Procurement Ombudsman’s Annual Report 2020-2021

Procurement Ombudsman’s priorities

Knowledge deepening and sharing

Since 2018-19, my office has undertaken independent research into procurement topics of interest to our stakeholders. It began as a way for us to better understand the root causes of some of the recurring issues we hear about. Now, it has also become one of the main ways in which we contribute to strengthening the knowledge and capacity of the federal procurement community. The aim of these studies is to share knowledge and provide meaningful guidance to suppliers and federal departments. In 2020-21, we shared the results of these research studies at 3 events.

In addition to completing a study on emergency procurement, we also completed 2 new studies. The first study explores the potential impact of a chief procurement officer (CPO) at the federal level, and finds that the CPO model has the potential to address some of the persistent issues in federal procurement, including the lack of standardization and coordination across government departments and the slow pace of reform.

The second study builds on our study of emergency procurement, and is intended to help parties to a federal contract understand the key components of a force majeure clause in instances where unforeseen events interfere with the parties’ abilities to perform their contractual obligations.

The Knowledge Deepening and Sharing initiative has become one of the main ways in which we contribute to strengthening the knowledge and capacity of the federal procurement community.

Diversity and inclusion

An important theme of the past year has been diversity and inclusion. My office continued our commitment in this area by hosting our third annual Diversifying the Federal Supply Chain Summit, geared toward connecting diverse business owners with organizations that can help them successfully bid on and obtain federal contracts. At the summit, we heard directly from diverse suppliers about the barriers they face in doing business with the federal government, and the need for more diversity and inclusion in the procurement process.

In 2020-21, my office conducted a diversity survey of federal departments in hopes of obtaining baseline data on diversity initiatives in federal procurement. We drew attention to the need for data in our knowledge deepening and sharing study on social procurement, which was published in 2019-20. A key factor raised in this study was that data collection is a known challenge and a hurdle for most organizations. Yet data is crucial to establishing baselines, setting meaningful targets and measuring progress against these targets. As well, it helps the federal government understand how racialized communities currently contribute to the federal supply chain, and how procurement processes may negatively and disproportionately impact these communities. In short, information is the first step to taking meaningful action. As the Government of Canada moves to adopt a formal policy for engaging in social procurement, it is crucial that we prioritize the collection and analysis of data on diverse communities across the country.

As the Government of Canada moves to adopt a formal policy for engaging in social procurement, it is crucial that we prioritize the collection and analysis of data on diverse communities across the country.

This year, we saw a call to action on anti-racism, equity and inclusion in the federal public service. This call to action includes not only equipping ourselves with the knowledge and tools to address these matters, but also making meaningful change to address the systemic barriers and disadvantages faced by marginalized communities. While COVID-19 has impacted all of us, the impacts have been worse for some groups, including racialized communities. Over the past year, my office has taken action internally by holding an all-staff learning session on unconscious bias, including multiple diversity- and inclusion-related courses on employee training plans, and committing to a 50/30 diversity target to achieve a 50% female and 30% diverse workforce within 5 years. While work is underway across the federal public service to address the systemic barriers and disadvantages, I echo the call to action against racism, discrimination and bias, as there is still much more work to be done.

Update on regulatory changes

Last year, I proposed changes to the Procurement Ombudsman Regulations in 2 areas that limit the effectiveness of my office:

• To enable the Procurement Ombudsman to recommend compensation of more than 10% of the value of the contract, up to the amount of actual lost profit incurred by a complainant
• To enable the Procurement Ombudsman to compel (rather than request) departments to provide the documentation necessary for OPO to conduct reviews of supplier complaints and reviews of departmental procurement practices

The challenges of this past year have reconfirmed the importance of having an independent and impartial ombudspersons office that is empowered to help Canadians. This year, I would like to reiterate the need for these changes and also request a new change that is long overdue:

• The title of my position and the name of the office should be changed to reflect the nature of the role and office. Similar changes have recently been implemented for newly appointed ombudspersons at the federal level. It is seminally important that an ombudsperson represent all people, and for this reason I strongly request that the name of the role and the office be changed from the “Procurement Ombudsman” to the “Procurement Ombudsperson.”

Looking ahead

Many new developments are planned or underway in federal procurement that have the potential to bring about significant change. Some of these new developments include:

• The adoption of a formal vendor performance management policy:
  • This policy is designed to improve accountability during the contract management phase and incentivize good performance.
• A policy on the federal government’s approach to social procurement:
  • Over the years, OPO has often heard from procurement officials seeking policy coverage to facilitate the award of contracts taking into account social factors.
• A new procurement directive:
  • The updating or replacement of the Treasury Board Contracting Policy has been a topic of discussion for many years, and is eagerly anticipated by both federal departments and suppliers.
• Implementation of an electronic procurement system:
  • Among the anticipated benefits of an electronic procurement system, OPO is optimistic that it will enable federal organizations to compile useful data on the diversity of suppliers both bidding on, and obtaining, federal contracts.

These upcoming changes represent an evolution of procurement at the federal level, and my office will continue to help suppliers and federal government buyers with any new issues that arise.

Sincerely,

Alexander Jeglic
Procurement Ombudsman

Our mission

We promote fairness, openness and transparency in federal procurement.

Our mandate

The Department of Public Works and Government Services Act provides the following authorities for the Procurement Ombudsman:

• Review procurement practices: Review the practices of federal departments for acquiring goods and services to assess their fairness, openness and transparency, and make appropriate recommendations to the relevant department.
• Review complaints related to contract award: Review complaints respecting the award of any contract that would have been subject to the Canadian Free Trade Agreement, were it not for the value of the contract falling below the applicability thresholds. This applies to the acquisition of goods valued below $26,400 and services valued below $105,700.
• Review complaints related to contract administration: Review complaints respecting the administration of any federal contract for the acquisition of goods or services, regardless of dollar value.
• Provide alternative dispute resolution: Ensure that an alternative dispute resolution (for example mediation) process is provided for federal contracts, regardless of dollar value, if the parties to the contract agree to participate.

Our federal ombudspersons community

OPO supports the Principles on the Protection and Promotion of the Ombudsman Institution (“The Venice Principles”).

An ombudsperson is a public official who is responsible for acting as an impartial intermediary between the public and the government. At the federal level within Canada, there are several ombudsperson offices that are responsible for helping Canadians navigate issues in their respective fields.

In solidarity with other federal ombudsperson offices, OPO supports the Principles on the Protection and Promotion of the Ombudsman Institution (“The Venice Principles”). These principles recognize the importance of ombudsperson institutions, and provide guidance for their effective establishment and functioning.

More specifically, OPO would like to call attention to the following key principles:

• The government should support and protect the ombudsperson institution and refrain from any action undermining its independence.
• The independence of the ombudsperson institution should be protected through a direct reporting relationship to Parliament, so that the ombudsperson may inform Parliament on the lack of compliance by the public administration without risk of interference.
• The ombudsperson institution should have sufficient and independent budgetary resources to ensure full and effective discharge of its responsibilities and functions.
• The ombudsperson should have unrestricted access to all relevant information necessary to carry out investigations, including information which might otherwise be legally privileged or confidential.
• Any individual should have free and unhindered access to the ombudsperson, and be able to file a complaint.
• The ombudsperson should be immune from legal process in respect of activities carried out in their official capacity for the institution, and this legal immunity should apply after they leave the institution.

For an ombudspersons office to effectively fulfill the role of an impartial intermediary between the public and the government, the principles noted above are of paramount importance.

Total number of procurement-related cases

The total number of cases reflects the number of times that OPO was contacted by a stakeholder. Examples of stakeholders include suppliers, a federal government buyer, or an association representing either one. A new case is created each time a stakeholder brings a procurement-related issue to our attention. A case often includes more than 1 issue, and the 437 cases resulted in 612 issues being raised.

Nature of cases

437 cases resulted, including

• 228 cases related to general procurement
• 58 cases related to the administration of a contract
• 151 cases related to the award of a contract

Origin of cases (top departments)^{Footnote 1}

This year, the highest number of cases were related to the following 4 departments: Public Services and Procurement Canada, Depart-ment of National Defence, Royal Canadian Mounted Police, and Correctional Service Canada. It is important to note that these federal organizations are also some of the top procurers by volume. As such, it is reasonable that we would hear the greatest number of issues about the departments that conduct the highest volumes of contracting activity.

Who contacted us

The group/people that contacted us include:

• 319 contacts from a supplier/supplier association/subcontractor
• 15 contacts from a federal departmental representative
• 6 contacts from a member of Parliament/member of provincial Parliament
• 97 contacts from anonymous persons

How we reached our stakeholders

We reached our stakeholders by:

• We hosted or participated in 20 information sessions for suppliers
• We atttended 4 trade shows
• We held 14 information-sharing sessions with other federal organizations
• We met 4 times with Members of Parliament
• We had 106,315 Twitter impressions
• We delivered 9 presentations at procurement events

Total number of outreach events in 2020-21: 51

Top 10 issues in federal procurement

In 2020-21, the Top 10 issues, as reported by our stakeholders, were as follows (including an example for each issue):

We investigate complaints from suppliers

The Procurement Ombudsman can launch an investigation into formal complaints from suppliers about the award and administration of certain federal contracts. To launch an investigation, the complaint must meet the criteria identified in the Procurement Ombudsman Regulations, including:

• The complaint must be from a Canadian supplier.
• The complaint must be filed in writing within 30 working days after public notice of the award of the contract or, if there was no public notice, within 30 working days after the day on which the award of the contract became known or reasonably should have become known to the complainant. In instances where the supplier is unable to meet this filing deadline through no fault of their own, the Procurement Ombudsman may extend this filing deadline to a maximum of 90 days.
• The contract would have been subject to the Canadian Free Trade Agreement, were it not for the value of the contract falling below the applicability thresholds.
• The facts and grounds on which the complaint is based are not and have not been the subject of an inquiry before the Canadian International Trade Tribunal or a proceeding in a court of competent jurisdiction.
• There are reasonable grounds to believe that the contract was not awarded in accordance with regulations made under the Financial Administration Act.

In 2020-21, we received 51 written complaints about the award of a contract, the administration of a contract and general procurement issues. 4 of these met the criteria referenced above: 1 complaint resulted in a formal investigation, and in the other 3 instances, OPO’s involvement led to the resolution of the issue such that an investigation was no longer required. The remaining complaints failed to meet the above criteria and OPO provided information and responses to the stakeholder as required.

In addition, OPO completed 2 investigations launched in 2019-20 in accordance with the legislative timelines set forth in the Regulations. Further details on each investigation are provided below:

We review departmental procurement practices

The Procurement Ombudsman also conducts comprehensive, systemic reviews of departmental procurement practices to assess the practices’ fairness, openness and transparency. Procurement practice reviews allow OPO to examine the entirety of a department’s procurement activity, not just the lower-dollar-value contracts that OPO sees in our reviews of complaints related to contract award. Through these reviews, OPO provides recommendations in areas that require improvement and also highlights good practices. As one of the Procurement Ombudsman’s key priorities, opportunities for simplification are also highlighted in these reviews. The office also conducts follow-up reviews to ensure recommendations have been implemented.

In October 2018, the Procurement Ombudsman approved a 5-year plan to examine the 3 highest-risk procurement elements across the top 20 federal departments identified based on the value and volume of their annual purchasing activity. This year, OPO completed 2 reviews and launched an additional 6 reviews that will be completed within the legislated timeline and reported on in OPO’s 2021-22 annual report.

The objective of these reviews is to determine whether procurement practices relating to evaluation and selection plans, solicitation, evaluation of bids and contract award are conducted in a fair, open and transparent manner. To determine this, OPO examined whether departmental procurement practices were consistent with Canada’s obligations under national and international trade agreements, the Financial Administration Act and the regulations made under it, the Treasury Board Contracting Policy and, where applicable, departmental guidelines. Summaries of the reviews completed this year are provided below.

We follow up on previous reviews

The purpose of the follow-up exercises was to determine whether the departments implemented the Procurement Ombudsman’s recommendations.

In addition to completing 2 formal reviews, OPO also followed up on the recommendations made in 2 reviews that were completed in pre¬vious years. The purpose of the follow-up exercises was to determine whether the departments implemented the Procurement Ombuds-man’s recommendations.

The assessment of progress made against recommendations was based upon each department’s self-assessment and statements about its plans and actions, coupled with supporting documentation. For each recommendation in the original review, OPO reviewed the information provided for overall reasonableness and credibility.

1. Follow-up of the procurement practice review of Elections Canada

In 2017-18, OPO conducted a procurement practice review of bid solicitation processes of the Office of the Chief Electoral Officer (Elections Canada) and made 2 recommendations:

• Ensure all solicitations meet the Treasury Board Contracting Policy and the Election Canada’s Procurement and Contracting Guide requirements for establishing bidding periods, with particular emphasis on those requirements below $25,000.
• Ensure the evaluation criteria and selection methodology are included in the solicitation documents, particularly on those requirements below $25,000.

As part of the follow-up review, OPO requested Elections Canada provide information on actions planned or implemented as a result of the recommendations. OPO found Elections Canada’s self-assessment to be reasonable and credible. The documentation provided by Elections Canada was sufficient to demonstrate its implementation of the recommendations and that actions have been both planned and taken to strengthen the fairness, openness and transparency of its procurement practices.

2. Follow-up of the procurement practice review of Courts Administrative Service

In 2017-18, OPO conducted a review of the procurement management control framework of Courts Administrative Service (CAS) and made 6 recommendations:

• 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.
• 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.
• Document the process for assessing procurement risk and the use of risk information to support decision making.
• Develop, implement and maintain a departmental procurement plan.
• Establish formal documented mechanisms for monitoring procurement activities.
• 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.

As part of the follow-up review, CAS self-assessed the implementation of each of these 6 recommendations as “full implementation.” In its assessment, OPO determined that 5 of the 6 recommendations had been fully implemented, and that greater work was required to develop, implement and maintain a departmental procurement plan in line with recommendation 4.

While CAS had clearly defined the purpose of a departmental procurement plan, they would benefit from complete and up-to-date procurement information to set out upcoming procurement priorities and to allow for the proper planning and management of ongoing procurement and contracting activities. CAS has recently drafted a more strategic procurement plan that will be finalized in Q1 of 2021-22. It is likely that, if approved, this new document will be sufficient to fully address the recommendation.

Reviews to be completed in 2021-22

As part of the 5-year review plan, the Procurement Ombudsman launched an additional 6 reviews in 2020-21, which will be completed in 2021-22. These include reviews of Parks Canada; the Royal Canadian Mounted Police; Transport Canada; Immigration, Refugees and Citizenship Canada; the Canada Border Services Agency; and Natural Resources Canada.

In addition to the planned reviews included in the 5-year plan, the Procurement Ombudsman also has the ability to launch ad-hoc reviews if there are reasonable grounds to do so. This year, an ad-hoc review of procurement practices associated with the award of directed contracts to WE Charity was initiated. This review involved contracts awarded by 4 federal organizations: Global Affairs Canada, the Canada School of Public Service, the Privy Council Office and the Public Health Agency of Canada. The review will be completed within the regulatory deadline in 2021, published on OPO’s website and reported on in our next annual report.

We offer fast, effective and cost-efficient alternative dispute resolution services

OPO offers alternative dispute resolution (ADR) services, for example mediation, to suppliers and federal officials for contractual disputes or any other issues that arise between the parties to a federal contract. Either the supplier or the government organization can request these services, and both must agree to participate in this voluntary process.

Engaging in mediation offers all parties to the contract the opportunity to be heard in front of an impartial and independent third party.

The growth of ADR services continues to be 1 of the Procurement Ombudsman’s key priorities. In the past year, OPO started to use vid-eo-conferencing platforms to conduct “face-to-face” mediations without requiring participants to travel to the location of the mediation. As the office continues to operate in a virtual setting, staff are gaining knowl-edge and improving practices associated with virtual mediation in order to best serve the needs of stakeholders.

Engaging in mediation offers all parties to the contract the opportunity to be heard in front of an impartial and independent third party. If a department refuses to participate in mediation and fails to resolve the dispute with the supplier, the result can be a loss of trust in the mechanism established by Parliament to serve the needs of suppliers. This is one of the main reasons why the Procurement Ombudsman asked 83 federal departments to include language in their contracts agreeing to make every reasonable effort to settle disputes amicably, and to clearly and transparently notify suppliers about the availability of OPO’s dispute resolution services. To date, most departments have already agreed to include this language in their contracts and the Ombudsman strongly encourages all remaining departments to include the requested ADR language as quickly as possible.

In 2020-21, OPO received 9 requests for ADR services:

• In 1 case, both parties agreed to use our ADR process, and their issues were formally resolved with a settlement agreement.
• In 3 cases, the department declined to participate in the ADR process.
• 2 cases were deemed to not meet the Procurement Ombudsman Regulations and could not be considered further.
• 3 cases were resolved after March 31, 2021, and will be reported on in the next fiscal year.

Knowledge deepening and sharing

One of the ways OPO contributes to strengthening the federal procurement community is by conducting and sharing research to better understand issues in federal procurement. Each year, OPO engages in a scan of the federal procurement environment to identify emerging trends, recurring issues and knowledge gaps. From this analysis, topics are selected that are of interest to our stakeholders, including buyers and suppliers.

The Chief Procurement Officer model shows potential to address some of the persistent issues in federal procurement including the lack of standardization and coordination across government departments, and the slow pace of reform.

Once topics are confirmed and studies completed, the office seeks to share the information from the studies as broadly as possible. This year, OPO presented the findings of our study on emergency procurement at the Supply Chain Canada National Conference, at the Canadian Institute for Procurement and Material Management Virtual Summit and to PSPC’s Client Advisory Board.

OPO also completed 2 additional studies. A summary is provided below, and the full reports are available on OPO’s website.

Diversity and inclusion

How we engaged with the supplier community

Despite the limitations on public gatherings, OPO continued efforts to connect with Canadian suppliers to raise awareness of OPO’s services and to provide them with a platform to share their experiences.

In 2020-21, OPO hosted 6 virtual multi-city town halls that gathered approximately 500 suppliers across Canada, and participated in 4 trade shows.

OPO uses the information provided by suppliers to identify the key issues they face in doing business, or trying to do business, with the federal government. OPO raises awareness of these issues in multiple ways to make sure decision makers are aware of concerns expressed by suppliers. These issues inform OPO’s decision making and help identify problematic areas of federal procurement that would benefit from a review. OPO also makes departments aware of these issues so that they can be proactive in addressing them.

How we reached diverse suppliers

Consistent with OPO’s ongoing commitment to increasing the diversity of the federal supply chain, in addition to hosting the Diversifying the Federal Supply Chain Summit, OPO undertook outreach activities to specifically reach diverse supplier groups. OPO delivered presentations at an event hosted by Stó:lō Community Futures, an organization that offers business counselling and business loans to small and medium-sized Indigenous businesses, and to the Canadian Black Chamber of Commerce. OPO also participated in 2 events organized by the Women’s Enterprise Centre, a non-profit organization devoted to helping women start, lead and grow their own business.

Despite the challenging circumstances of the past year that prevented in-person meetings with suppliers, OPO continued efforts to connect with Canadian suppliers. OPO remained committed to ensuring that outreach activities were as inclusive as possible and that every stakeholder could access and benefit from OPO’s services.

Transitioning to an online platform enabled OPO to expand its reach to simultaneously connect with suppliers across Canada, including in Miramichi, New Brunswick; Summerside, Prince Edward Island; Saanich, British Columbia; and Trois-Rivières, Quebec. This approach to outreach allowed OPO to make the most out of a challenging situation, and provided a forum to connect with suppliers in smaller regions in Canada where OPO may not have traditionally visited. Suppliers in these regions may not have previously had the opportunity to come together and share their experiences in doing business with the Government of Canada, and OPO plans to continue to ensure they are given a voice through future online outreach activities.

How we are working with the Canadian International Trade Tribunal to help suppliers

This collaborative arrangement offers suppliers the opportunity to have a summary of their complaint shared with both organizations simultaneously so that it can be assessed in a timely manner.

OPO recognizes the significant benefits of ongoing collaboration with the Canadian International Trade Tribunal (CITT) to better serve the needs of Canadian suppliers that encounter procurement issues. That is why the Procurement Ombudsman and the Chairperson of the CITT established a Memorandum of Understanding (MOU) that came into effect on October 1, 2020. The MOU facil-itates improved supplier access to each organization’s respective complaint review mechanisms. It enables both organizations to immediately share information related to complaints, with the complainant’s consent, so that suppliers are quickly advised of the deadlines to file their complaints with the appropriate organization. This collaborative arrangement offers suppliers the opportunity to have a summary of their complaint shared with both organizations simultaneously so that it can be assessed in a timely manner. It also allows both organizations to quickly determine jurisdiction so that suppliers can file their complaint with the appropriate body, reducing the risk that the supplier will miss one of the filing deadlines. In addition to simplifying the complaint process for suppliers, the MOU allows for continued co-operation between OPO and the CITT in other areas, including the possibility of collaborating on the development of knowledge deepening and sharing studies that are of interest to both suppliers and federal departments.

Since the MOU came into effect in October 2020, OPO has received 22 cases from the CITT. OPO is using the information in these complaints to identify and track procurement issues, and inform future decision making regarding our selection of areas for review.

How we engaged with federal officials

In 2020-21, OPO continued our efforts to strengthen and support the federal procurement community.

OPO attended 14 information-sharing sessions with federal officials where we shared information that our office heard from Canadian suppliers and other stakeholders. The meetings provided an open forum for discussion with regard to any issues in the procurement process. Attending events with the procurement community allows OPO to share the issues that we hear from Canadian suppliers, and bridge the gap between suppliers and the federal procurement community. Bringing these issues to their attention allows them to understand the challenges that suppliers face when navigating the federal procurement process.

OPO also attended a number of online events such as the Canadian Institute for Procurement and Material Management Virtual Summit. Here OPO learned more about the issues that buyers experience when procuring for the Government of Canada. We also raised awareness about the services that OPO offers to support them, namely alternative dispute resolution, including mediation services.

OPO understands that it can be more difficult for stakeholders outside the National Capital Region (NCR) to engage with our office. We seized the opportunity that these sessions gave us to continue our efforts to reach out to stakeholders everywhere in Canada, well beyond the limits of the NCR.

Office of the Procurement Ombudsman clauses

We believe that awareness of and access to OPO’s services should be as easy as possible for Canadian suppliers. The most obvious place to start is in federal departments’ procurement and contract documents. That is why the Procurement Ombudsman wrote to the deputy heads of 83 departments and asked them to add standard language about OPO’s services in their solicitation documents, contracts and regret letters. These clauses provide suppliers with clear information on filing a complaint with OPO, or seeking the office’s dispute resolution (for example mediation) services.

To date, 93% of departments have responded, and we expect full support from government departments and agencies as part of the government’s commitment to enhancing transparency.

1. Authority and objective

The position of Procurement Ombudsman was established through amendments to the Department of Public Works and Government Services Act. The Procurement Ombudsman’s mandate is further defined in the Procurement Ombudsman Regulations. The Office of the Procurement Ombudsman’s mission is to promote fairness, openness and transparency in federal procurement.

2. Parliamentary authority

The funding approved by the Treasury Board for the operation of the Office of the Procurement Ombudsman is part of Public Works and Government Services Canada’s (PWGSC)^{Footnote 2} appropriation, and consequently, the office is subject to the legislative, regulatory and policy frameworks that govern PWGSC. Nonetheless, implicit in the nature and purpose of the office is the need for the Office of the Procure-ment Ombudsman to fulfill its mandate in an independent fashion, and be seen to do so, by maintaining an arm’s-length relationship with PWGSC and all other federal departments.

3. Statement of operations

4. Proactive disclosure

Compliance with the Treasury Board of Canada Secretariat and Public Services and Procurement Canada (PSPC) financial management policies requires the mandatory publication of the Procurement Ombudsman’s travel and hospitality expenses. It also requires disclosure of contracts entered into by the Office of the Procurement Ombudsman for amounts over $10,000. Information on our proactive disclosures can be found by selecting the “Disclosure of Travel and Hospitality Expenses” link on PSPC’s “Transparency” webpage or on the “Open Canada” website by searching for “Procurement Ombudsman.” Disclosure of our contracts is published under PSPC as the organization.