not consistently considered by departments) and which allow for more nuance in determining best value to taxpayers. Business people understand very well the importance of cost efficiencies and I have yet to hear from a supplier suggesting that cost should be ignored. What many argue, however, is that neither industry nor government benefit from lowest cost being the default in federal purchasing.

The next topic has become a perennial albatross. It has become so common place to hear about federal security clearance process concerns that we are astonished when the topic is not raised with us. This year we heard about the issue at almost every supplier meeting we held, with some suppliers becoming quite fervid in their criticisms of the administration of this program. What we continue to hear has been documented in previous annual reports: excessive time delays, challenges in finding sponsorship, and the lack of transferability of clearances among departments. Alongside these recurring issues, suppliers also expressed concern regarding security clearance requirements which they perceive as unwarranted. Questions about the overall clarity of the information and guidance available to suppliers regarding the security clearance process were also raised this year. In short, suppliers are telling us they are reliant on government to comply with a government-established mandatory requirement which the government is incapable of processing in a reasonable time frame. Many business people referred to the security clearance process as an unequivocal and unmitigated barrier to doing business with the federal government.

Federal officials also weighed in on the security issue. Some shared with us measures taken within the clearance process while others empathized with colleagues required to deal with such a large volume of requests. Many acknowledged that delays had taken a toll on their programs and openly pondered potential contributing factors. Procurement officials wondered whether there is a lack of clarity in the information and guidance provided to suppliers, which may be contributing to errors and unnecessary “back and forth” with suppliers over submitted clearance forms. Others spoke about helping themselves by conducting procurement-specific risk assessments to identify security requirements, rather than simply defaulting to a higher security level, which could be contributing to the unnecessary backlog. We also heard about the potential risks if, in an effort to circumvent the lengthy process, the security requirement is either under classified or not identified. While efforts are being made to expedite the security clearance process, the volume of feedback that continues to be brought to our attention by both suppliers and federal officials is alarming.

I was also struck by the general sense of uneasiness expressed by suppliers and federal officials alike. The malaise seems to stem from the changes occurring in both the procurement world and the public service as a whole. A number of new initiatives have been implemented in the past few years intended to improve the way procurement is conducted. New strategies were launched in the area of defence procurement. Public Works and Government Services Canada continued to implement its three year Acquisitions Transformation Program and continues to decentralize low-dollar-value procurement to departments. Several new standing offers and supply arrangements were created, and new trade agreements were brought into the fold. In addition, whether it was updates to the federal government’s electronic tendering service (buyandsell.gc.ca), the Open Government initiatives, new departmental tools or major IT company procurements, technology continued to change the way the federal government does business. The 2014-2015 fiscal year saw the introduction of new tools, rules and procedures and individuals from both sides of the procurement world spoke to us about the challenges of adapting to these changes. Both suppliers and federal officials highlighted the need for effective ongoing communication and training.

Procurement personnel appreciated the opportunity to speak to someone about the impact and challenges associated with these changes. They were particularly concerned about how to adapt to the changes in light of aging demographics, a loss of corporate memory and ongoing budget cuts. There is palpable angst within the community with the increased workload in an area of work that is considered “back-office” and whose complexity they feel is grossly underestimated.

Many businesses took the time to share positive procurement anecdotes with us. For example, many suppliers were pleased with the new features and information available through buyandsell.gc.ca, and we heard of exceptional professionalism, organization and communication by federal departments. Departments also shared with us their innovative ideas and initiatives to strengthen fairness, openness and transparency including systems that track what phase the contract is at, as well as procurement monitoring tools which identify strengths and weaknesses through a number of risk indicators.

While the Office continues to experience an increase in the number of contacts, the number of complaints we reviewed has remained relatively low and fairly stagnant at three to five per year since the Office opened. This low number can be attributed to two things: our ability to de-escalate issues, which is the hallmark of an effective Ombudsman’s office, and the nature of the regulations that govern our operations. Similarly, the results of these complaint reviews were fairly consistent, with as many reviews finding merit to the supplier allegations as those which found no basis for the allegations.

Of particular note among the four complaint reviews completed during the 2014-2015 fiscal year was the recalcitrance of a department in refusing to provide me the information necessary to review a supplier complaint. Despite repeated attempts to obtain the information necessary for the conduct of the review, including a request to the deputy head of the organization, the department chose to provide limited material in the form of redacted documents which the department stated were “within the parameters” of the Privacy Act and the Access to Information Act. This deliberate withholding of information impeded my ability to execute my mandate as required by subsection 12(1) of the Procurement Ombudsman Regulations (the Regulations). This was the first complaint review where the information made available to my Office by the department was insufficient to enable me to assess the extent to which the fairness, openness or transparency of the department’s procurement process was prejudiced, as I am required to do by the Regulations.

Frank Brunetta
Procurement Ombudsman

Date modified:

2018-11-01