6.
DELEGATION OF
AUTHORITY – CONTRACTS AWARDED FOR THE PERIOD OCTOBER 1 TO DECEMBER 31, 2008, SPONSORSHIP
AND ADVERTISING, LEGAL OUTSOURCING COSTS AND PAYMENT WITHOUT REFERENCE AND
2008 CONSOLIDATED ANNUAL SUMMARY DÉLÉGATION DE POUVOIR – CONTRATS ACCORDÉS POUR LA PÉRIODE DU 1er
OCTOBRE AU 31 DÉCEMBRE 2008, COMMANDITES ET
PUBLICITÉS, FRAIS LÉGAUX D’IMPARTITION ET PAIEMENTS SANS RÉFÉRENCE ET
DÉCLARATION ANNUELLE INTÉGRÉE DE 2008 |
Que le Conseil prenne
connaissance de ce rapport.
DOCUMENTATION
1.
City Treasurer’s report dated 16 March 2009
(ACS2008-CMR-FIN-0010).
2.
Extract
of Draft Minutes
Corporate Services and Economic Development
Committee
Comité des services organisationnels et du développement économique
and Council / et au Conseil
16 March 2009 / le 16 mars 2009
Submitted by/Soumis par : Marian Simulik, City Treasurer/Trésorière
municipale
Contact/Personne-ressource : Daniel Farrell, Program Manager, Supply
Management Division / gestionnaire de programme, Division de la gestion de
l'approvisionnement,
(613) 580-2424 ext./poste 21505; Daniel.Farrell@ottawa.ca
That the Corporate Services and Economic Development Committee table this report, to be received and discussed at the next scheduled meeting of CSEDC, and then forwarded to Council for information.
Que le Comité des services organisationnels et
du développement économique dépose le présent rapport qui sera discuté à la
prochaine réunion prévue du CSODE, puis transmis au Conseil municipal pour
information.
The Purchasing by-law
requires the Supply Management Division to report to Council on a quarterly
basis. Each quarterly report:
1. contains information on contracts exceeding $25,000
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.
In addition to the above,
this fourth quarter report includes details about the 2008 Sponsorship and
Advertising, Legal Outsourcing Costs and Payments without Reference.
In November 2008, the
Corporate Services and Economic Development Committee directed that staff
provide an annual summary of contracts awarded under delegation of authority
and legal outsourcing costs totalling the contracts over $25,000 as reported
each quarter by vendor. This summary
has been included in this report.
Document 1
The contracts approved
for the period of October 1 to December 31, 2008 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.
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 Supply Management Division, 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.
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”.
Non-Competitive Purchases
Under
subsection 22(1) and (8) of the Purchasing By-law the requirement for
competitive bid solicitation for goods, services and construction may be waived
under joint authority of the appropriate Director and Supply Management and
replaced with negotiations by the Director and Supply Management under the
following circumstances:
22(1) The requirement for competitive bid
solicitation for goods, services and construction may be waived under joint
authority of the appropriate Director and Supply Management and replaced with
negotiations by the Director and Supply Management 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, or
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.
i. where the requirement is for a utility for which there exists a monopoly.
22(8) Despite any other provision of this by-law, the Director, Infrastructure Design and Construction Services and Supply Management may jointly award a contract for which no competitive bids were solicited provided that,
a. the contract is to complete outstanding works in approved plans of subdivision or site plans, and
b. the City holds sufficient funds as security to complete the works or the subdivision or site plan agreement contains provisions to recover the costs from the developer.
This report identifies all non-competitive purchases as well as references the appropriate subsection 22(1) and (8) exception.
Supply
Management Division certifies that all the contracts awarded under Delegation
of Authority for the period of October 1 to December 31, 2008, are in
compliance with the Purchasing By-law.
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 |
4 |
$180,928 |
4 |
- |
- |
- |
4 |
- |
- |
- |
CM |
36 |
$24,086,137 |
11 |
4 |
- |
15 |
- |
- |
- |
- |
CO |
333 |
$50,995,006 |
39 |
14 |
- |
45 |
1 |
- |
- |
7 |
ISCS |
183 |
$98,039,375 |
68 |
11 |
- |
28 |
- |
- |
- |
51 |
Total |
556 |
$173,301,446 |
122 |
29 |
- |
88 |
5 |
- |
- |
58 |
Document
2
Legal costs paid for 2008 are listed in Document 2.
Although Legal Services is required by the Purchasing By-law to identify those law firms in receipt of an annual cumulative total of $100K or more, the Branch has identified all of the law firms providing external legal services to the City during 2008, as well as identifying disbursement and GST costs for that same period of time as per Sections 13(1) and (2) of the Purchasing By-law. Also, included for 2008 are the amounts paid to external law firms with respect to litigated insured claims. These amounts represent legal fees and disbursements associated with litigation, which are funded by the City's Self-Insurance account and therefore, are not paid from the Legal Services' budget. Similarly, the amounts reported for external legal services provided with respect to the Light Rail project and litigation are not paid from the Legal Services’ budget, and, instead, are paid from the North-South Light Rail budget within the Infrastructure Services and Community Sustainability Department.
The annual total for outsourced legal services increased from $2,537,406 in 2007 to $3,480,103.15 in 2008, representing an increase of 37.15%. The increase, in part, is due to the expanded reporting in 2008, which includes, for the first time, expenditures in the area of insured litigated claims.
Document 3
In accordance with the Sponsorship and Advertising Policy, Supply Management Division is responsible for preparing an annual report to Council on all Sponsorships exceeding $25,000. Document 3 provides the detail of these sponsorships, which total $1,126,961.
Document 4
Payment
without reference to a purchase order describes a method of payment and is not
a reflection of the method used to procure the goods or services. All procurement actions that go through the
Supply Management Division have a corporate purchase order created and therefore
these are known to be in compliance with the Purchasing By-law. A payment without reference is a legitimate
payment method permitted within corporate procedure and is recognized in the
Purchasing By-Law. These types of payments provide a cost effective process for
low dollar value goods and services and are the standard method used for paying
utility and telecommunication costs. As
payments without reference do not go through the Supply Management Division, an
assessment of their compliance with the Purchasing by-law can only be made
after the fact.
Document 4 of this report lists the purchases greater than $25,000, paid without reference to a purchase order. The 2008 purchases made without reference total $80.6 million. Of these, approximately $42.5 million was paid to utility companies or other companies that have a monopoly on the provision of a good or service. These purchases would not be set up through a purchase order. The majority of the other purchases listed, valued at $37.6 million have been procured through a competitive process and paid without reference to expedite payments for small value items. The non-compliance purchases paid without reference total $0.5 million or approximately 0.6% of the total purchases paid without reference.
Periodically reviewing the number of invoices per vendor and the total dollar amount paid to each vendor illustrates noticeable purchasing trends. The Supply Management Division now reviews payments without reference to ensure the purchases were in compliance to the Purchasing By-law and then consults with client departments to determine appropriate procurement methods. In this regard, 7 vendors who were paid through payments without reference have been identified in Document 4 as having non-compliant procurements. The value of these purchases total $0.5 million while in 2007 the value totalled $1.1 million. There has been a 55% decrease in the value of non-compliant purchases from those identified and reported in the 2007 Delegation of Authority 4th Quarter Report, ACS2008-CMR-FIN-0016.
With respect to the 7 vendors paid without reference in 2008, one client department has completed the competitive process for purchases of this nature, another client department has agreed to commence a competitive process in 2009, and the Supply Management Division has started a pro-active dialogue with the 5 other client departments to determine whether the goods or service being purchased could be procured through a competitive process or paid through the issuance of a corporate purchase order. The results of these discussions will be presented to Council in the 2009 Delegation of Authority 4th Quarter Report.
As a result of the Supply Management Division’s investigation into the six non-compliant 2007 purchases, five clients departments are either procuring goods and services through a competitive process or paying through the issuance of a corporate purchase order. In the sixth case, a Request for Standing Offer (RFSO) was established in the first quarter 2008. At present Public Health is working with Supply Management Division to issue their own RFSO for their unique requirements.
All payments without reference issued by members of Ottawa City Council and the Mayor have been removed because the City's Purchasing By-law does not apply to the Mayor and Members of Council (that is, elected representatives) individually.
Document 5
Document
5 is a summary of the consolidated amount of contracts exceeding $25,000
awarded under delegated authority per vendor for all the 2008 Delegation of
Authority Reports and the payments without reference. The total Legal outsourcing costs are referenced in Document 2.
The preparation of this report is required by the 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 Management Division 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 delegated authority.
Report forwarded for information pursuant to the By-law. No further action required.
DELEGATION
OF AUTHORITY – CONTRACTS AWARDED FOR THE PERIOD OCTOBER 1 TO DECEMBER 31, 2008,
SPONSORSHIP AND ADVERTISING, LEGAL OUTSOURCING COSTS AND PAYMENT WITHOUT
REFERENCE AND 2008 CONSOLIDATED ANNUAL SUMMARY
DÉLÉGATION DE POUVOIR – CONTRATS ACCORDÉS POUR
LA PÉRIODE DU 1er OCTOBRE AU 31 DÉCEMBRE 2008, COMMANDITES ET PUBLICITÉS, FRAIS LÉGAUX D’IMPARTITION
ET PAIEMENTS SANS RÉFÉRENCE ET DÉCLARATION ANNUELLE INTÉGRÉE DE 2008
ACS2009-CMR-FIN-0010 city wide / À l’Échelle de la ville
Ms. Marian Simulik, City Treasurer, indicated
staff would be presenting Committee with changes that would be made to the
report process due to concerns expressed by Councillors and the public. Ms. Simulik then introduced Mr. Jeff Byrne,
Manager of Strategic Projects and Mr. Dan Farrell, Program Manager of
Purchasing.
Mr. Byrne spoke to a PowerPoint presentation,
which served to provide
Committee with an overview of the report and of changes that would be made to
the report process. A copy of the
presentation is held on file.
Councillor El-Chantiry referenced the media
and public reaction that had occurred when the report was released and he asked
why a summary had not been attached to the report to properly explain the
figures and put things in perspective.
Mr. Kent Kirkpatrick, City Manager, felt the Councillor raised a good
point and agreed that in the future, the staff should attach a short summary or
press release to properly explain all controversial reports or all reports that
staff felt were potentially newsworthy to ensure that these were accurately
reported in the media. He also believed
members of Council should have the benefit of that high level information prior
to being put in the position where they had to answer questions from the
media.
Committee members expressed support for the
idea.
Following these exchanges, Committee voted on
the item.
That the Corporate Services and Economic
Development Committee receive and discuss this report and then forward it to
Council for information.
CARRIED