2005 Audit Recommendations - Status Tracking

Document 8

Audit: Procurement Process

(EMC Lead: G. Geddes / Staff Lead: M. Simulik)

Audit Recommendation

Management Response

Comments

Budget Implications 2007 or Beyond

Related Council Motions

Status Update

Audit Management Response

Action Required Based on DCM Implementation Plan

Management Timelines (Q1- Q4)

(Risks, issues regarding implementation, etc)

($$ if known)

That Supply Management not process any contracts for goods or services which have already been delivered, or for which work has begun.

Management agrees with this recommendation.

Management does not endorse processing any contract “after the fact”, where Purchasing has not been properly involved in the process.

This recommendation is clearly supportable, however the outcome is that without purchasing involvement, no Purchase Order may be issued. Within SAP, that limits the payment tool to only “payment without reference”, which is unfortunately not always an acceptable option. Some contracts, even those incorrectly initiated outside of purchasing, require that purchasing find a means of supporting them, in order to allow the issuance of a Purchase Order contract. A review of the cost of removing this limitation from SAP will be pursued with the Information Systems Branch in Q2 2006.

Staff have been directed to follow this approach as of June 2006.

Exceptions, to recognize the issues raised under the “comments” column, to be discussed with Program Manager and approved only where that approach is supportable.

Q2 2006

Management does not endorse processing any contract “after the fact”, where Purchasing has not been properly involved in the process.

However, some contracts, even those incorrectly initiated outside of Purchasing, require that Purchasing find a means of supporting them, in order to allow the issuance of a Purchase Order contract.

Complete

When a contract has been entered into on a sole source basis, the total value of the contract, including all amendments, should not exceed $50,000 without the approval of the City Manager.

Management agrees with the intent of this recommendation.

Sole source contracting at the City, although permitted in the Purchasing By-Law under stipulated conditions, is strongly discouraged by Corporate Purchasing. It is estimated that approximately 10% of all purchases are sole sourced which is representative of best practices industry wide. Amendments occur when there are scope changes and when it would be counter-productive to put the additional work to tender. Management will examine the need to establish any additional thresholds for amendments and, if necessary, proceed with the revisions to the Purchasing By-law.

Management does not support the City Manager approving sole source contracts over $50,000 and believes existing due diligence which includes review by either the Chief Corporate Services Officer or Deputy City Manager when necessary would continue to suffice.

Staff have been directed to follow this approach as of June 2006.

Level 2 approval (Deputy City Manager, CCSO) will continue until the recommendations of the Council Audit Working Group are accepted.

Q4 2006

Sole source contracting at the City, although permitted in the Purchasing By-Law under stipulated conditions, is strongly discouraged by Corporate Purchasing. Less than 10% of all purchases are sole sourced which is representative of best practices industry wide.

Management does not support the City Manager approving sole source contracts over $50,000 and believes existing due diligence which includes review by either the Chief Corporate Services Officer or Deputy City Manager when necessary would continue to suffice.

Need to discuss with Council Audit Working Group (CAWG) ability to distinguish between discretionary sole source and those monopoly type areas like Bell, Hydro, etc.

None

In progress: would like to review recommendation requiring City Manager approval with CAWG (see comments section).

Supply Management should ensure the total value of amendments to the scope of work of any contract should not exceed 50% of the original contracted amount without the approval of the City Manager.

Management disagrees with this recommendation.

Amendments to contracts are typically in light of unforeseen changes in scope, and are scrutinized closely, in both the operating department and by Purchasing, with a view to ensuring that fair value is received by the City. The current approval process includes both the Manager of Supply Management and level 2 approval of either the Chief Corporate Services Officer or Deputy City Manager, and continues to be appropriate.

In June 2006, a process was implemented to ensure that all such amendments are approved at senior management level 2.

Also, all are captured for inclusion in the annual report to Council on consultants, sponsorships, legal, etc.

Q3 2006

Amendments to contracts are typically in light of unforeseen changes in scope, and are scrutinized closely, in both the operating department and by Purchasing, with a view to ensuring that fair value is received by the City. The current approval process includes both the Manager of Supply Management and level 2 approval of either the Chief Corporate Services Officer or Deputy City Manager, and continues to be appropriate.

Need to discuss with Council Audit Working Group the ability to define certain thresholds (like recommendation # 13 ), where the total value of the amendment would need to exceed 50% and $50K in order to be captured.

2007 budget pressure: 1 additional FTE required to record and capture information for reporting.

That “Supply Management should ensure the total value of amendments to the scope of work of any contact should not exceed 50% of the original contracted amount without the approval of the Deputy City Managers” , and that an information report be forwarded to the appropriate Standing Committee; and that staff reports to Council on the implementation of this recommendation no later than September 2006.

Complete

Would like to discuss the following suggestions with CAWG:
· that Council motion be amended to only apply in instances where the amendment has both a value of at least $50K AND is greater than 50% of the original contracted amount;

To avoid unnecessarily high volume of reviews and approvals required (200+ contracts/yr), suggest revising recommendation to require approval for contracts exceeding 50% of contract and $50K. (See examples attached.)

Also, as per Council amendment, recommend report be forwarded annually to CSEDC.

· that the Council motion be amended to state that the "appropriate Standing Committee" be designated as CSEDC, and that reporting take place annually in conjunction with the existing report to Committee and Council which deals with several reporting requirements detailed in the Purchasing By-Law, such as consultants awarded contracts with an annual value greater than $100K, legal outsourcing costs for the year, and sponsorships.

That Supply Management adopt evaluation methodologies that better reflect price differences in proposals for professional services, such as standard deviation, low bid or price per point.

Management agrees with this recommendation.

The recommended methodology is currently used for most contracts whereas the benchmark average methodology is used for consulting engineering assignments. Management will implement a methodology that better reflects price differences. This will be initiated in Q2 2006 in conjunction with Recommendation 5.

This was implemented city wide in June 2006.

Benchmark average discontinued. Standard deviation accepted as the normal methodology.

Q2 2006

The recommended methodology is currently used for most contracts whereas the benchmark average methodology is used for consulting engineering assignments. Management will implement a methodology that better reflects price differences. This will be initiated in conjunction with Recommendation 5.

None

Complete

That Supply Management ensure that the pricing component in Requests for Proposals of professional services is immediately standardized at a minimum of 30%.

Management agrees with the intent of this recommendation.

Currently, the weighting for the price component varies depending upon the type of professional service being contracted. In many cases the pricing component is in fact above 30%. Our experience has been that considerable flexibility is required. This is an area that staff has reviewed frequently and over the years the weighting for the factor has moved from cost not being a factor (i.e. 0%) to a minimum weighting of 15%. One of the areas where concern regarding the establishment of a 30% minimum exists is in the studies and infrastructure design services.

Implementation city wide June 2006.

None

That “Supply Management ensure the pricing component in Requests for Proposals of professional services is immediately standardized at a minimum of 20%”, and that staff reports to Council on the implementation of this recommendation no later than September 2006.

Complete

Management has reviewed the threshold for the pricing component based on the practices used in other Canadian municipalities and government departments. That review indicates that 20% is a common threshold for infrastructure design and engineering, and the City will move up to that threshold immediately. It should be noted that an initiative to benchmark best practices for procuring engineering services is being conducted by InfraGuide (National Guide for Sustainable Municipal Infrastructure) whose guiding principles Council endorsed in 2003. InfraGuide expects to publish its draft report for review and comment in March 2006. At that time, management will review the results with the Auditor General to determine what other changes may be necessary to best provide the City with value for money when procuring engineering services.

Supply Management should ensure that a reasonable number of firms are eventually awarded Standing Offers, using price as a significant component (a minimum of 30%) in the evaluation process.

Management disagrees with this recommendation.

Management has completed the review and believes that the current process does provide some assurance that firms will receive some work.

The majority of Standing Offers use a price component of 100%, and are awarded based on lowest bid. A list of authorized firms is available on the basis that the lowest cost service provider will be called first. Management attempts to limit the number of firms to a level that would ensure that most or all will receive work; however, Standing Offers are set up in advance of actual assignments being known. The basic premise of a Standing Offer, clearly stipulated in each procurement solicitation, is that no guarantee of work is provided. In addition, in the case of translation, those firms that are listed on the Standing Offer have the quality of their work monitored on a regular basis. If two pieces of work are returned that are substandard, the firm is removed from the Standing Offer listing.

The implementation of the 20% standard as a minimum was completed city wide in June 2006.

Management has completed the review and believes that the current process does provide some assurance that firms will receive some work. The basic premise of a Standing Offer, clearly stipulated in each procurement solicitation, is that no guarantee of work is provided. Additionally, as an outcome of the recent successful Rural Summit, the concept of geographic representation of service providers, in the rural segments of the City, has been recommended as a possible procurement initiative. If adopted, this approach would result in additional firms being added to Standing Offers, with more choice to the various urban and rural sections of the City, in order to ensure that contractors providing service have knowledge of the diverse and often specialized requirements that pertain to those different areas.

Requires staff time (.33 of an FTE) to monitor and ensure a “reasonable” number of firms are authorized on RFSO.

That “Supply Management should ensure that a reasonable number of firms are eventually awarded Standing Offers, using price as a significant component (a minimum of 20%) in the evaluation process” be accepted and implemented, and that staff reports to Council on the implementation of this recommendation no later than September 2006.

Complete

The various firms represented on a Standing Officer can vary significantly in size, resources, and capability. Therefore, it is not unreasonable to suggest that a larger firm with more staff and a wider expertise base may be used more often than a smaller vendor authorized on the same Standing Offer. In areas such as translation this can result in some firms receiving greater volumes of work due to their ability to provide specific skills or quicker turnaround due to their size and expertise. Conversely, some smaller firms offer specialized, technical translation services (for issues in health, engineering or finance for example). These types of request occur less frequently, but the specialized firms receive that work over the generalist firms.

Additionally, as an outcome of the recent successful Rural Summit, the concept of geographic representation of service providers, in the rural segments of the City, has been recommended as a possible procurement initiative. If adopted, this approach would result in additional firms being added to Standing Offers, with more choice to the various urban
and rural sections of the City, in order to ensure that
contractors providing service have knowledge of the
diverse and often specialized requirements that pertain
to those different areas.

Supply Management ensure that all new Standing Offers have effective evaluation criteria established in order to rank proponents to ensure the City achieves "best value".

Management agrees with this recommendation.

This is reflective of current purchasing practice, and a focus on new Standing Offer opportunities will be implemented by Q3 2006.

All new standing offers will include effective evaluation criteria to rank proponents to ensure best value to the City.

Q3 2006

This is reflective of current purchasing practice, and a focus on new Standing Offer opportunities will be implemented.

None

Complete

For existing Standing Offers, Supply Management should develop specific management processes in order to ensure that work is allocated equitably.

Management agrees with this recommendation.

This is reflective of current purchasing practice, and a focus on new Standing Offer opportunities will be implemented by Q3 2006.

All call-ups against standing offers are approved and monitored by Purchasing, and clients are provided with, or have access to, details in order to assist with equitable work allocation.

Q3 2006

This is reflective of current purchasing practice, and a focus on new Standing Offer opportunities will be implemented.

None

Complete

When evaluating proposals for Standing Offers, Supply Management should ensure the various categories of professional are weighted to reflect usage.

Management agrees with this recommendation.

This will be implemented by Q3 2006.

The various categories of professional, under a standing offer, are weighted to reflect usage, in the price evaluation.

Q3 2006

None

Complete

Supply Management should ensure that all call-ups against Engineering Standing Offers be required to bid resources against the classifications contained in their Standing Offer Agreement or that the bids be deemed non responsive.

Management agrees with the intent of this recommendation.

Management generally concurs with the recommendation but believes that certain situations may require flexibility.

Standing Offers by their very nature, are issued in advance of specific assignments being fully scoped, or in some cases known at all. The resources therefore, against which proponents commit firm per diem rates, tend to be typical, generic classifications; however, they do cover the majority of “down stream” needs which follow and become call-ups against the Standing Offer.

It should be recognized that occasionally an authorized firm may have the need to include a specialized resource on a proposal in order to respond to the specific needs of an assignment, and that in-house expertise exists in Supply Management Division to ensure that the City is getting the best cost.

In the vast majority of cases, call-ups against engineering standing offers do comply with the Auditor Generals recommendation. In those unusual cases where a specific expertise is needed for a project, and not covered under the RFSO rates, Purchasing will undertake it’s due diligence in accordance with the provisions of the Purchasing By-Law, and compare the rates against other competitive assignments, in order to designate fair and reasonable value to the City.

Q3 2006

Management agrees with the intent of this recommendation but stresses that certain situations may require flexibility. It should be recognized that occasionally an authorized firm may have the need to include a specialized resource on a proposal in order to respond to specific needs of an assignment and that in-house expertise exists to ensure the City is getting the best cost.

None

Complete

Can discuss this in more detail with CAC, if required, to further explain how current practices meet needs, with the understanding that standing offers cover multiple years, are issued in advance of specific needs being known and that expertise exists within SMD to validate consultant rates for unique expertise that may be needed in specific call-up situations.

When Information Technology Services calls for bids and the individual selected (originally submitted for evaluation by the winning proponent) is unavailable for work, the second qualified bid be selected (rather than the original firm substituting another individual).

Management agrees with this recommendation. A review by Information Technology Services indicates that this is a current practice; however, it is acknowledged that a deviation to the practice occurred inadvertently only once (in 2003). The Standing Offer has been in use for five years.

Process currently in place

Q2 2006

Management agrees with this recommendation. A review by ITS indicates that this is a current practice; however, it is acknowledged that a deviation occurred accidentally in 2003.

None

Complete

When Information Technology Services issues calls for proposals, that all invitees be reminded of the criteria against which they will be assessed.

Management agrees with this recommendation.

This will be implemented immediately.

Management agrees with this recommendation.

This was implemented immediately.

Q2 2006

Management agrees with this recommendation.

This was implemented immediately.

None

Complete

Supply Management ensure that all Standing Offer Agreements have an original maximum cap for call-up of $100,000 with the total value of amendments not to exceed a further $50,000, or 50% of the original call-up, without the approval of the City Manager.

Management agrees with the intent of this recommendation.

Management agrees that the total value of amendments to call-ups should not exceed 50% of the value of the original call-up. In addition, most standard call-ups have a threshold of $120,000, which we feel is reasonable. Although most existing call-ups are typically limited to the $100-$120,000 range, establishing a specific dollar threshold does not reflect the very real differences in the types of goods and services that the City purchases. For example, a $100,000 cap may be too much for the purchase of office supplies, but would not begin to meet the needs to secure SAP resources or purchase steel.

Standing Offers are reviewed in relation to the good or service required and the needs of the city client. The majority of standing offer call-ups are restricted in $$ to the 100k limit, although exceptions do make sense on occasion.

Amendments to standing offer call-ups, which exceed 50% of the original approved call-up, will require approval of the City Manager.

Q3 2006

Management agrees that there should be a 50% cap on amendments to call-ups but recognizes that in the case of PWS & Infrastructure Services, there are instances where there may be the need to exceed these limits. These exceptions require the City Manager's approval.

Also recommend continuing to seek Level 2 management approval for amendments (as in recommendation #3).

Requires 1 additional FTE (included under recommendation #3).

Complete. Supply will seek level 2 (DCM or CCSO) approval for call-ups exceeding $100K and proceed to City Manager for approval where they exceed 50% of original call-up.

Recommend revising recommendation to indicate that City Manager approval required for amendments exceeding 50% and $50K, to eliminate necessity for senior management review of relatively small amendments. Consistent with suggestion under #3. (See example attached.)

Information Technology, for example, frequently has instances where contracts for SAP related resources require more than 100 days of commitment, because the resources are difficult to find, the per diem rates are high, and vendors require longer commitments in order to guarantee availability.

While management agrees that there should be a 50% cap on amendments to call ups, it recognizes that, at least in the case of Infrastructure Services and Public Works, there are instances where there may be a need to exceed these limits to deal with follow-on work where changing firms is not in the City’s interest financially. These exceptions should have the City Manager’s approval.

Supply Management should review purchasing activities related to Fleet Services and develop appropriate Standing Offers and/or tenders.

Management agrees with this recommendation.

This will be implemented by Q3 2006.

Agree. Meetings have taken place in order to identify and prioritize issues to be competed either by RFT or RFSO.

Branch processes need review to ensure proper scrutiny is applied to payments, including those entered in M4 and paid in SAP without reference.

Q4 --2006 (for agreement on priority issues to be addressed)

Will review issues on an ongoing basis, based on priorities identified in meetings with Fleet Services.

None

In progress (extensive, multi-year project)

Where organizations make call-ups directly, a copy should be forwarded to Supply Management for monitoring purposes.

Management agrees with this recommendation.

This will be implemented by Q2 2006.

Process in place for call-ups above $10K

Q2 2006

None

Complete

That Supply Management regularly reviews the Standing Offer site to ensure that all information is up to date.

Management agrees with this recommendation. This process is now in place.

This process is now in place.

Q2 2006

None

Complete

Supply Management should ensure that all purchasing activity is included in its report to Council, regardless of the source of the information or the means of acquisition and be presented in a clear and easily understood format.

Management agrees with the intent of this recommendation.

Management believes that the current reporting meets the standards established within the City Purchasing By-Law, which requires that Supply Management submit to Council on a quarterly basis the details of contracts in excess of $25k which were awarded under delegated authority.

The recommendation here suggests an expansion beyond those works that are below $25,000 or do not flow through Supply Management. This reporting is possible but not within existing resources as this additional requirement will require the on-going analysis of all other payment types, and may not provide the kind of information Council needs for financial oversight.

The recommendation deals mainly with the issue of payment without reference, and Finance is working towards a meaningful method of providing Council with the information.

The next annual report to Council, as identified by the AG, is Q2-2007.

Finance staff to meet and agree on the format and level of detail to comply with the Council motion. It is proposed that the CAC provide feedback on the reporting enhancements prior to implementation.

Q3 2006

Management agrees with the intent of this recommendation.

Management believes that the current reporting meets the standards established within the City Purchasing By-Law, which requires that Supply Management submit to Council on a quarterly basis the details of contracts in excess of $25K which were awarded under delegated authority.

A much simpler and more cost effective approach would be for Accounts Payable to produce an annual listing of all vendors to whom payments totalling $25,000 or more in aggregate were made, together with the total payments made for the year.

With #19, will require addition of 1 FTE (senior purchasing officer).

That “Supply Management should ensure that all purchasing activity (by type, more than $25,000) is included in an annual report to Council, regardless of the source of the information or the means of acquisition and be presented in a clear and easily understood format”

In progress

A much simpler and more cost effective approach would be for Accounts Payable to produce an annual listing of all vendors to whom payments totalling $25,000 or more in aggregate were made, together with the total payments made for the year. SAP can readily produce such a report, however, the need to remove the numerous nondiscretionary payments such as those to other governmental levels, benefit service providers,
pension plans, school boards, etc., to name but a few,
and to portray the data in a meaningful manner, will
require an additional administrative level of effort.

Management agrees that it is time to look at how reporting standards to Council for contracts and purchasing could be improved. Supply Management will investigate best-practice reporting for Council oversight and bring recommendations for improvement forward for the next term of Council.

Suggest reporting on purchasing activity of more thank $50K, to reduce unnecessary volume of information in report.

Management agrees that it is time to look at how reporting standards to Council for contracts and purchasing could be improved. Supply Management will investigate best-practice reporting for Council oversight and bring recommendations for improvement forward for the next term of Council.

Supply Management should facilitate reporting by including specific fields in the Procurement Module to identify specific transaction types such as: Call-up against Standing Offers, Request for Quotation, Request for Tender, Request for Proposal, and Request for Standing Offer, Payments without Reference, etc.

Management agrees with this recommendation.

This upgrade to the Procurement Module in SAP would be a valuable addition to the data reporting capability, and Supply Management will initiate a working committee to include the IT Enterprise Application Management Division and the SAP Support Center to investigate the possibility of implementing the suggested upgrades. This application will, however, undergo the same analysis and business case evaluation as all other Information Technology requests and be prioritized against all other requests.

Discussion to be initiated with the SAP – IT team to investigate the feasibility of a modification to the Purchasing module.
A/P also to consider such a field in other payment tools for consistent application.

Q4 2006

This upgrade to the Procurement Module in SAP would be a valuable addition to the data reporting capability, and Supply Management will initiate a working committee to include the IT Enterprise Application Management Division and the SAP Support Center to investigate the possibility of implementing the suggested upgrades. This application will, however, undergo the same analysis and business case evaluation as all other Information Technology requests and be prioritized against all other requests.

None currently

In progress. Discussions initiated with IT SAP Support Centre to conduct business case analysis and prioritize request.

Supply Management should ensure Payments without Reference to a Purchase Order are adequately monitored, in order to identify and include cases of non-compliance in regular reports to Council, and the City Manager, in order to minimize their occurrence.

Management agrees with the intent of this recommendation.

Management believes that a reasonable level of monitoring is currently in place. The expansion to 100% review as suggested will have resource implications.

The Finance Branch conducts on-going compliance reviews of all payments made by credit cards, petty cash and payment without reference to a purchase order, which are an essential component of the City’s Financial Management Control Framework. The reports are provided to management as an information item. The Financial Services Branch and the involved parties deal with all cases of non-compliance.

Purchasing does review the P w/o R listing in order to identify areas where a move to a competitive process ( see recommendations 14 & 17 which relate).

Including cases of non-compliance in regular reports to Council, and the associated review suggested does have staffing and resource implications.

Q4 2006

Management agrees with the intent of this recommendation. To expand reviews to 100% would require a significant increase in staffing. Implementation of this recommendation will be identified and resourcing sought in the 2007 budget.

As above #17, 1 FTE (combined) to complete both activities.

That “Supply Management should ensure Payments without Reference to a Purchase Order (by type, more than $25,000) are adequately monitored and included in an annual report, in order to identify and include cases of non-compliance in regular reports to Council, and the City Manager, in order to minimize their occurrence”, and that staff reports to Council on the implementation of this recommendation no later than September 2006.

In progress

As with previous recommendations, recommend monitoring for Payments without Reference to a Purchase Order of more than $50K, to reduce unnecessary volume. The consistent application of the $50K threshold is in keeping with recent Council-approved changes to the Purchasing By-Law, which have raised the tender limits to $50K.

To expand the reviews to 100% of all payments without reference in order to report on Standing Offers and non-compliance will require a significant increase in staffing requirements in Accounts Payable, as well as potentially expensive customization to the SAP application.

The implementation of this recommendation will be identified in the 2007 Departmental Business Plan and resources sought as part of the 2007 budget.

That Supply Management ensure the quarterly reports to Council reflect the actual nature of the purchase. Program Managers may make corrections to errors only, rather than "editorialize" the description of what was purchased, which must remain as described in the Contract Approval Request.

Management agrees with this recommendation.

Corrections will be restricted to providing clarity to the description. This will be
implemented immediately.

Corrections will be restricted to providing clarity to the description.

Process in place.

Q2 2006

None

Complete

Supply Management should review their standard contract formats and clauses to remove duplication.

Management agrees with this recommendation.

This will be implemented by Q3 2006.

Review taking place to ensure no duplication in contract clauses.

Q3 2006

None

Complete

Supply Management should not amend Terms and Conditions without the explicit approval of Risk Management.

Management agrees with this recommendation.

This will be implemented immediately.

Purchasing and Risk Management will continue to work together to ensure the City is sufficiently insured against risk associated with outsourcing.

Q2 2006

None

Complete

Supply Management and Financial Support Units should ensure Terms and Conditions are sent out with both Corporate and Departmental Purchase Orders, regardless of value, and their receipt and acknowledgement by suppliers kept on record.

Management disagrees with this recommendation.

Management believes that the process currently being followed is preferable to the recommendation.

Currently, all bid solicitation documents, Tender, Standing Offer, Proposal, etc., contain up to 40 standard terms and conditions (6 to 7 pages typically), designed by Purchasing, Risk Management, and Legal Services to protect the City from a number of perspectives. Issues addressed include Conduct of Work, Insurance, Indemnification and Liability, Workplace Safety, Occupational Health, MFIPPA, Conflict of Interest, Need for Confidentiality, Audit and Reporting Requirements, among others. Bidders, in their proposal or tender submission, are obligated (at the bidding stage, where the City clearly has leverage in that regard), to accept the City terms and conditions.

Management disagrees with this recommendation.

The existing approach will continue until the CAC has a chance to comment on the AG recommendation and the merits of the current Supply Management approach.

Management believes that the process currently being followed is preferable to the recommendation.

Currently, all bid solicitation documents, Tender, Standing Offer, Proposal, etc., contain up to 40 standard terms and conditions (6 to 7 pages typically), designed by Purchasing, Risk Management, and Legal Services to protect the City from a number of perspectives. Issues addressed include Conduct of Work, Insurance, Indemnification and Liability, Workplace Safety, Occupational Health, MFIPPA, Conflict of Interest, Need for Confidentiality, Audit and Reporting Requirements, among others. Bidders, in their proposal or tender submission, are obligated (at the bidding stage, where the City clearly has leverage in that regard), to accept the City terms and conditions. (See samples attached.)

None

Complete

Once a vendor is selected as either the lowest responsive bidder, or best value proponent, a Purchase Order is issued. The Purchase Order includes, by direct reference, an order of precedence, which lists amongst other documents, the initial City bid document (which contains the complete legal terms and conditions), and the bidder response (which has accepted those conditions), within a legally acceptable
validity period.

This approach, endorsed by the City’s Legal Services Branch, appears to be appropriate and preferable to the collection of signed statements, which would occur after the award was determined, and the leverage of the City to impose sometimes onerous conditions on the vendor, may be reduced. Additionally the smaller

Departmental Purchase Orders include a condensed version of the main legal terms and conditions, which print automatically in SAP, and are provided to the vendor.

Once a vendor is selected as either the lowest responsive bidder, or best value proponent, a Purchase Order is issued. The Purchase Order includes, by direct reference, an order of precedence, which lists amongst other documents, the initial City bid document (which contains the complete legal terms and conditions), and the bidder response (which has accepted those conditions), within a legally acceptable validity period. (See sample attached.)

This approach, endorsed by the City's Legal Services Branch, appears to be appropriate and preferable to the collection of signed statements, which would occur after the award was determined, and the leverage of the City to impose sometimes onerous conditions on the vendor, may be reduced. Additionally, the smaller Departmental Purchase Orders include a condensed version of the main legal terms and conditions, which print automatically in SAP, and are provided to the vendor.

Supply Management should ensure that all Requests for Proposal contain a clause requiring bidders to certify that the rates offered are those offered to their best/most favoured client, and that this be subject to verification.

Management agrees with this recommendation and will expand the recommendation
to include all bid solicitation proposals.

This will be implemented by Q3 2006.

Purchasing will include this wording and certification in all RFP's and other procurement vehicles where appropriate

Q3 2006

Management agrees with this recommendation and will expand the recommendation to include all bid solicitation proposals.

Complete

Supply Management should work to integrate the Contract Approval Request within the Procurement Module of the Financial System.

Management disagrees with this recommendation.

The Contract Approval Request is an MS Word based template used to approve all contracts under delegated authority. The CAR, as it is known, flows well through the outlook e-mail function, and the timeline associated with contract approval, even at the highest levels of City management, is an impressively short one. Imbedding the CAR “Word” document in SAP would not be cost-effective.

Purchasing and A/P are working towards using functionality which may currently exist in SAP to implement the AG’s recommendation.

The Contract Approval Request is an MS Word based template used to approve all contracts under delegated authority. The CAR, as it is known, flows well through the outlook e-mail function, and the timeline associated with contract approval, even at the highest levels of City management, is an impressively short one.

Although we would continue to process the CAR for approval as a word.doc through Outlook, there is an advantage to saving the final approved CAR, as evidence of appropriate authority, in SAP.

None

In progress. Discussions initiated with IT SAP Support Centre to conduct business analysis and prioritize the request.