Message from the Procurement Ombudsman

“What’s a Procurement Ombudsman?”

That is the question I am almost always asked when I tell people I work at the Office of the Procurement Ombudsman. When I first joined the Office more than four years ago I would provide a detailed response, going to great lengths to define “procurement” and explain the concept of “an ombudsman”. Usually the reaction I received was blank stares.

Over the years I’ve simplified my response to explain that an ombudsman helps bridge gaps that sometimes develop between citizens and institutions. In the case of this Office, we try to bridge gaps that sometimes materialize between Canadian suppliers and federal organizations.

The previous Procurement Ombudsman retired in December 2015 and for the rest of the fiscal year the Office was without an Ombudsman. While this imposed limits on the Office’s mandated activities, we remained focused on trying to help and we achieved a number of milestones. I am honored to have been appointed, effective May 9, 2016, to lead this valued and trusted organization as the Interim Procurement Ombudsman.

Key milestones

In 2015-2016, the Office registered the highest number of requests for Alternative Dispute Resolution (ADR) services. One of those requests was from a federal organization, making it the first time our services have been requested by someone other than a supplier. Throughout the fiscal year, we successfully helped resolve disputes in all instances where both parties agreed to participate in our ADR process. As well in a number of other cases, we were able to facilitate a resolution even before the launch of our formal ADR process.

In addition, our Office recorded the highest number of procurement-related written complaints in one fiscal year. Of those, eight written complaints met the requirements of the Procurement Ombudsman Regulations (Regulations) and reviews were launched. Seven review of complaint reports were issued in 2015-2016. The number of reviews launched and reports completed both represent high-water marks for this Office. One of the reviews completed examined a complaint from a supplier regarding the administration of a contract, and the associated report was the first completed by this Office on such a complaint.

We are here to help

In most instances, we were able to help find solutions to the issues raised by suppliers through collaboration from federal organizations. The Office’s ability to resolve issues is affected by a number of factors, not the least of which is the willingness of suppliers and federal organizations to be part of the solution. What has become apparent to me in helping to resolve procurement-related issues is that it isn’t necessarily the information we provide, since the information has usually already been provided by federal organizations to suppliers or vice-versa. What matters is having an independent group (our Office) that can act as a “go between” for suppliers and federal organizations. I’ve found that it is often not a case of what is being said but who is saying it that makes the difference, and our Office is uniquely positioned to make a positive difference when issues arise between suppliers and federal organizations.

In addition, for all procurement-related written complaints, the Office ensured the supplier’s concerns were raised to the senior-most decision-makers in the federal organizations in question. Moreover, these complaints were assessed to identify potential risks to the fairness, openness and transparency of the procurement process. When such potential risks were identified, in addition to noting them for potential future procurement practice reviews, we brought the risks to the attention of the head of the federal organization in question.

What I heard

In 2015-2016, with the exception of during the federal election period, the Office continued outreach activities to speak with Canadian suppliers and federal officials from coast to coast to obtain their views on federal procurement. This report outlines the most common feedback received and, while the areas of concern have generally remained the same since the Office opened in 2008, there were two issues I heard at outreach events more prominently in 2015-2016 than in previous years: frustration on the part of new companies trying to sell to federal organizations, and concerns from sub-contractors related to the procurement activities of prime contractors.

Numerous suppliers shared with me their frustrations as new companies trying to obtain contracts from federal organizations. These suppliers lamented “the federal contracting system” makes it particularly difficult for companies that have recently been established by often requiring the company (and not necessarily the individuals working for the company) to have prior experience, and sometimes specifically requiring experience in providing goods or services to federal organizations. As new companies trying to establish themselves, suppliers expressed frustration that these requirements disadvantaged new entrants in the market. Coupled with concerns regarding obtaining security clearances, challenges in getting listed on pre-qualified procurement vehicles, and other perceived impediments, these suppliers held the view that selling to federal organizations as a new company is an uphill battle. Interestingly, similar concerns were also shared with me by suppliers working for more established companies trying to obtain their first federal contract.

I was also struck by the increased frequency of Canadian suppliers raising concerns regarding the procurement practices of prime contractors. In the examples shared with me during outreach events, suppliers stated the prime contractors (“prime” since they have the primary contract with a federal organization) were all large companies who had been awarded multi-million dollar contracts by federal organizations. To complete the work required under these high value contracts, prime contractors sub-contract part of work, often to smaller companies. Suppliers informed me of their concerns regarding delays in obtaining payment from the prime contractor for work completed, sometimes due to delays in the prime contractor being paid by the federal organization, or sub-contracts being awarded in ways that would be considered unacceptable if done by federal organizations. As one supplier told me in Ottawa “these companies are spending taxpayers’ money – they should have to follow the same rules [as federal organizations] so that they don’t just give [sub-]contracts to their buddies”. This particular supplier was disappointed to hear of the constraints our Office has in trying to deal with these types of issues. The Regulations require that, to provide our ADR services, one party to the contract must be a federal organization. Similarly, the Regulations require that our reviews into the award or administration of contracts involve contracts issued by federal organizations. If my experience this year is indicative of the overall level of concern within the broader supplier community, I expect concerns from sub-contractors will continue to be raised to this Office, and we will therefore continue to monitor them.

It’s all about communication

My experience with this Office has reinforced the fact that a breakdown in communication is often the cause of, or the key contributing factor to, issues between suppliers and federal organizations. When issues arise, I have found they are often due to a misunderstanding between the parties (frequently due to different rules that apply to sellers in the private sector and buyers in the public sector) and usually exacerbated due to a lack of communication (typically on the part of federal organizations). In most instances, a neutral party – namely our Office – can help re-establish lines of communications and clear up misunderstandings.

Some of these breakdowns may be due to capacity challenges that appear to exist in some federal organizations. During outreach events, I often heard from federal officials that they simply don’t have the time, or sufficient staff, to return all the emails and phone calls they receive from suppliers regarding procurement. This is usually the start of the breakdown in communications and the development or exacerbation of issues between suppliers and federal organizations. Some suppliers echoed the views of federal officials, expressing their concerns that some federal organizations simply don’t have sufficient staff, or don’t have the staff with sufficient experience, expertise or knowledge of a particular industry, to successfully undertake all procurements.

A potential solution to some of the procurement-related concerns raised to me, and this Office’s attention, may therefore be for federal organizations to ensure they have sufficient staff, in both program and procurement areas, and to provide them with the tools, training, guidance and mentoring necessary to ensure they are successful in dealing with the challenges inherent in federal procurement.

Moving forward

The words “we are here to help” have become more than just a motto for this Office. They have become deeply ingrained in this Office’s culture and our day-to-day operations. As a result, the motto is evidenced in everything we do, from the respect afforded all who contact our Office (regardless of whether the subject is related to procurement or not), to the genuine interest in helping to resolve contractual disputes between suppliers and federal organizations, to the discipline and thoroughness exhibited in undertaking our reviews.

As we move into 2016-2017, we will continue to be guided by our “we are here to help” motto and our simple, but important, mission: to promote fairness, openness and transparency in federal procurement.

Lorenzo Ieraci
Interim Procurement Ombudsman

Date modified:

2018-11-01