Finance and Economic Development Committee
Comité des finances et du développement économique
and Council / et au Conseil
21 March 2011 / le 21 mars 2011
Submitted by/Soumis par: Marian Simulik, City Treasurer/Trésorière municipale
Contact Person/Personne ressource : Jeff Byrne, Chief Procurement Officer, Supply / Agent principal des achats, Approvisionnement
Finance Department/Service des finances
613-580-2424 ext./ poste 25175, Jeff.Byrne@ottawa.ca
|
Ref N°: ACS2011-CMR-FIN-0020 |
That the Finance and Economic Development Committee table this report to be received and discussed at the next scheduled meeting of FEDCO, and then forwarded to Council for information.
Que le Comité des finances et du développement économique dépose le présent rapport qui sera discuté à la prochaine réunion prévue du CFDÉ, puis transmis au Conseil municipal pour information.
The Purchasing By-law requires the Supply Branch to report to Council on a quarterly basis. Each quarterly report:
1. contains information on contracts exceeding $10,000 awarded under delegated authority.
2. identifies all contracts categorized as:
(a) Consulting Services
(b) Professional Services
(c) Follow-on Contracts
(d) Amendments
3.
identifies the reason for outsourcing in accordance with the definitions
discussed below.
4. includes details about the Legal Outsourcing Costs.
Document 1
The contracts approved for the period of October 1, 2010 to December 31, 2010, are listed in Document 1.
Where appropriate, staff used the following definitions as outlined in the Purchasing By-law to identify the contract category, the outsourcing reason and the non-competitive exception.
Professional Services
Professional Services means services requiring the skills of professionals for a defined service requirement or for a specific project related deliverable including but not limited to the areas of engineering, architecture, design, planning, information technology, financial auditing and fairness commissioners.
Consulting Services
Consulting Services means assistance to management, including but not limited to the areas of strategic analysis, organizational design, change management, policy development, feasibility studies and other services intended to assist decision making within the organization.
Amendment
An amendment is an increase in the scope of an approved contract, which is unanticipated. Those amendments that are both greater than $50,000 and 50% of the original contract will be identified in the quarterly report.
Follow-on Contract
A follow-on contract differs from an amendment in that the original contract or bid solicitation document recognizes the fact that it is likely that the initial defined contract scope may be expanded to include a number of related phases that are either included in the tender document, or are customary in relation to the work assignment. Rates charged for the follow-on contract are reviewed by the Supply Branch, and must be based on those rates proposed by the service provider in the original competitive “bid”.
An extension to a contract is not categorized as an amendment or a follow-on contract. An extension is a contract term allowing the City to continue purchasing the good or service for an extended period of time where the option to extend the contract was outlined in the bid document, or is deemed to be in the best interest of the City.
Reasons for Outsourcing the Work
The reason Consulting and Professional Service contracts are let is identified as follows:
(a) workload related or lack of internal resources by a “W”;
(b) need for specialized expertise by an “E”;
(c) need for independent third party oversight by an “I”;
(d) regulatory requirement by an “R”;
(e) proprietary service or unique market position by a “P”; and
(f) business model required outsourcing by an “O”.
The following table summarizes the total number and value of the contracts as well as the different categories under which the applicable contracts fall.
|
|
Total # of Contracts |
Total $ Value |
# Prof. Services |
#
Consulting |
Workload
|
Specialized
|
Independent third party oversight "I" |
Regulatory
|
Proprietary
|
Business model outsourcing "O" |
|
AG |
11 |
$276,253.44 |
11 |
- |
- |
11 |
- |
- |
- |
- |
|
CM |
39 |
$2,837,131.77 |
20 |
- |
- |
11 |
1 |
- |
- |
8 |
|
CO |
400 |
$55,918,491.86 |
71 |
3 |
- |
56 |
1 |
- |
- |
17 |
|
ISCS |
393 |
$87,079,462.60 |
117 |
3 |
- |
20 |
- |
- |
- |
100 |
|
Total |
843 |
$146,111,339.67 |
219 |
6 |
- |
98 |
2 |
- |
- |
125 |
Non-Competitive Purchases
22(1) The requirement for competitive bid solicitation for goods, services and construction may be waived under joint authority of the appropriate Director/General Manager and the Supply Branch and replaced with negotiations under the following circumstances:
a. where competition is precluded due to the application of any Act or legislation or because of the existence of patent rights, copyrights, technical secrets or controls of raw material,
b. where due to abnormal market conditions, the goods, services or construction required are in short supply,
c. where only one source of supply would be acceptable and cost effective,
d. where there is an absence of competition for technical or other reasons and the goods, services or construction can only be supplied by a particular supplier and no alternative exists,
e. where the nature of the requirement is such that it would not be in the public interest to solicit competitive bids as in the case of security or confidentiality matters,
f. where in the event of a "Special Circumstance" as defined by this By-law, a requirement exists,
g. where the possibility of a follow-on contract was identified in the original bid solicitation,
h. where the total estimated project cost for professional services does not exceed $50,000, or
i. where the requirement is for a utility for which there exists a monopoly.
22(7) Any non-competitive contract that does not satisfy the provisions of Subsection 22(1) is subject to the City Manager’s approval.
Document 1 identifies all non-competitive purchases as well as references the appropriate subsection 22(1) and 22(7).
Supply Branch certifies that all the contracts awarded under Delegation of Authority for the period of October 1, 2010 to December 31, 2010, are in compliance with the Purchasing By-law.
The following represents a statistical overview of the purchases made for the period of October 1, 2010 to December 31, 2010
|
2010 Q4 |
Total Contracts |
% of Total Contracts |
Total Amount |
% of Total Amount |
|
$10K - $25K |
279 |
33.1% |
$4,742,498.11 |
3.3% |
|
$25K - $50K |
173 |
20.5% |
$6,055,719.48 |
4.1% |
|
$50K - $100K |
156 |
18.5% |
$10,786,952.19 |
7.4% |
|
≥$100K |
235 |
27.9% |
$124,526,169.89 |
85.2% |
|
Total |
843 |
100% |
$146,111,339.67 |
100% |
2010 Q4 Purchases by Type
|
Type |
# of Contracts |
|
|
Fleet & Equipment[1] |
138 |
$39,268,471.01 |
|
Construction & Technical Services[2] |
278 |
$56,135,792.25 |
|
Professional & Consulting Services[3] |
225 |
$19,170,986.44 |
|
Goods[4] |
202 |
$31,536,089.97 |
|
Total |
843 |
$146,111,339.67 |
Professional and Consulting Services Contracts > $10,000
|
2010 Q4
|
Total Contracts |
Total Value |
|
Professional Services |
$19,023,108.96 |
|
|
Consulting Services |
6 |
$147,877.48 |
|
Total |
225 |
$19,170,986.44 |
Document 2
Legal costs paid for the fourth quarter 2010 are listed in Document 2.
Although the City Clerk and Solicitor is required by the Purchasing By-law to identify those law firms in receipt of an annual cumulative total of $100K or more, in an effort to be completely transparent, the Department has identified all of the law firms providing external legal services to the City during the fourth quarter of 2010, as well as identifying disbursement and HST costs for that same period of time as per subsections 13(1) and (2) of the Purchasing By-law. Also included in the report are the amounts paid to external law firms with respect to the Downtown Ottawa Transit Tunnel (DOTT) project and litigated insured claims. These amounts represent legal fees and disbursements associated with the DOTT project which are funded through the Infrastructure Services and Community Sustainability Department; as well as insured litigation costs, which are funded by the City’s Self-Insurance account and therefore, are not paid from the Legal Services budget.
The information provided in Document 2, is a summary of external legal services costs for the fourth quarter of 2010. Council-driven initiatives continue to result in legal costs. The table below summarizes a number of these projects and expenditures in the last quarter of 2010:
|
Council-Driven Initiative |
2010 Q4 Legal Costs |
|
Lansdowne Partnership Plan, Injunction, Exhibition Hall RFP, LR Issues, OMB Hearing |
$621,254.28 |
|
South March Highlands/Terry Fox Drive |
$274,847.97 |
|
Interval House – Opinion and Litigation |
$57,682.81 |
|
OMB Hearing re Comprehensive Zoning By-law – Urban Boundary |
$ 48,401.01 |
|
Carp Airport Development |
$ 27,170.16 |
|
Minto-Manotick – Motion re Costs |
$17,060.69 |
|
Orgaworld Canada Inc. |
$10,794.89 |
In addition, there were several ongoing litigation matters, which resulted in significant expenditures in the fourth quarter including the Marked Paintball Injunction arising from the enforcement of the City’s Comprehensive Zoning By-law ($6,017.83); the $10M claim by the Ottawa Lynx and the $3M claim by the Ottawa Rapidz ($91,662.70); the claim by the City for approximately $600,000 in emergency repair costs, as well as the $2M claim against the City for loss of business associated with Somerset House ($17,274.43); and employment law issues associated with the Keefer Regulator ($47,609.89) and D. Wilson ($62,405.10).
The majority of outsourced work is with the City’s three Strategic Standing Offer firms, being Borden, Ladner, Gervais (Corporate, Commercial and Development files); Heenan, Blaikie (Litigation files); and Hicks, Morley (Labour and Employment Law files). Work may be outsourced to external law firms for the following reasons:
Finally, Legal Services has negotiated a new Strategic Standing Offer with two external law firms, which spans the current term of Council.
There are no rural implications.
The preparation of this report is required by the Purchasing By-law and as such no public consultation is required.
There are no adverse legal or risk management implications as the information is required to be disclosed pursuant to the Purchasing By-law.
Prior to a contract approval, Supply Branch staff confirms that the appropriate funds are available in the budget, based on receipt of a funded requisition in SAP. The availability of funds is a condition of approval under the Purchasing By-Law.
Report forwarded for information pursuant to the Purchasing By-law.