| 2005 Audit Recommendations - Status Tracking | ||||||||||
| 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) | ($$ if known) | ||||||
| 13 | Supply Management ensure that all Standing Offer Agreements have an original maximum cap for call-up of $100,000 with the total value of amendments not to exceed a further $50,000, or 50% of the original call-up, without the approval of the City Manager. | Management
agrees with the intent of this recommendation. Management agrees that the total value of amendments to call-ups should not exceed 50% of the value of the original call-up. In addition, most standard call-ups have a threshold of $120,000, which we feel is reasonable. Although most existing call-ups are typically limited to the $100-$120,000 range, establishing a specific dollar threshold does not reflect the very real differences in the types of goods and services that the City purchases. For example, a $100,000 cap may be too much for the purchase of office supplies, but would not begin to meet the needs to secure SAP resources or purchase steel. |
Standing
Offers are reviewed in relation to the good or service required and the needs
of the city client. The majority of
standing offer call-ups are restricted in $$ 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). |
No | Ongoing.
Council approval 25 October 2006 dealt with the second half of the
recommendation, which deals with approval of amendments. The remaining piece, which is a cap on the
original call-up of $100,000 imposes unrealistic limits on management. Report
provided to City Manager outlining concerns and recommendations. Issue and request for budget/resources
will have to be discussed at a meeting of CAWG. |
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| 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. |
CAWG recommended approval of no limit to standing offers for IT SAP resources with the approval of the CCSO. Standing offers for engineering contracts would have a limit of 100K. | |||||||||
| 14 | 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 | No | In progress (extensive, multi-year project) | ||
| 18 | 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 | No | In progress. Discussions initiated with IT SAP Support Centre to conduct business case analysis and prioritize request. | ||
| 23 | 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 CAWG 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 | No | Ongoing. Management not in agreement with this recommendation. Issue will be added to agenda for discussion at a future meeting of CAWG. | |||
| 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. |
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| 25 | 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 | No | In progress. Discussions initiated with IT SAP Support Centre to conduct business analysis and prioritize the request. | |||