Investigate: Office of the Procurement Ombudsman Annual Report 2016-2017
"It is our intention to leverage lessons learned as a result of your team's findings" - Federal official
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This diagram emphasizes that of the 283 procurement-related contacts, 30 were determined to fall within the Office's Investigate pillar. This number is further divided into 23 complaints that did not meet regulatory criteria, and 7 complaints which were accepted. Out of the 7 accepted complaints, all 7 involved the awarding of a contract. One complaint was completed during the 2016-2017 fiscal year, with 6 reviews being carried over into the 2017-2018 fiscal year.
What OPO did to review complaints and federal procurement practices
Suppliers with concerns about the award or administration of a federal contract can file a written complaint with the Office. Once OPO receives a written complaint, the Procurement Ombudsman must make a determination on whether to undertake a review within 10 working days.
In making this determination, the Ombudsman is required to assess whether the complaint meets the requirements specified in the Procurement Ombudsman Regulations (the Regulations). If a complaint meets the regulatory criteria and falls within the Procurement Ombudsman's jurisdiction (see Table 1), the Ombudsman must launch a review and produce a report. These reports include findings and, if applicable, recommendations for improving the procurement process.
Table 1: Procurement Ombudsman Regulations
| Criteria related to a complaint regarding the award of a contract include: | Criteria related to a complaint regarding the administration of a contract include: |
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For a complete list of criteria, please consult the Procurement Ombudsman Regulations on the OPO website at www.opo-boa.gc.ca. |
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This diagram outlines the number of investigations conducted by OPO. During the 2016-2017 fiscal year, OPO launched 7 reviews of complaints, completed 3 reviews of complaints, and recommended compensation on 1 review of complaint. OPO also completed 3 procurement practice reviews, making 8 recommendations to federal organizations to improve procurement practices. OPO also completed 1 procurement study. In its reviews, OPO included 10 federal organizations: Agriculture & Agri-Food Canada, Canada Border Services Agency, Canada Revenue Agency, Health Canada, Immigration, Refugees & Citizenship Canada, Indigenous and Northern Affairs Canada, Natural Resources Canada, Parks Canada Agency, the Royal Canadian Mounted Police and Statistics Canada.
Reviews of supplier complaints
Of the 30 written complaints filed with the Office, 25 pertained to the award of a contract while the remaining 5 pertained to the administration of a contract.
Of these 30 written complaints, 23 (77%) did not meet the criteria specified in the Regulations, including 5 which were withdrawn by the suppliers. The remaining 7 written complaints, all pertaining to the award of a contract, met the requirements of the Regulations and reviews were launched. OPO completed one of these reviews in 2016–2017. As the remaining 6 written complaints were submitted towards the end of the fiscal year, they will be completed in 2017–2018 within the 120 working days timeframe specified in the Regulations. OPO also completed two reviews carried over from 2015–2016.
The following are summaries of the 3 reviews of complaints completed in 2016–2017.
Request for proposal with unclear estimates impacts a bidding process
(Launched in 2015–2016 and completed in 2016–2017)
A supplier filed a complaint regarding the award of a contract for the provision of data entry, accuracy and quality services by a federal organization. The Complainant raised three issues: 1) The methodology used for calculating the bid did not reflect the true scope of the project; 2) The methodology used to evaluate bids had a negative impact on the Complainant's bid; and 3) The format of the financial proposal did not indicate that fixed costs needed to be or should be prorated.
With regard to the first issue, the Procurement Ombudsman found the solicitation contained unclear information regarding the volume of records the winning bidder would be required to process under the contract. The lack of clear and accurate estimates in the solicitation made it difficult for suppliers to determine the “true scope” of the project.
For the second issue, the Ombudsman found no evidence to suggest the methodology used to evaluate bids had a negative impact on the Complainant's bid, and bids were evaluated according to the methodology specified in the solicitation.
Regarding the third concern, the solicitation did not indicate that fixed costs needed to be or should be prorated, and it defined what tasks should be included in the fixed-cost component of bids. In that regard, the format of the financial proposal in the solicitation was clear. However, the lack of a clear estimated volume of work may have made it difficult for suppliers to make informed decisions regarding how to develop their bids.
Although the requirement lacked clarity, all suppliers were provided with the same information to formulate their bids. When evaluating the bids, the federal organization in question followed the evaluation methodology as specified in the solicitation and chose the lower-priced bid, in accordance with the solicitation.
Delays impede a supplier's ability to submit a bid
(Launched in 2015–2016 and completed in 2016–2017)
A supplier filed a complaint regarding a contract awarded for the provision of access to information consultant services. The Complainant raised three issues: 1) The federal organization did not provide enough time for the supplier to prepare and submit a bid; 2) A rated evaluation criterion was flawed since it was impossible to obtain the maximum number of points; and 3) There were discrepancies between the resources requested through the solicitation and the procurement tool (supply arrangement) being used.
With regard to the first issue, the review revealed the federal organization did invite the Complainant as it had requested. However, it took three business days for the federal organization to respond and send the invitation to the Complainant on a five day solicitation process. The Complainant therefore had less than 24 hours to prepare and submit a bid for a solicitation that contained numerous evaluation criteria. These actions impeded the Complainant's ability to prepare and submit a bid. Additionally, the federal organization demonstrated inconsistent actions by offering to extend the deadline for submitting bids to one supplier approximately 24 hours before refusing the first of the two requested extensions (by the Complainant and another supplier).
For the second issue, the Procurement Ombudsman noted the Access to Information Act did not come into force until 1983, meaning that the maximum number of years of experience a bidder could have was 32 years, thereby making it impossible to obtain the full 40 points for the 35 years of experience specified in the solicitation. The Ombudsman therefore questioned the federal organization's rationale for establishing a level of experience for which full marks could not be obtained and for failing to correct the issue once it was brought to its attention by suppliers during the solicitation period.
Finally, for the third issue, the Ombudsman found a disconnect between the resource classification requested by the federal organization in the solicitation and the information found in the procurement tool (supply arrangement) used in the process. The federal organization sought a resource level that was lower than the one that should have been requested to meet the requirements specified in the solicitation.
The review concluded the federal organization affected the openness of this process by impeding the Complainant's ability to prepare and submit a bid. As well, the federal organization affected the fairness of the process by not treating the Complainant equally in relation to other invited suppliers. Fairness was further affected by the federal organization's inconsistent use of its discretion to extend the solicitation periods for various suppliers invited.
Ombudsman recommends compensation to bidder that was treated unfairly
(Launched and completed in 2016–2017)
A supplier filed a complaint regarding a contract awarded for the provision of audit services. The Complainant raised three issues: 1) There was an inappropriate allocation of points regarding the scoring of a rated criterion; 2) The federal organization used an undisclosed evaluation criterion; and 3) The federal organization's assumption that the Complainant could not complete the work with the proposed level of effort was inappropriate.
The review revealed that the Complainant's proposal had been evaluated twice. The result of the first evaluation showed that the Complainant's proposal was deemed the winner. However, following a re-evaluation, the Complainant's proposal was ranked second, and therefore the Complainant was not awarded the contract.
In reviewing the Complainant's first issue, the Procurement Ombudsman noted the federal organization did not award points according to the instructions set out in the solicitation in re-evaluating the Complainant's proposal, thus failing to adhere to the requirements of the Treasury Board Contracting Policy.
On the second issue, the review showed that while the solicitation explicitly identified the rated sub-criterion in question, in re-evaluating the Complainant's proposal, the federal organization applied a minimum “critical threshold” that had not been disclosed to bidders. Therefore, the federal organization applied an undisclosed evaluation factor in the re-evaluation of the Complainant's proposal.
On the third issue, the Ombudsman noted concerns with the federal organization's explanation for how it awarded points to the Complainant's proposal during the re-evaluation. The explanation failed to provide a reasonable rationale for the federal organization's concerns regarding the Complainant's proposed level of effort. It was therefore inappropriate for the federal organization to assume the Complainant could not complete the work with the proposed level of effort.
The Complainant would have been awarded the contract had the federal organization appropriately applied the evaluation criteria or not used an undisclosed evaluation factor. As such, the Procurement Ombudsman recommended the federal organization pay compensation to the Complainant.
Given the fairness and transparency of this procurement process were prejudiced, the Ombudsman also recommended the federal organization take steps to ensure that all individuals directly involved in this procurement process are aware of, and adhere to, obligations under the Treasury Board Contracting Policy.
Follow-up to the previous Ombudsman's recommendations
The previous Procurement Ombudsman, who served from January 2011 to December 2015, issued 21 review of complaint reports during his tenure, 9 of which included recommendations.
In August 2016, OPO sent letters to the 7 federal organizations regarding the 9 reports in which the previous Procurement Ombudsman issued recommendationsFootnote 1. These 9 reports each included recommendations for the federal organizations to improve their procurement practices or pay compensation to the supplier that had filed the complaint. The August 2016 letters requested information on whether the Ombudsman's recommendations had been implemented.
The responses demonstrated that:
- 3 reports recommended that 3 organizations improve their procurement practices, and all 3 responded indicating they had taken steps to address the Ombudsman's recommendations.
- 5 reports directed at 4 organizations recommended the payment of compensation. Of these, compensation had been paid in full in 3 instances, in another instance payment negotiations were ongoing, and in the final instance the supplier refused the compensation offered.
- 1 report included recommendations to both improve practices and pay compensation. The federal organization responded that changes had been made to its procurement practices and that, because of these changes, compensation was unwarranted; a view not shared by OPO. This exercise demonstrated that federal organizations have taken steps to respond to the recommendations made by the Procurement Ombudsman to improve procurement practices. In the long run, such efforts may help reduce the recurrence of the most common procurement-related issues raised to OPO.
This exercise demonstrated that federal organizations have taken steps to respond to the recommendations made by the Procurement Ombudsman to improve procurement practices. In the long run, such efforts may help reduce the recurrence of the most common procurement-related issues raised to OPO.
Most common procurement-related issues
In addition to tracking the issues unearthed through reviews of complaints, the Office assesses all written complaints submitted by suppliers to determine whether there are any potential systemic issues related to fairness, openness and transparency.
The Office also analyzes all the questions, concerns and issues raised by Canadian suppliers through all contacts to the Office. This information is used by the Office to identify the most common issues raised, which are considered in determining what topics to examine through procurement practice reviews.
In 2016–2017, the top five most common issues, by category, raised by suppliers through direct contacts to the Office were:
- 1. Bid evaluation and selection plan
- Concerns related to the method used by federal organizations to select the winning bid, including restrictive or unfair evaluation criteria. More specifically, suppliers raised concerns regarding:
- awarding contracts to the lowest-priced technically compliant bid, given this does not always equate to federal organizations obtaining best value.
- evaluation criteria, which:
- appeared to favour certain suppliers over others, including the incumbent supplier.
- were different across solicitations and geographic locations, even if within the same federal organization, for the same work.
- required previous experience delivering goods or services to federal organizations, thus creating a barrier to new businesses trying to obtain federal contracts.
- 2. Solicitation
- Concerns in this category related to the solicitation phase of the procurement process, including issues such as:
- late or no responses to supplier questions during the solicitation phase.
- suppliers that qualify on standing offers or supply arrangements but are seemingly never contacted regarding potential opportunities.
- short time periods to respond to solicitations.
- 3. Evaluation of bid
- Concerns regarding how bids were evaluated, including issues such as:
- suppliers disputing the grounds on which their bid was deemed non-compliant.
- contracts being awarded to a supplier whose bid should, allegedly, have been deemed non-compliant.
- concerns regarding the potential unequal application of evaluation criteria to competing bids.
- 4. Contract execution
- Concerns related to how suppliers or federal officials were performing their respective contracting roles and responsibilities, including:
- federal officials delaying projects unnecessarily by not adhering to contractual timelines.
- federal officials terminating contracts without sufficient warning or justification.
- 5. Statement of work
- Concerns focused on the quality and content of statements of work produced by federal organizations, more specifically regarding:
- documents that were unnecessarily specific or restrictive, giving the impression of wired specifications that favoured certain suppliers.
- documents that were insufficiently detailed or unclear, making it difficult for suppliers to respond effectively.
Reviews of procurement practices
The Regulations provide the Procurement Ombudsman with the authority to review the procurement practices of federal organizations. These in-depth and objective reviews provide the Procurement Ombudsman with the opportunity to explore the procurement practices of one or more federal organizations, and make recommendations to strengthen the fairness, openness and transparency of those practices. The Office also shares information on good practices identified in federal organizations and in other jurisdictions as a way to promote improvement in the field of procurement.
To determine what topics to review, OPO considers all of the issues raised directly to the Office, including the most common procurement-related issues identified on the previous page. A detailed assessment is carried out of all the issues to identify those posing the greatest risks to the fairness, openness and transparency of the federal procurement system, and those that would be of the most common interest to suppliers and federal officials. In 2016–2017, the Office completed two procurement practice reviews that were directly related to high-risk areas identified in the 2015–2016 Annual Report: bid evaluation processes (evaluation of bids, which was the 2nd highest ranked issue category in 2015–2016) and non-competitive contracting (a sub-topic of procurement strategy, which was the 3rd highest ranked category).
The following section outlines what OPO did to review federal procurement practices, including the two reviews, one follow-up review and one study completed in 2016–2017. Full versions of the reviews and study are available on the Office's website at www.opo-boa.gc.ca.
Bid evaluation processes
What OPO did
OPO conducted a review to determine whether three federal organizations' bid evaluation processes were conducted in a manner consistent with applicable sections of the Treasury Board Contracting Policy, the Financial Administration Act and related regulations, and the principles of fairness, openness and transparency.
The Office examined Canada Border Services Agency (CBSA), Parks Canada (Parks) and the Royal Canadian Mounted Police (RCMP), assessing documents and files related to competitive contracts for goods and services up to $2 million, from April 1, 2014 to November 30, 2015.
What OPO found
OPO found that the three federal organizations had policies and guidelines in place to support bid evaluation processes. Roles and responsibilities were clear and communicated, and monitoring and quality assurance activities were noted.
The bid evaluation processes for the majority of the files reviewed were conducted in a manner consistent with applicable legislation and policies and supported the principles of fairness, openness and transparency.
Nonetheless, inconsistencies and areas for improvement were identified, including the need for organizations to strengthen file documentation.
What the Ombudsman recommended
The Procurement Ombudsman made no recommendations to the RCMP as their management structure was solid and few errors were found in their files.
The Ombudsman recommended the CBSA complete the implementation of its contracting quality assurance program and the updating of policies, templates and guidance.
The Ombudsman recommended Parks strengthen its oversight of bid evaluation processes through the continued updating of procurement guidance, the development and implementation of formal quality assurance activities, and the establishment of an appropriate review mechanism, such as a contracting review board and a review of its contracting authority delegations.
CBSA and Parks committed to implementing the Procurement Ombudsman's recommendations.
Non-competitive contracting
What OPO did
OPO reviewed the procurement practices of Agriculture and Agri Food Canada (AAFC), Immigration, Refugees and Citizenship Canada (IRCC) and Statistics Canada (StatCan) to determine whether non competitive contracts and associated amendments were issued in a manner consistent with applicable sections of the Treasury Board Contracting Policy, the Financial Administration Act and related regulations, and the principles of fairness, openness and transparency. Contracts examined were awarded between November 30, 2013 and November 30, 2015.
What OPO found
StatCan and IRCC were able to demonstrate that nearly all non-competitive contracts and amendments to non-competitive contracts reviewed were awarded and issued according to the requirements of the Treasury Board Contracting Policy and therefore supported the principles of fairness and transparency. Of the 30 files reviewed at AAFC, 7 were not awarded in a manner consistent with the Treasury Board Contracting Policy.
What the Ombudsman recommended
No recommendations were directed to IRCC and StatCan. As for AAFC, the Procurement Ombudsman recommended an increase in oversight of non-competitive contracts and associated amendments, particularly in the organization's regional offices, to ensure that procurement practices are consistent with the requirements of the Treasury Board Contracting Policy. In response to this recommendation, AAFC indicated it will review opportunities and augment its procurement oversight function for non competitive procurement and associated amendments to ensure alignment with applicable requirements.
Follow-up reviews
To determine the impact of OPO's procurement practice reviews on federal practices, follow-up reviews are conducted two to three years after the release of a report. Follow-up reviews allow the Office to report on progress made by federal organizations in responding to the Procurement Ombudsman's recommendations. These reviews inform interested stakeholders of specific actions organizations have taken to improve procurement practices, thereby facilitating other federal organizations' ability to introduce similar improvements, where applicable. In addition, 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.
Follow-up report on the 2013–2014 procurement practice review
What OPO did
After the initial 2013–2014 review of Health Canada, First Nations and Inuit Health Branch, Manitoba Region's procurement practices on acquiring dental services, OPO conducted a follow-up to assess whether the organization implemented the recommendations made by the Procurement Ombudsman. Specifically, the follow-up focused on what actions were undertaken in response to the initial review and the extent to which each action had been completed and monitored.
What OPO found
The follow-up revealed the organization had implemented a series of measures to strengthen its management controls and procurement practices and had developed a new standing offer for dental services to be implemented by April 1, 2017. The follow-up review noted one recommendation made by the Procurement Ombudsman remained outstanding. This recommendation required seeking clarification on whether Treasury Board approval was necessary for certain procurement activities.
Procurement studies
The Office conducts studies on procurement-related topics to ensure the procurement community has a balanced understanding of the interests and concerns of suppliers and federal officials. OPO's procurement studies provide the Office with an opportunity to share good procurement practices and encourage dialogue and critical thinking regarding Canadian federal procurement.
Available procurement information study
What OPO did
OPO examined publicly available procurement information to determine if gaps existed between the information available and the information required by government policies, guidelines and initiatives. This study also sought to determine if the information was useful, from both an OPO and supplier perspective, and if any additional information may be useful to suppliers and other interested stakeholders.
To gain international perspective, OPO explored open data initiatives and reporting methods in the United States and Australia.
What OPO found
Overall, the reporting methods explored met the Canadian government's policy requirements and initiatives by providing historical information about federal procurement activities. While the disclosure of procurement information may have been consistent with policies and guidelines in place, publicly available information was limited in terms of usefulness.
For those interested in federal procurement, the information was fragmented, not timely and inconsistent. For suppliers, it was difficult to determine whether a federal market existed for their product, what federal organizations spent annually on given goods or services and what the upcoming business opportunities were.
What OPO concluded
OPO supports the Government's commitment to make available complete, timely and accessible information, as set out in the open data principles. Centralized access to federal government procurement data and information should provide the public with greater insight into government activities and the use of tax dollars.
While a step in the right direction, the centralization of information does not address the lack of transparency regarding contracts valued at less than $10,000, which account for a significant portion of federal procurement activity.
Footnotes
- Footnote 1
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Two federal organizations were each issued two separate review of complaint reports that included recommendations.
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