Committee recommendationS as amended
That Council
approve that:
1.
The
City Treasurer be directed to establish and fill the new position of Chief
Procurement Officer;
2.
The
criteria to engage the services of a Fairness Commissioner in specific
procurement processes as set out in this report be adopted;
3.
Subsection
9(1)(e) of the Purchasing By-law
dealing with a “substantive objection” to a procurement process be revised to
adopt the Comprehensive Complaints Process as described in this report;
4.
The
Purchasing By-law be amended to
reflect the use of a local preference provision as a “tie-breaker”; and
5.
Staff
be directed, prior to implementing a bidding prohibition against suppliers
engaged in litigation with the City, to clarify the grounds upon which such
discretion would be exercised (e.g. when a supplier has committed fraud against
the City or one of its boards or corporations, has a history of failing to
perform under the terms of a contract or has been found to be in breach of
health and safety conditions) and to consult with the Business Advisory
Committee with respect to same and report back to the Corporate Services and
Economic Development Committee; and
6.
As part of the City of Ottawa making the formal amendments to its
Purchasing By-law, staff consult with the Business Advisory Committee to ensure
that the roll-out of these new City procedures will be brought to the attention
of the business community in a timely manner; and
7.
The Chief Procurement
Officer and/or the City’s contact person identified in a formal procurement
process be the only official points of contact for bidders in a City
procurement process or a complaint thereof and that bidders shall not contact
either elected representatives or other staff regarding that bid; and
8.
The criteria to engage the services of a Fairness Commissioner in
specific procurement processes as set out in Recommendation 2 of the Report, be
adopted and expanded to also include the Recommendations of the Business
Advisory Committee dated January 18, 2010 for the management of such services
by:
(a)
ensuring that the use of Fairness Commissioners is carefully managed
to avoid project delays and increases in acquisition costs;
(b)
having Fairness Commissioner services engaged through a competitive
process and that the cost for such services to the City is fair and reasonable;
and
(c)
ensuring the scope of such services is clearly defined, as part of
the engagement, including required deliverables such as written reports and
presentations to Committee and Council, if necessary.
Que le
Conseil approuve que :
1.
Le Trésorier municipal
soit chargé de créer et de pourvoir le nouveau poste d’Agent principal des
achats;
2.
Le critère pour retenir
les services de commissaires de l’équité pour certaines procédures d’achats
décrites dans ce rapport soit adopté;
3.
Le paragraphe 9(1)(e)
du Règlement municipal sur les achats
traitant de « l’objection de fond » relative aux procédures d’achats
soit révisé et que l’on adopte le processus intégré relatif aux plaintes décrit
dans ce rapport;
4.
Le Règlement municipal sur les achats soit modifié pour intégrer une
clause de préférence locale pour le départage de soumissions équivalentes;
5. de charger le
personnel de préciser, avant de bannir du processus de soumission un
fournisseur en litige avec la Ville, les motifs justifiant une telle mesure
(p. ex., lorsque le fournisseur a fraudé la Ville, l’un de ses conseils,
comités ou sociétés, qu’il a par le passé manqué à ses obligations au titre
d’un contrat ou qu’il a été jugé avoir contrevenu aux conditions relatives à la
santé et à la sécurité) et de consulter à ce sujet le Comité consultatif sur
les affaires et déposer un rapport devant le Comité des services
organisationnels et du développement économique;
6. dans
le cadre du processus de modification officielle par la Ville d'Ottawa de son
Règlement sur les marchés, le personnel obtiendra l’avis du Comité consultatif
sur les affaires pour veiller à ce que la mise en oeuvre de cette nouvelle
procédure municipale soit rapidement communiquée au milieu des affaires;
7. l’agent
principal des achats ou la personne nommée à cette fin dans le cadre d’un
processus d’appel d’offres, ou les deux, seront les seules personnes-ressources
officielles pour les soumissionnaires parties à un processus d’appel d’offres
municipal ou au dépôt d’une plainte à ce sujet et qu’il sera interdit aux
soumissionnaires de s’adresser aux représentants élus et aux autres membres du
personnel concernant cet appel d’offres;
8. les
critères pour recourir aux services d’un commissaire à l'équité dans le cadre
d’un processus d’appel d’offres précis, comme l’indique la
recommandation 2 du rapport, seront adoptés et augmentés afin d’inclure
également les recommandations formulées le 18 janvier 2010 par le Comité
consultatif sur les affaires au sujet de la gestion de ces services :
a)
en veillant à ce que le recours aux
services de commissaires à l’équité soit géré avec soin afin d’éviter de
retarder des projets ou de hausser les coûts d’acquisition;
b)
en ne retenant les services d’un
commissaire à l'équité qu’à la suite d’un processus concurrentiel et à un prix
juste et raisonnable;
c)
en s’assurant de circonscrire
clairement dans l’entente la portée de ces services, y compris en ce qui a
trait aux réalisations attendues comme les rapports et les soumissions au
Comité et au Conseil, au besoin.
Documentation
1.
Corporate Services and Economic Development
Committee report dated 29 November 2009 (ACS2009-CMR-FIN-0058)
2. Extract of Draft Minute, 19 January 2010.
Corporate
Services and Economic Development Committee
Comité des services organisationnels et du développement économique
and Council / et au Conseil
29 November 2009 / le 29
novembre 2009
Submitted by/Soumis par : Kent Kirkpatrick, City Manager/Directeur municipal
Contact
Persons/Personnes ressource : Marian Simulik, City Treasurer
Community
and Social Services/Services sociaux et aux communautés
(613)
580-2424 x, marian.simulik@ottawa.ca and
M. Rick O’Connor, City Clerk and Solicitor/Greffier et Chef du
contentieux.
(613) 580-2424 (Ext. 21215)
Rick.O’Connor@ottawa.ca
Ref N°: ACS2009-CMR-FIN-0058 |
SUBJECT: |
|
|
|
OBJET :
|
That the Corporate
Services and Economic Development
Committee recommend that Council approve that:
1.
The
City Treasurer be directed to establish and fill the new position of Chief
Procurement Officer;
2.
The
criteria to engage the services of a Fairness Commissioner in specific
procurement processes as set out in this report be adopted;
3.
Subsection
9(1)(e) of the Purchasing By-law
dealing with a “substantive objection” to a procurement process be revised to
adopt the Comprehensive Complaints Process as described in this report;
4.
The
Purchasing By-law be amended to
reflect the use of a local preference provision as a “tie-breaker”; and
5.
The
Purchasing By-law be amended to add to the discretion of the
City Treasurer, in consultation with the City Clerk and Solicitor, the
authority to prohibit a supplier from bidding on future contracts when engaged
in litigation with the City of Ottawa.
Que le Comité des
services organisationnels et du développement économique recommande au Conseil
d’approuver que :
1.
Le Trésorier municipal
soit chargé de créer et de pourvoir le nouveau poste d’Agent principal des
achats;
2.
Le critère pour retenir
les services de commissaires de l’équité pour certaines procédures d’achats
décrites dans ce rapport soit adopté;
3.
Le paragraphe 9(1)(e)
du Règlement municipal sur les achats
traitant de « l’objection de fond » relative aux procédures d’achats
soit révisé et que l’on adopte le processus intégré relatif aux plaintes décrit
dans ce rapport;
4.
Le Règlement municipal sur les achats soit modifié pour intégrer une
clause de préférence locale pour le départage de soumissions équivalentes;
5.
Le Règlement municipal sur les achats soit modifié pour ajouter, à la
discrétion du Trésorier municipal en consultation avec le Greffier municipal et
chef du Contentieux, le pouvoir d’interdire à un fournisseur en litige avec la
Ville d’Ottawa de soumissionner sur de futurs contrats.
EXECUTIVE SUMMARY
On July 8, 2009, Council directed “Legal and Procurement staff to
review the Purchasing By-law and
report back to Committee and Council before the end of 2009 with options to
further ensure that the City’s procurement processes reflect best practices
from the Bellamy Report and the Federal
Accountability Act in an effort to help promote fair, transparent and
objective procurement processes including an official point of contact for all
competitive processes, as well as a comprehensive complaint process.”
Additionally, individual Councillor inquiries to the City Clerk and
Solicitor and the City Treasurer, over the last year, have raised a variety of
related procurement issues, including the use of Fairness Commissioners, as
well as the City’s ability to implement both a local preference and a
litigation exclusion as components of the Purchasing
By-law.
In September 2005, Madam Justice Denise Bellamy delivered her
four-volume report to Toronto City Council, being the results of two judicial
inquiries. The Bellamy Report focused on
all aspects of leasing contracts for computers and related software between the
City and MFP Financial Services and between the City and Oracle Corporation and
to inquire into the history of the contracts and their impact on the ratepayers
of Toronto and to investigate a number of issues related to consultants
retained by the City (as well as the former City of North York) and the
purchase of computer hardware, among other matters.
Furthermore, Madam Justice Bellamy also held hearings on the subject of
“good government”. In short, individuals
and panels of academics, politicians and experts presented ideas in “the
workings of municipal governments”. The
so-called “Good Governance Phase” of the Inquiry was designed to help Madam
Justice Bellamy fulfill her mandate to make any recommendations which she
deemed appropriate and in the public interest.
Enacted in 2006, the Federal
Accountability Act was intended to fundamentally change the way the Federal
Government operates in various areas, including the provision of conflict of
interest rules, additional restrictions on election financing, as well as new
measures respecting administrative transparency. It was a direct political and legislative
response to the events surrounding the so-called “Sponsorship Scandal” and
encompassed a number of recommendations made by Mr. Justice Gomery in his
Second Commission Report entitled, “Restoring Accountability”.
While the Federal Accountability
Act seeks to achieve a wide range of objectives in procurement, the statute
takes the view that a best practice in promoting fair, transparent and
objective procurement is to establish a bidder complaint process that is
independent, that works efficiently, and that provides meaningful relief. In this respect, the Act mirrors some of the intentions of the Bellamy Report, and these
important principles are captured in the comprehensive complaints process being
recommended for approval later in this report.
This report will provide information on both the Bellamy Report and the
Federal Accountability Act followed
by a discussion and recommendations dealing with the following subjects.
1.
Official
Point of Contact
The concept of an official point of contact in procurement matters is a
best practice that requires a tender document to always state the name and full
contact information of the person whom prospective bidders can contact with any
questions. The tender document should
make clear that this is the only City person bidders contact regarding this
tender for the entire procurement process.
Although not expressly set out in the Purchasing By-law, this basic principle of sound procurement has
been a longstanding procedure at the City of Ottawa.
2.
Chief
Procurement Officer
In a section in her Report entitled, “Central Procurement”, Madam
Justice Bellamy determined that “procurement should be overseen and managed by
one City department” and “since effective procurement is fundamental to the good
governance of the City, the head of the central procurement department should
be a very senior position”.
In response, the City Treasurer is recommending that the level of
responsibility for procurement at the City of Ottawa should be undertaken by a
new position called the Chief Procurement Officer and be equivalent to a Deputy
Treasurer.
3.
Fairness
Commissioners
At the City Council meeting of October 28, 2009, a direction was issued
for staff to review the use of more Fairness Commissioners for large and/or
contentious procurements. In her Report,
Madam Justice Bellamy recommended that “for major, high-risk, controversial or
complex tenders, the City should consider retaining a fairness commissioner.”
Currently, at the City of Ottawa, Purchasing staff do make use of these
independent fairness monitors, however, their involvement is limited to those
procurement issues which are either very complex, or have the potential of
becoming contentious.
The City Treasurer recommends that staff continue to use Fairness
Commissioner services on an “as needed” basis, selected from the competitive
standing offer now in place in planned procurement processes which are complex
or potentially contentious, as determined by the Chief Procurement Officer and
based on an assessment of the criteria set out in this report.
4.
Comprehensive
Complaints Process
In addition to seeking “to ensure that the City’s procurement processes
reflect best practices”, the Council Motion resolved that a “comprehensive
complaints process” be put in place, which was also a recommendation in the
Bellamy Report.
For the purposes of this review, staff recommends that Ottawa City
Council adopt a comprehensive complaints process that reflects the approach
adopted in Toronto and various other municipalities. By clarifying the complaints process in
writing, vendors will know, in advance of any procurement initiative, what
their rights are, as well as when and how to exercise them (e.g. de-briefing,
written complaint, timelines, etc.).
Furthermore, the comprehensive complaints process set out in this report
retains Council’s jurisdiction as the final arbiter of such disputes.
5.
Local
Preference
In response to an inquiry sent in June 2009, all Members of Council
were advised that, on the basis of the Discriminatory
Business Practices Act, it would be Legal Services opinion that the City is
not able to adopt a Local Preferences Purchasing Policy.
However, more recently, the City Clerk and Solicitor received the
following inquiry from a Member of Council:
“Is it feasible to structure the policy (in relation to the City
procurement process), to support local suppliers if all other things are equal?”
In response, staff suggested that, in the event of two identical bids,
that one of the factors to be considered in the “tie-breaker” analysis could be
whether or not the bidders are “local”.
Should Council adopt this recommendation, staff would amend the Purchasing By-law and prepare additional
guidelines in the City’s Purchasing
Policies and Procedures Manual to clarify the meaning of the word “local”.
6.
Litigation
Exclusion
Council inquired about the ability of the City of Ottawa to temporarily
suspend both business relationships and grants to persons or organizations
engaged in litigation with the City.
In response, the City Clerk and Solicitor provided to Corporate
Services and Economic Development Committee and Council his legal opinion, on
November 10, 2008, that there was sufficient legal authority for the City of
Ottawa to initiate a litigation exclusion to its Purchasing By-law that would prohibit vendors and suppliers of
goods, services or construction who have legal actions pending against the City
from doing business with it while such matters are unresolved. In addition, it was noted that this exclusion
could also prohibit persons, associations and not-for-profit organizations from
applying for grants under various City programs while any lawsuit by such
person, association or organization was still pending against the City.
In an attempt to overcome the problems associated with an overly broad
litigation exclusion, staff recommend that the City Treasurer be given the
delegated authority recommended to reject a bidder who is engaged in litigation
against the City.
RÉSUMÉ
Le 8 juillet 2009, « en vue de promouvoir des processus d’acquisition
équitables, transparents et objectifs, [le Conseil chargeait] le personnel des Services juridiques et de
l’Acquisition d’examiner le Règlement
municipal sur les achats et de déposer un rapport devant le Comité et le
Conseil municipal avant la fin de 2009, en présentant des solutions visant à
veiller à ce que les processus d’acquisition de la Ville d’Ottawa reflètent les
pratiques exemplaires issues du rapport de la juge Bellamy (rapport Bellamy),
ainsi que la Loi fédérale sur la
responsabilité. Le processus comprendra une personne-ressource officielle
responsable de tous les processus d’appel d’offres de même qu’un processus
intégré relatif aux plaintes ».
Aussi,
des demandes adressées par les conseillers municipaux au Greffier municipal et
chef du Contentieux au cours de la dernière année ont soulevé diverses
questions relatives aux achats, notamment sur le recours à des commissaires de
l’équité et sur le pouvoir de la Ville d’adopter dans le cadre du Règlement municipal sur les achats à la
fois une clause de préférence locale et une clause d’exclusion pour cause de
litige.
En
septembre 2005, madame la juge Denise Bellamy a déposé un rapport en quatre
volumes au Conseil municipal de Toronto suivant la tenue de deux enquêtes
judiciaires. Dans son rapport, la juge Bellamy s’est intéressée à tous les
aspects des contrats de location d’ordinateurs et de logiciels afférents entre
la Ville et MFP Financial Services et entre la Ville et Oracle Corporation. Son
mandat consistait à examiner les antécédents des contrats et leurs conséquences
sur les contribuables de Toronto et à scruter un certain nombre de problèmes en
lien avec les consultants engagés par la Ville (ainsi que par l’ancienne Ville
de North York) et l’achat de matériel informatique, entre autres questions.
De plus,
madame la juge Bellamy a tenu des audiences sur la question du « bon
gouvernement ». En résumé, des individus et des groupes d’universitaires,
de politiciens et d’experts ont soumis des idées entourant « les rouages
et le fonctionnement de l’administration municipale ». La communément
appelée « phase de bonne gouvernance » de l’enquête avait été conçue
pour aider la juge Bellamy à s’acquitter de son mandat qui consistait à
formuler toutes les recommandations qu’elle jugeait appropriées et dans
l’intérêt public.
Édictée
en 2006, la Loi fédérale sur la
responsabilité visait à modifier fondamentalement la façon dont le
gouvernement fédéral se comportait dans différents domaines et, notamment, à instaurer
des règles en matière de conflits d’intérêts et à ajouter des restrictions sur
le plan du financement des élections ainsi que de nouvelles mesures relatives à
la transparence administrative. Il s’agissait d’une réponse directe et
législative à ce qu’on est convenu d’appeler le « scandale des
commandites » qui incorporait un certain nombre de recommandations
formulées par le juge Gomery dans son deuxième rapport de la commission du même
nom qui portait sur la transparence.
La Loi fédérale sur la responsabilité vise
un large éventail d’objectifs sur le plan de l’approvisionnement. Elle stipule
notamment qu’une pratique exemplaire pour promouvoir des procédures
d’acquisition équitables, transparentes et objectives consiste à établir un
processus relatif aux plaintes indépendant, efficace et assorti de mesures
réparatoires significatives pour les soumissionnaires. À cet égard, la Loi reflète certaines intentions du
rapport Bellamy et ces importants principes s’inscrivent dans le processus
intégré relatif aux plaintes dont l’approbation est recommandée au Conseil
municipal plus loin dans ce rapport.
Ce
rapport fournit des renseignements sur le rapport Bellamy et sur la Loi fédérale sur la responsabilité et
est suivi d’une analyse et de recommandations traitant des sujets
suivants :
1.
Interlocuteur officiel
Le concept
d’interlocuteur officiel en matière d’achats est une pratique exemplaire qui
exige que soient toujours mentionnés dans le dossier d’appels d’offres le nom
et les coordonnées de la personne avec laquelle les soumissionnaires
éventuelles peuvent communiquer s’ils ont des questions. Le dossier d’appels
d’offres devrait préciser qu’il s’agit de l’unique personne à la Ville avec qui
les soumissionnaires peuvent communiquer relativement à l’appel d’offre en
question pendant tout le processus d’approvisionnement.
Même s’il n’est pas
expressément stipulé dans le Règlement
municipal sur les achats, ce principe de base en matière de sain
approvisionnement est appliqué de longue date à la Ville d’Ottawa.
2. Agent principal des achats
Dans une section de
son rapport intitulé « Central Procurement », madame la juge Bellamy
a établi que « les achats devraient être supervisés et être administrés
par un service municipal [et que] le système d’approvisionnement
efficace étant fondamental à la bonne gouvernance de la Ville, la personne
responsable du service municipal des achats devrait faire partie de la haute
direction » [traduction].
À l’instar de cette
proposition, le Trésorier de la Ville recommande que la responsabilité pour les
achats à la Ville d’Ottawa relève d’un nouveau poste intitulé Agent principal
des achats et que ce poste se situe dans la hiérarchie municipale au niveau de
celui de Trésorier adjoint.
3. Commissaires de l’équité
Lors de la réunion du
Conseil municipal du 28 octobre dernier, une directive a été donnée au
personnel de la Ville de réviser la procédure relative au recours à des
commissaires de l’équité pour des achats d’envergure et/ou contentieux. Dans
son rapport, madame la juge Bellamy recommandait à la Ville de Toronto
« de retenir les services d’un commissaire de l’équité dans le cas
d’appels d’offres majeurs, à risque élevé, controversés ou complexes »
[traduction].
Présentement, à la
Ville d’Ottawa, le personnel chargé des achats fait appel à des surveillants de
pratiques équitables indépendants, mais a recours à leurs services uniquement
dans des dossiers d’approvisionnement soit très complexes soit susceptibles de
devenir contentieux.
Le Trésorier
municipal recommande que le personnel continue d’avoir recours au besoin à ces
commissaires de l’équité sélectionnés à même l’offre à commandes en vigueur
pour des processus d’achats planifiés complexes ou potentiellement contentieux,
tel que déterminé par l’Agent principal des achats et basé sur une évaluation
du critère décrit dans ce rapport.
4. Processus intégré relatif aux
plaintes
En plus de
« veiller à ce que les procédures d’achats de la Ville soient conformes
aux pratiques exemplaires » dans le domaine, la motion du Conseil
municipal demandait d’établir un processus intégré relatif aux plaintes, ce qui
était également une recommandation du rapport Bellamy.
Aux fins de cet
examen, le personnel de la Ville recommande au Conseil municipal d’adopter un
processus intégré relatif aux plaintes comparable à celui en vigueur à la Ville
de Toronto et dans diverses autres municipalités. La clarification par écrit du
processus de plaintes fera en sorte que les fournisseurs sauront,
antérieurement à toute initiative d’approvisionnement, quels sont leurs droits,
ainsi que le moment et la manière de les exercer (p. ex. débreffage, plainte
écrite, échéanciers, etc.). De plus, le processus de plaintes décrit dans ce
rapport conserve au Conseil son autorité comme arbitre exécutoire dans de tels
litiges.
5. Préférence locale
En réponse à une
demande formulée en juin 2009, tous les membres du Conseil ont été informés
qu’en vertu de la Loi sur les pratiques
de commerce discriminatoires, les Services juridiques étaient d’avis que la
Ville ne pouvait pas adopter de politique de préférence locale en matière
d’approvisionnement.
Par contre, plus
récemment, un membre du Conseil adressait la question suivante au Greffier
municipal et chef du Contentieux: « Peut-on structurer la politique
(relative aux procédures d’achats de la Ville) de manière à appuyer les
fournisseurs locaux si tous les autres
aspects s’équivalent? »
En réponse, le
personnel de la Ville suggère qu’advenant deux propositions identiques, le
facteur à considérer pour faire le départage puisse être le fait que le
fournisseur soit « local ». Si le Conseil devait adopter cette
recommandation, le Règlement municipal
sur les achats serait modifié en conséquence et de nouvelles lignes
directrices seraient ajoutées au Manuel
des politiques et procédures en matière d’achats de la Ville pour clarifier
le sens du terme « local ».
6. Exclusion pour cause de litige
Le Conseil municipal
a voulu savoir si la Ville d’Ottawa pouvait suspendre temporairement ses
relations d’affaires et l’octroi de subventions à des personnes ou des
organisations en litige avec la Ville.
Selon un avis
juridique soumis le 10 novembre 2008 par le Greffier municipal et chef du
Contentieux au Comité des services organisationnels et du développement
économique, la Ville d’Ottawa a l’autorité juridique suffisante pour inclure
dans son Règlement sur les achats une
clause d’exclusion pour cause de litige qui interdirait à des vendeurs et
fournisseurs de biens, de services et d’ouvrages en litige avec la Ville de
faire affaires avec cette dernière tant que les contentieux ne seraient pas
réglés. De plus, il est précisé qu’en vertu de cette exclusion, il soit
interdit aux personnes, associations et organismes sans but lucratif d’adresser
des demandes de subventions à la Ville dans le cadre de divers programmes
municipaux tant que les poursuites intentées par ces personnes, associations ou
organisations contre la Ville sont en cours.
Dans le but de
surmonter les problèmes liés à une définition trop large de l’exclusion pour
cause de litige, il a été recommandé d’accorder au Trésorier municipal
l’autorité requise pour refuser un soumissionnaire en litige contre la Ville.
On July 8, 2009, in conjunction with a report dealing with a Voice over
Internet Protocol (VoIP) contract, and the Mitel Networks’ objection to that
procurement process, Council carried several Committee recommendations,
including the following:
3. Direct Legal and Procurement staff to review
the Purchasing By-law and report back to Committee and Council before the end
of 2009 with options to further ensure that the City’s procurement processes
reflects best practices from the Bellamy report and the Federal Accountability
Act in an effort to help promote fair, transparent and objective procurement
processes including an official point of contact for all competitive processes,
as well as a comprehensive complaint process.
Additionally,
individual Councillor inquiries to the City Clerk and Solicitor and the City
Treasurer, over the last year, have raised a variety of related procurement
issues, including the use of Fairness Commissioners, as well as the City’s
ability to implement both a local preference and a litigation exclusion as
components of the Purchasing By-law. Therefore, in recognition of the fact that
all of these items relate to the Purchasing
By-Law, this report will provide information on both the Bellamy Report and
the Federal Accountability Act followed by a discussion and recommendations
dealing with the following subjects:
1.
Official Point of Contact;
2.
Chief Procurement Officer;
3.
Fairness Commissioners;
4.
Comprehensive Complaints Process;
5.
Local Preference; and
6.
Litigation Exclusion.
1.
Bellamy Report
As referenced in the Council Motion, the results of Toronto’s most
recent judicial inquiries have been described as being “fraught with scandal,
corruption, sex, innuendo – the Bellamy Report (which reads like your Grisham
thriller) has emerged as the de facto
handbook for how not to procure IT
goods and services, nor in fact any types of goods and services. It clearly demonstrates the need for
transparency, objectivity and accountability in decision-making” (see Lou
Milrad, “Municipal IT Procurement: Lessons Learned from the Bellamy Inquiry”, Municipal
World, June 2006, p. 21). Briefly,
Madam Justice Denise Bellamy delivered her 1,123 page, four-volume report to
Toronto City Council in September 2005, the results of two judicial inquiries
that focused on the following:
(1)
In
February 2002, the Toronto Computer Leasing Inquiry was established by Toronto
City Council to inquire into all aspects of leasing contracts for computers and
related software between the City and MFP Financial Services and between the
City and Oracle Corporation and to inquire into the history of the contracts and
their impact on the ratepayers of Toronto; and
(2)
In
October 2002, Toronto City Council voted to expand the mandate of the earlier
judicial inquiry when it established the Toronto External Contracts
Inquiry. That second inquiry was to
investigate a number of issues related to consultants retained by the City (as
well as the former City of North York) and the purchase of computer hardware,
among other matters.
Furthermore, Madam Justice Bellamy’s Inquiry also held hearings on the
subject of “good government”. In short,
individuals and panels of academics, politicians and experts presented ideas in
“the workings of municipal governments”.
The so-called “Good Government Phase” of the Inquiry was designed to
help Madam Justice Bellamy fulfill her mandate to make any recommendations
which she deemed appropriate and in the public interest.
The Bellamy Report contained 241 recommendations, of which 111 were
directed at procurement issues at the City of Toronto. Although the Report was focused on Toronto, Madam Justice Bellamy
observed that the general principles behind the recommendations “are equally
applicable to other municipalities and other levels of government.” In this regard, various, relevant
recommendations on procurement matters and related “best practices” from the
Bellamy Report will be referenced in the respective sections below.
2.
The Federal
Accountability Act
Enacted
in 2006, the Federal Accountability Act was intended to fundamentally change the way the Federal
Government operates in various areas, including the provision of conflict of
interest rules, additional restrictions on election financing, as well as new
measures respecting administrative transparency. It was a direct political and legislative
response to the events surrounding the so-called “Sponsorship Scandal” and
encompassed a number of recommendations made by Mr. Justice Gomery in his
Second Commission Report entitled, “Restoring Accountability.”
However,
for the purposes of this report, the most important change under the Federal Accountability Act related
to the authority to appoint a Procurement Ombudsman under the Department of
Public Works and Government Services Act, which has lead to the
establishment of the Office of the Procurement Ombudsman. In accordance with Section 22.1(3) of the Act,
the mandate of the Procurement Ombudsman is as follows:
a)
Review the practices of departments for
acquiring material and services to assess their fairness, openness and
transparency and make any appropriate recommendations to the relevant
department for the improvement of those practices;
b)
Review any complaint respecting the award
of a contract for the acquisition of goods below the value of $25,000 and
services below the value of $100,000;
c)
Review any complaint respecting the administration
of a contract for the acquisition of material or services by a department,
regardless of dollar value; and
d)
Ensure that an alternative dispute
resolution process is provided, if both parties agree to participate.
As can be
seen from the description above, the role of the Procurement Ombudsman is very
broad and goes well beyond responding to complaints from disappointed
bidders. A more detailed summary of the
Procurement Ombudsman and other procurement complaint processes employed by the
Federal Government can be found at Document No. 1 to this report.
While the
Federal Accountability Act seeks
to achieve a wide range of objectives in procurement, the
statute takes the view that a best practice in promoting fair, transparent and
objective procurement is to establish a bidder complaint process that is
independent, that works efficiently, and that provides meaningful relief. In this respect, the Act mirrors some of the intentions of the Bellamy Report, and these
important principles are captured in the comprehensive complaints process being recommended for approval later
in this report.
DISCUSSION
1.
Official Point of
Contact
The Council Motion that initiated this report included an express
reference to, “including an official point of contact for all competitive
processes...”. The concept of an
official point of contact in procurement matters is a best practice that can be
found in Recommendation 205 of the Bellamy Report:
205.
When a tender document is
publicly released, it should always state the name and full contact information
of the person whom prospective bidders can contact with any questions. The tender document should make clear that
this is the only City person bidders may contact regarding this tender for the
entire procurement process.
In the background research paper on “Procurement” for the Bellamy
Report, the authors summarize the importance of a “single point of contact” as
follows:
Most experts agree that poorly managed communication between bidders
and government officials can pose a major risk to the integrity of the
procurement process at all levels of government in terms of demonstrating
fairness, equity, and transparency.
According to experts and the professional literature on procurement, a
common best practice is to establish a single point of government contact
(typically the official responsible for managing the actual procurement
process) and require that all vendor communication with government officials be
made through that single point of contact.
*****
By way of example, the Ontario Government is fairly typical in this
regard. Request documents are usually
quite specific that from the time a release document is issued until a contract
award has been made there can be no contact by bidders on their
agents/lobbyists with any government officials (including specific reference to
Ministers and Ministers’ staff) other than the designated contact person.
Although not expressly set out in the Purchasing By-law, this
basic principle of sound procurement has been a longstanding procedure at the
City of Ottawa. In fact, this best
practice is found in most City bid solicitation documents, normally accompanied
by a prescriptive inquiry process which advises potential bidders not only on
the City contact person, but also that the inquiry must be in writing, and
submitted within a predetermined inquiry timeline.
In her September 2006 report entitled, “Bellamy Inquiry Progress
Report”, Toronto’s City Manager, Shirley Hoy, confirmed that, “the City’s usual
practice is to identify two contacts: a
[procurement] contact for process questions and a line Division contact for
technical questions.”
In addition, the Bellamy Report expands on this information exchange
process further:
Information given by the contact person to one bidder after the bids
are in should be given to every other interested bidder as well, with enough
time for them to give it consideration.
In this
regard, City of Ottawa responses to particular bidder questions are issued in
an official addendum through one of several internet-based bid distribution
networks, without naming the source of the inquiry. Once again, the City’s approach is in
accordance with sound, public procurement best practices.
2. Chief
Procurement Officer
In a section in her Report entitled, “Central
Procurement”, Madam Justice Bellamy set out the following two recommendations
with respect to the importance of both the central oversight of public
procurement as well as the fact that it should be run by “a very senior
position”:
133. Procurement
should be overseen and managed by one City department.
134. Since
effective procurement is fundamental to the good governance of the City, the
head of the central procurement department should be a very senior position.
Toronto’s City Manager confirmed in 2006
that, “the City’s procurement is centralized in the Purchasing and Materials
Management Division” and that, “the City’s updated Purchasing By-law
specifically designates the Director of Purchasing and Materials Management as
the City’s Chief Purchasing Official.”
The City Manager further noted that both the Director of Purchasing and
the City Treasurer are “able to serve as policy advisors to Council on large
procurements.”
At the City of Ottawa, general
responsibility for procurement matters rests within the overall jurisdiction of
the Finance Department. In fact, the
Manager, Supply Branch, is the specific position which reports directly to the
City Treasurer on all procurement issues.
Not
surprisingly, procurement is a key function in any large organization and is
responsible for an annual spend of about $800M at the City of Ottawa. Recent initiatives, such as the following,
have seen the Manager of Supply engaged in meaningful dialogue with the most senior
members of executive management at the City:
a.
the ongoing “procurement savings targets”;
b.
strategic sourcing in relation to the spend analysis;
and
c.
high profile procurement issues debated at Council.
However, in
light of Madam Justice Bellamy’s recommendation that procurement should be run by
“a very senior position”, the City Treasurer is recommending that the level of
responsibility be more appropriately recognized within the organizational
structure at the Deputy Treasurer level.
Given the above, the City Treasurer intends to
replace the existing Manager of Supply position with a newly defined Chief
Procurement Officer position, equivalent to a Deputy Treasurer, whose job
description will include some of the broader, remedial responsibilities as
described by the Federal Government’s Procurement Ombudsman, continuing to
report directly to the Treasurer.
Some corporations consider purchasing to be a
straightforward means to an end: the goal is to minimize costs while meeting
functional, purchasing requirements. As a result, the primary purchasing model
often rests on finding the best price for each isolated transaction through
individual purchases. However, this
approach misses a significant strategic potential to add value to the
organization through the purchasing function by driving innovation and superior
long-term cost performance.
As such, one of the first tasks of the Chief
Procurement Officer will be to transform the City’s current purchasing unit
from a transactional procurement organization to one with a more strategic
focus. Briefly, strategic sourcing benefits an organization in several ways, including:
(1) improved ability of the organization to achieve strategic goals due
to alignment of purchasing strategies with business strategies; and
(2) improved
contribution from purchasing outcomes to service delivery.
Finally, this
transformation will likely include the establishment of a Strategic Sourcing
Group within Supply Management who would focus on corporate business strategy
identification, alignment of sourcing strategies and business strategies, use
of a “total cost” model, increasing both internal client and external supplier
collaboration, and enhancing the City’s overall procurement skills and
visibility.
3.
Fairness
Commissioners
At the City Council meeting on October 28, 2009, a direction was issued
for staff to review the use of more Fairness Commissioners for large and/or
contentious procurements. In his May
2003 report to the City of Toronto Council on the RFP process regarding Union
Station, the Ontario Integrity Commissioner, Mr. Justice Coulter Osborne,
recommended the appointment of a Fairness Commissioner “in major projects…to
oversee the RFP evaluation process, and in some cases even the development of
the RFP, to ensure that the process is objective and fair throughout.” In Recommendation 166 of her Report, Madam
Justice Bellamy put forth a similar proposal with respect to Fairness
Commissioners:
166. For
major, high-risk, controversial or complex tenders, the City should consider
retaining a fairness commissioner.
In support of Recommendation 166, Madam Justice
Bellamy provided the following insights:
Currently at the City of Ottawa, Purchasing staff do make use of these
independent fairness monitors. However,
their involvement has been limited to those procurement issues which are either
very complex, or have the potential of becoming contentious.
Since January 1, 2007, the City has spent about
$260,000 on fairness commissioner services, as follows:
Vendor |
Project |
Amount |
Total
Per Vendor |
|
|
|
|
PPI
Consulting Limited |
Beaver
Barracks |
$23,400.00 |
|
PPI
Consulting Limited |
Water
Meter Reading System |
$65,008.00 |
$
88,408.00 |
|
|
|
|
|
|
|
|
P3
Advisors Inc |
Pay and
Display |
$79,193.00 |
$
79,193.00 |
|
|
|
|
|
|
|
|
Knowles
Consultancy Services Inc |
Dome at
Ben Franklin Park |
$26,000.00 |
$
26,000.00 |
|
|
|
|
|
|
|
|
PSC The
Public Sector Company |
Beach
Pavilion at Petrie Island |
$22,500.00 |
|
PSC The
Public Sector Company |
VOIP |
$36,000.00 |
|
PSC The
Public Sector Company |
Integrated
Street Furniture |
$
8,250.00 |
$
66,750.00 |
|
|
|
|
|
|
|
|
|
|
Total: |
$260,351.00 |
For small to mid-sized projects, the commissioner may be an
internal person, such as someone from the central purchasing authority. The
person often becomes involved at the invitation of the
operating department, particularly where the buying team
anticipates a higher than normal degree of external scrutiny. Larger, more
complex projects benefit from an external expert. Set out below are five critical details
public institutions should consider before appointing a fairness commissioner.
1. Which projects warrant a Fairness Commissioner?
Both Mr. Justice Osborne and Madam Justice Bellamy have
recommended using Fairness Commissioners for “major” projects. While there is
no single criterion for what constitutes a major project, it is suggested that
high-value, high-profile, complex and controversial projects are the primary
candidates.
2. Determining the appropriate skill
set
Once the decision to retain a Fairness Commissioner has
been made, the purchasing organization should consider the appropriate skill
set required for the particular project. The City has had a competitive
standing offer in place for the provision of these services since 2007.
3. Ensuring the independence of the Fairness
Commissioner
Madam Justice Bellamy observed that, "It is important
to ensure the internal person has both objectivity and independence from the
procurement decision-makers," To have credibility, a fairness commissioner
must be empowered with sufficient independence to provide an effective
check-and-balance to the project team.
In effect, the individual should have an independent oversight role and
capacity to ensure disagreements with the public officials managing the
procurement are brought to the attention of appropriate senior managers.
4. Defining the scope of engagement
The purchasing organization should clearly establish the
role of the Fairness Commissioner at the outset of a project. While one of the
key functions of a Fairness Commissioner is ensuring the fairness of the
evaluation process, the Commissioner can also play a role during the
preliminary planning phases, particularly with respect to larger and more complex
undertakings.
5. Balancing fairness and effectiveness
At the end of the day, it is the public institution, rather
than the Fairness Commissioner, that is responsible for both the fairness and
success of the procurement process. While the process has to be transparent and
fair, buyers must also strive to get a good deal for the taxpayer, deliver the
product or service within reasonable timeframes, and navigate a tendering
terrain that is full of legal risk.
At Document 2 of this report is a more fulsome discussion
of the use of Fairness Commissioners.
In June 2004, Toronto City Council approved a staff report
entitled, “Feasibility of Using Fairness Consultants for Certain
Procurements”. The purpose of the report
was to “investigate the merits of using external fairness consultants for
certain procurements.” In adopting this
report, Council approved the criteria to be used by Toronto staff when
assessing a project for potential use of a Fairness Commissioner. Briefly, those criteria are as follows:
(1)
Rapidly evolving
products, especially software;
(2)
High-risk endeavours;
(3)
Out-of-country vendors
challenging required Canadian terms and conditions;
(4)
New technologies such
as waste management or information systems;
(5)
Competition against a
long-term incumbent (to avoid perception of undue advantage);
(6)
Innovative forms of
procurement;
(7)
New, high value
products;
(8)
Development/new use or
operation of significant public sites/facilities/properties;
(9)
Anticipated high
profile and controversy that can lead to few responses or pressure to take low
bid/price regardless of other areas evaluated s best; and/or
(10)
Private-public or
public-private partnerships (known as P3s).
For convenience, this report is set out in its entirety at
Document 3. The City Treasurer recommends
that staff continue to use Fairness Commissioner services on an “as needed”
basis, selected from the competitive standing offer now in place (and renewed
from time to time), in planned procurement processes which are complex or
potentially contentious, as determined by the Chief Procurement Officer and
based on an assessment of the criteria listed above.
4.
Comprehensive
Complaints Process
In addition to seeking “to ensure that the City’s procurement processes
reflects best practices, the Council Motion resolved that a “comprehensive
complaint process” be put in place. The
following recommendations from the Bellamy Report also address the same
concerns regarding a comprehensive complaint process:
230. To
demonstrate its commitment to maintaining integrity and transparency in the
procurement process, the City should have a comprehensive bidder complaints
process.
231. A
bidder should not be allowed to file a formal complaint without having made a
post de-briefing submission to the City.
233. The
City should adopt a formal two-stage process to manage bidder complaints, to
replace the current standing committee/deputation approach.
Since originally being approved in 2000, the City of Ottawa’s Purchasing
By-law contains only two provisions with respect to vendor complaints. Subsection 9(1)(e) states that, “Despite any
other provision of this by-law, the following contracts are subject to Council
approval:
(e) where
a substantive objection emanating from the bid solicitation has been filed with
the Director or with Supply Management.
In addition, Section 1 of the By-law defines “substantive
objection” to mean “a written objection to Supply Management or the Director by
an interested party giving specific reasons for the objection and subject to
the proviso that the objection is not precluded by legislation or applicable
trade agreements.” Obviously, these two provisions cannot be characterized as a
comprehensive complaints process.
A recent survey of other public purchasing organizations, in relation
to the existence of formal complaints processes, provides some insight into
municipal trends:
Municipality
|
Complaints
Process
|
|
|
Calgary, Alberta |
Process managed internally within Supply Management |
Durham Region |
No formal complaints policy in place at this time |
Hamilton |
Policy requires a written complaint to the Manager of
Purchasing. If not resolved, the
complaint is referred to Committee and Council |
London |
No formal complaints policy in place at this time |
Niagara Region |
No formal complaints policy in place at this time |
Region of Peel |
Formal process within Purchasing
By-Law, includes review by Director Purchasing and Regional Solicitor,
and possible escalation to the General Committee |
Sudbury |
No formal complaints policy in place at this time |
Thunder Bay |
Purchasing By-Law defines process, starting with Supply
staff, and escalating to head of Finance, and CAO, if necessary |
Windsor |
No formal complaints policy in place at this time |
While the recommendations in the Bellamy Report seeking a “comprehensive
bidders complaint process” and the prerequisite of a “de-briefing submission”
prior to a bidder initiating a formal complaint are largely self-explanatory,
the third recommendation to “adopt a formal two-stage [complaint] process”
requires further examination. In her
Report, Madam Justice Bellamy provided the following rationale for this latter
recommendation:
Complaints should initially be adjudicated by
a neutral panel of administrative staff that does not include anyone who was
involved with the procurement. The
initial adjudication could be reviewed by an official or officials with a high
level of independence, such as the fairness commissioner, the integrity
commission, or personnel from the auditor general’s office. The decision of the second panel would be
final and not subject to further review within the City.
Councillors should not be involved in the
complaints process.
The Report goes on to recommend that the “formal complaints process
should have tight deadlines that will move the matter forward quickly” and that
the “results of the bidders’ appeals should be made public.”
In short, the Bellamy Report’s suggested approach for a comprehensive
complaints process for bidders would result in the removal of Toronto City
Council from the decision-making process in all procurement matters. In response, the City Manager’s 2006 progress
report on the Bellamy Inquiry noted that, “Council adopted the Procurement
Process Policy in July 2004 to protect the interests of the City, the public
and persons participating in the procurement process.” The Toronto Policy reinforces fairness,
openness, transparency and integrity by adopting consistent and standard
approaches for many issues, including “dealing with vendor complaints”. However, without providing much analysis, the
report rejected Madam Justice Bellamy’s Recommendation 233 (for a “formal,
two-stage process to manage bidder complaints to replace the current standing
committee/deputation approach”) in favour of the following, modified complaints
process:
The current policy requires the complaint to
be made in writing to the Chief Purchasing Official. If the complaint cannot be resolved, the
bidder is advised of their right to make a deputation to Committee.
As noted earlier, this hybrid approach to vendor complaints (e.g. staff
engagement followed by Committee/Council action if required) is currently being
used in other municipalities. As such,
it would appear that neither the City of Toronto nor any of the comparator
municipalities cited have taken the steps necessary to remove their respective
councils entirely from the decision-making process when procurement complaints
arise.
It is worth noting that Recommendation 233 is merely one out of a
number of similar recommendations contained in the Bellamy Report aimed at
removing Toronto City Council from the procurement process, save and except for
the enactment of broad policies. In this
respect, reference may be had to the following, additional recommendations:
129. City
Council should establish fair, transparent, and objective procurement
processes. These processes should be
structured so that they are and clearly appear to be completely free from
political influence or interference.
130. Councillors
should separate themselves from the procurement process. They should have no involvement whatsoever in
specific procurements. They have the
strongest ethical obligation to refrain from seeking to be involved in any way.
131. Members
of Council should not see any documents or receive any information related to a
particular procurement while the procurement process is ongoing.
132. Councillors
who receive information from vendors related to any specific procurement should
tell them to communicate with one or more of the following three people, as is
appropriate in the circumstances:
a)
the
contact person in the tender document, in accordance with the contact rules in
place
b)
the
fairness commissioner
c)
the
person in charge of the complaints process, as set out in the tender documents.
232. Councillors
should not act as advocates for aggrieved bidders.
For the purposes of this review, staff recommends that Ottawa City
Council adopt a comprehensive complaints process that reflects the approach
adopted in Toronto and various other municipalities. By clarifying the complaints process in
writing, vendors will know, in advance of any procurement initiative, what
their rights are, as well as when and how to exercise them (e.g. de-briefing,
written complaint, timelines, etc.). To
provide additional clarity with respect to the roles and responsibilities, it
is recommended that Recommendation 132 from the Bellamy Report be adopted and
adjusted accordingly. In essence, this
recommendation, that Members of Council refer any questions/concerns during a
procurement process to either the City’s “official point of contact”, the
respective Fairness Commissioner or the party responsible for the complaints
process, effectively complements the parallel recommendations in this report,
as well as meeting the general principles to have transparency and
accountability with respect to the procurement process at the City of
Ottawa. As such, the comprehensive
complaints process is set out in Document No. 4 to this report and retains
Council’s jurisdiction as the final arbiter of such disputes.
Finally, it is suggested that the issue of further separating Council
from procurement complaints – including the possibility of prohibiting
“lobbying of any kind at any time during a City procurement process” in
Recommendation 107 – should be revisited in greater detail during the next
review of the Purchasing By-law in
the 2010 Governance Review.
5.
Local Preference
On June 4, 2009,
an e-mail was sent to all Members of Council in response to an inquiry received
by them on the subject of local preference.
The e-mail stated as follows:
Staff understand that an inquiry has been received by
Members of Council with respect to the possibility of the City of Ottawa
adopting a Local Preferences Purchasing Policy.
Legal Services staff have had the opportunity to
review the Ontario Discriminatory Business Practices
Act.
The Discriminatory Business Practices
Act prohibits the City (and any other
person in Ontario) from refusing to engage in business with another person
because of that person’s geographical location.
(There is an exemption if such refusal is in respect of a foreign
country and is consistent with a policy of Canada or is in respect of another
province and is consistent with a policy of the Province of Ontario).
On the basis of the Discriminatory Business Practices Act, it would be Legal Services opinion that the City is
not able to adopt a Local Preferences Purchasing Policy.
More recently, however, the City Clerk and Solicitor
received the following inquiry from Councillor Steve Desroches:
“Is it feasible to
structure the policy (in relation to the City procurement process), to support
local suppliers if all other things are equal?”
The response to the Councillor is set out below, as follows:
As you are aware, any form of "local preference"
policy - as it may relate to a municipal government's statutorily-mandated
policy for its procurement of goods and services - must also comply with the
Province's Discriminatory Business Practices Act. Briefly, the stated purpose and intent of that
provincial statute "is to prevent discrimination in Ontario on the ground
of race, creed, colour, nationality, ancestry, place of origin, sex or geographical
location of persons employed in or engaging in business [emphasis
added]." Furthermore, Subsection
5(1) of the Act states that "no
person in Ontario may engage in a discriminatory business practice".
While this statute does not appear to be
referenced in the general text that you have cited (being The Law of
Municipal Finance, by Patrice C. Noé and Allan C. Ross), it is discussed in
a more specific legal book on local government procurement entitled, Municipal
Procurement Handbook (ironically also co-authored by Patrice C. Noé). At page 312 of that book, the authors not
only recognize the above-noted legislation but also expand upon the possibility
that a local preference policy may be possible in the case of a “tie” among
competitors:
A key question for any municipality to
resolve is the extent to which municipal procurement practice ought to favour
local suppliers over those based in more remote locations. As discussed in Chapter 11, in Ontario
discrimination against local suppliers contravenes provincial law. Perhaps for this reason, it is sometimes
argued that the giving of a local preference is inherently wrong. However, a moment's thought is sufficient to
show that this view is untenable. If all
other factors are equal, there is no justification for not giving a local
preference. Indeed, a failure to do so
would almost amount to punishing the supplier for being connected with the
purchasing municipality. Nevertheless,
it can be difficult to craft a proper regime for local preference. For instance, if a local preference is to be
given, the first question to resolve is the extent to which the locality of a
supplier is to be determined - is a local office or plant sufficient, or is it
also necessary that the supplier be locally based and controlled.
The question of when a local preference
policy could be useful to a municipality has also been the subject of further
comment in Procurement: A Practical Guide for Canada's Elected Municipal
Leaders, by Denis Chamberland. In a
more detailed examination of the "tie-breaker" proposal for the use
of a local preference option put forth by Noé and her colleagues, Chamberland
provides the following analysis for consideration:
Another reason for the topic’s staying power
is that, in some context, the economic realities make it clear that it may make
sense to favour a local supplier. For
example, what should be the determining factor(s) where a bid is tied between
two suppliers? If one supplier is a
local enterprise, and the other is not, selecting the local one will contribute
to the local economy. Similarly, it
would make little business sense for a municipality to conduct a Canada-wide
competition, and for a supplier 200 kilometres away to offer to provide
technology help-desk support services where on-site visits may be
required. A supplier could argue that
remote service has become the norm in the industry, but there may be good
reasons why the municipality needs a local preference. In the above two examples, common sense
suggests that the local company should be given priority.
But, it is a challenge to define the
legitimate circumstances where preference may be granted to a local
supplier. Being able to successfully
defend the integrity of the procurement process is another. The former is about applying judgment, and is
the responsibility of the evaluation team; the latter is about transparency and
proper disclosure, and is, in part, the responsibility of elected
representatives. They must ensure that
the procurement framework contemplates the exercise of the required discretion.
There can be circumstances where recognizing
a local preference may be defensible and a legitimate business practice. However, the evidence overwhelmingly shows
that it generally makes better economic sense to avoid local preferences.
Clearly, this issue of a local preference in procurement matters has
been a long-standing subject of debate for all levels government. The above-noted inquiry seeks to “support”
local suppliers if all other things are equal, in other words, in the situation
of a “tie bid”. Perhaps surprisingly,
with over 800 competitive bids each year, there are very few tied bids at the
City of Ottawa. However, in the event of such a tie, Subsection 28(6) of the
City’s Purchasing By-law identifies
the following four “factors to be considered in the breaking of [a] tie:
(a) Prompt payment discount;
(b)
When
delivery is an important factor, the bidder offering the best delivery date be
given preference;
(c)
A bidder
in a position to [offer] better after sales service, with a good record in this
regard, be given preference;
(d)
A bidder
with an overall satisfactory performance record be given preference over a
bidder known to have an unsatisfactory performance record.
In the event of a tie, Purchasing staff would usually rely on Clause
(a) above, and give preference based on this financial factor.
Over the past two years, Purchasing staff are aware of only two
instances where the City received tied bids which could not be decided on the
issues of financial merit. In both
cases, the suppliers were local, and were called in to meet with the Purchasing
staff. The City and both bidders (in
each case) agreed to abide by the outcome of a coin toss, which was
administered by the City purchasing officer.
Although not a “high tech” solution, the bidders agreed in advance and
were satisfied with the outcome. Ultimately,
the City received the advantage of accepting the low bid, and the project
client was able to proceed without undue delay.
These two experiences, and the statistical data from the full 2008
purchasing year (found at Document 5)
suggests that there is no pressing need for the City of Ottawa to
consider and implement a comprehensive local preference policy.
Clearly, the City of Ottawa is a strong consumer of
local products, spending almost 95% of the annual purchasing dollar in Ottawa
and the surrounding area, for goods and services which are available in the
local community. That being said, it is
suggested that, in the event of two identical bids, that one of the factors to
be considered in the “tie-breaker” analysis by Purchasing staff be whether or
not the bidders are “local”. Should
Council adopt this recommendation, staff would amend the Purchasing By-law
and prepare additional guidelines in the City’s Purchasing Policies and
Procedures Manual to clarify the meaning of the word “local”.
6.
Litigation Exclusion
In 2008, Council inquired
about the ability of the City of Ottawa to temporarily suspend both business
relationships and grants to persons or organizations engaged in litigation with
the City.
In response, the City
Clerk and Solicitor provided to Corporate Services and Economic Development
Committee and Council his legal opinion, on November 10, 2008: a copy of the memo, “Procurement
and Grants Policies – Litigation Exclusion”, being ACS2008-CMR-LEG-0026 IPD,
can be found at Document 6 to this report.
In short, the legal opinion stated that
there was sufficient legal authority for the City of Ottawa to initiate a
litigation exclusion to its Purchasing
By-law that would prohibit vendors and suppliers of goods, services or
construction who have legal actions pending against the City from doing
business with it while such matters are unresolved. In addition, it was noted that this exclusion
could also prohibit persons, associations and not-for-profit organizations from
applying for grants under various City programs while any lawsuit by such
person, association or organization was still pending against the City.
That
being said, Supply Management does not
believe it would be in the best interest of the City to institute a blanket
exclusion against all suppliers of goods, services or construction engaged in
litigation with the City. The City
currently purchases many goods and services from limited and/or specialized
markets. A small sample of such goods
and services is set out below:
·
Ambulances and
replacement parts,
·
Building
Automation Systems / HVAC systems,
·
Building Security
Systems,
·
Buses and
replacement parts,
·
Cement,
·
Engineering
design and inspection services for bridges,
·
Engineering
services for the upgrade and expansion of the water filtration plants and
ROPEC,
·
Environmental
assessment services,
·
Fire trucks and
replacement parts,
·
Fuel,
·
Graders for
winter snow clearing,
·
Ice Plant
Maintenance and/or Refrigeration Services,
·
Information
technology hardware and software, upgrades, repair and maintenance,
·
Laboratory
services which provide support for water, waste water and environmental
projects,
·
Landscape
architects,
·
Specialized CCTV
and sewer work,
·
Specialized heavy
equipment, parts, repair and maintenance.
In the event that there
was a broad litigation exclusion against any supplier, or several suppliers of
such a good, it would mean that fewer bidders could bid on such contracts for
the City. The unintended consequences of
this action would be less competition among bidders and could result in higher
prices for the City. In markets where
there is only one supplier, it could also mean the City would need to make an
exception or do without the good or service until the litigation was resolved.
Furthermore, many of the
City’s purchases are followed by parts, maintenance and/or repair contracts, as
well as product enhancement contracts in the case of software. Information technology suppliers of goods
often have separate collateral contracts with the City for the maintenance of
existing technology purchased previously as well as for professional services
to support such technology. As such, a
strict litigation ban against such a supplier would prevent it from bidding on
new technology contracts for the City.
Again, this would not likely be in the best interest of the City where
the supplier was considered to be the leader in the field of the desired
technology or the most cost-effective supplier.
At present, Subsections
37(1) and 37(2) of the City’s Purchasing By-law provide a discretion to
the City Treasurer, in consultation with the City Clerk and Solicitor, to
prohibit an unsatisfactory supplier from bidding on future City contracts where
the performance of the supplier has been unsatisfactory in terms of failure to
meet contract specifications, terms and conditions or for Health and Safety
violations.
In the past, this
authority has been used sparingly, albeit judiciously, and the ban has been
temporary in nature (e.g. up to two years).
In fact, when it has been used, the Treasurer’s decision was not
challenged by the unsatisfactory supplier.
In light of this example, it is suggested that this is a more practical
approach to business relations with suppliers.
In an attempt to model a
litigation exclusion in the mould of the existing unsatisfactory supplier
approach and to avoid the problems of an overly broad litigation exclusion,
staff recommend that the following provisions be used as the basis for a more
discretionary approach to this issue:
(1) The City may, in its absolute discretion, reject a
quotation, tender or proposal submitted by the bidder if the bidder, or any
officer or director of the bidder is or has been engaged, either directly or
indirectly through another corporation, in a legal action against the City, its
elected or appointed officers and employees in relation to:
(i)
Any other
contract or services; or
(ii)
Any matter
arising from the City’s exercise of its powers, duties or functions.
(2) In determining whether or not to reject a quotation,
tender or proposal under this clause, the City Treasurer and the City Clerk and
Solicitor will consider whether the litigation is likely to affect the bidder’s
ability to work with the City, its consultants and representatives, and whether
the City’s experience with the bidder indicates that the City is likely to
incur increased staff and legal costs in the administration of the contract if
it is awarded to the bidder.
It is envisioned that, on
the few occasions that the City Treasurer and the City Clerk and Solicitor
invoke their discretion to prohibit a party from participating in City
procurements, every attempt will be made to warn the party in advance, and in
writing, of an actual procurement process.
Although the report
recommends a limited, joint discretion to the City Treasurer and City Clerk and
Solicitor to prohibit a party from participating in its procurement processes,
it does not recommend a similar ban for litigants who may apply to the City’s
various grants programs. In this regard,
the research set out in Document 6 failed to find any municipalities in Ontario
that had adopted a litigation exclusion with respect to grants. Such a statistic could be used to suggest
that this type of policy is unwarranted.
Therefore, in the absence of additional, factual evidence that such a
policy is warranted, staff have not recommended that a potential litigation
exclusion apply to City grants.
This report is scheduled to be “tabled” at Corporate Services and
Economic Development Committee on December 1st, 2009. It will be considered by the Committee and
Council in January 2010, thereby allowing sufficient public consultation on the
report’s recommendations. In addition,
staff will send comments from the City’s various Advisory Committees, including
the Business Advisory Committee.
There are no Legal/Risk Management impediments to implementing any of
the recommendations in this report.
There are no financial implications.
RURAL IMPLICATIONS
There are no rural implications for this report.
Document 1 : Government of Canada : Procurement Complaints
Document 2 :
Fairness Commissioners
Document 3 : Toronto’s
“Feasibility of Using Fairness Consultants for Certain Procurements”
Document 4 :
Comprehensive Complaints Process
Document 5 :
Purchasing Data (2008)
Document 6 :
Procurement and Grants Policies –
Litigation Exclusion
Pending Council’s deliberations on this
report, staff will prepare any amendments to either the City’s Purchasing By-law or its related Procedures Manual.
Public Works and
Government Services Canada (PWGSC) is the central purchaser for the Government
of Canada, buying approximately $12 billion in goods and services each year.
PWGSC has created a “Code of Conduct for Procurement” that provides a single
point of reference for the above legal, regulatory and policy requirements of
the procurement process at the federal level of government. The Code of Conduct for Procurement was one
among many additions to the Federal Government procurement process that were
the result of the introduction of the Federal Accountability Act (2006,
c.9), an omnibus Act that amended PWGSC related legislation such as the Financial
Administration Act (R.S., 1985, c. F-11) and the Department of Public
Works and Government Services Act (1996, c.16).
Institutional changes
included the creation of an Office of the Procurement Ombudsman that has
jurisdiction over vendor complaints where the monetary threshold is below cases
dealt with by the Canadian International Trade Tribunal. The Office of the
Public Sector Integrity Commissioner was created to oversee disclosures of
wrongdoing, including wrongdoing in respect to procurement. Finally, the
Federal Government continues to use Fairness Monitors to oversee problematic or
complex procurement processes to ensure the process is fair and transparent.
1.
Canadian International Trade
Tribunal
The Canadian
International Trade Tribunal (CITT) is an independent administrative tribunal
established under the authority of the Canadian International Trade Tribunal
Act (1985, c. 47 (4th Supp.)). The CITT conducts inquiries into complaints
by potential vendors concerning procurement by the federal government.
Any potential vendor
who believes they may have been unfairly treated during the solicitation or
evaluation of bids, or in the awarding of contracts subject to the Trade
Agreements including the Federal/Provincial Agreement on Internal Trade may
lodge a formal complaint with the Canadian International Trade Tribunal. The
complaint must meet a monetary threshold in order to be considered by the CITT.
The Procurement Ombudsman rather than the CITT conducts reviews of any
complaint is in respect to the award of a contract for the acquisition of goods
below the value of $25,000 and services below the value of $100,000.
The CITT has the
powers of a Court of Record and may review all aspects of a procurement action
up to and including contract award. The Tribunal decides whether a complaint is
valid and may recommend appropriate remedies including the issuance of a new
solicitation, the re-
evaluation of the
proposals, the termination of the contract, the awarding of the contract or
monetary compensation. When a complaint has been accepted to inquiry prior to
the contract award, the government institution may be ordered by the Tribunal
to postpone any award until the resolution of the complaint. The Tribunal, however, does not have the
ultimate power to delay the performance of any contract.
2.
Office of
the Procurement Ombudsman
Since the coming into
force of the Procurement Ombudsman Regulations in the spring of 2008, the
Office of the Procurement Ombudsman been involved in addressing vendor
complaints arising out of contracts awarded for procurements below the monetary
thresholds of the Federal Provincial Agreement on Internal Trade that would
otherwise have been subject to that Agreement.
The Procurement
Ombudsman, reports to the Minister of Public Works and Government Services
Canada. Unlike the CITT that issues binding decisions, the Procurement
Ombudsman may only make findings and recommendations in respect of the
complaint, including a non-binding recommendation that a vendor be compensated
by the government. Although the Ombudsman has this power, he has seldom
exercised it. During the 2008-2009 period, the Procurement Ombudsman undertook
a single investigation and received only 71 contract award complaints. The
Federal Regulations allow the Procurement Ombudsman to use other means to
resolve disputes including the ability to manage an Alternative Dispute
Resolution Process using a neutral third party from outside the Office of the
Procurement Ombudsman.
In addition to
facilitating the resolution of vendor complaints, the Procurement Ombudsman
undertakes reviews of the practices of departments for acquiring products and
services to assess their fairness, openness and transparency and make any
appropriate recommendations to the relevant department for the improvement of
those practices. In performing this role, the Procurement Ombudsman is able to
provide independent advice to various government departments on improving the
procurement processes.
3.
Fairness
Monitors
As a proactive measure
and prior to a dispute arising, the government often engages an independent
Fairness Monitor (known as Fairness Commissioner at the provincial and
municipal levels of government) to monitor and make recommendations on the
procurement process for fairness and to ensure that the bids are evaluated in
accordance with the evaluation procedures specified in the bid solicitation
documentation.
As early as
September-October 2000, the House of Commons’ Standing Committee on Public
Accounts considered a report from the Federal Auditor General with respect to,
“Alternative Forms of Delivery:
Contracting for Property Management Services” with the Public Works and
Government Services Canada. The minutes
and key recommendation from the Federal Standing Committee assisted in the
development of Fairness Monitors in the Federal Government:
The
Department’s use of Fairness Monitors contributed significantly to the success
of the initiative. These Monitors
provided independent assurance to all parties that the process was fair and
conducted according to the rules.
Potential litigation and complaints were thus avoided. The Committee believes that the use of such
Monitors should be extended and therefore recommends:
1.
That Public Works and Government Services Canada amend
its Contracting Manual to include the use of independent Fairness Monitors for
all large and complex procurements.
As a result, the
PWGSC Fairness Monitoring Program has been in place since 2004 and is described
as follows:
The
Fairness Monitoring (“FM”) Program provides management, client departments,
government suppliers, Parliament and Canadians with independent assurance that
PWGSC’s activities are conducted in a fair, open and transparent manner.
Independent
third-party Fairness Monitors observe all or part of a departmental
activity. Based on their observations,
they provide an impartial opinion on the fairness of the monitored
activity. The Program helps PWGS protect
the interests of its clients, and Canadian taxpayers, by identifying and
resolving fairness issues as they arise.
Dealing with any issues early makes the process fairer and avoids
possible costly after-the-fact resolutions.
When they
are finished observing an activity, Fairness Monitors document their opinions
in a final FM Report. The report is
delivered to the office of the Chief Risk Officer. PWGSC makes all final FM Reports available to
the public. The availability of the
reports is subject to limits of disclosure under the Access to Information Act and Section 7 of the Privacy Act.
In August 2009, PWGSC
issued its Fairness Monitoring Policy which provided the following insights
regarding the “Use of Fairness Monitors”:
When a
Fairness Monitor has been engaged to support a procurement process, he/she will
provide written reports to the Departmental Oversight Branch (DOB), in
accordance with the statement of work included in the Fairness Monitor’s
contract, attesting to the fairness of the procurement process.
If a
Fairness Monitor observes a situation that constitutes, or has the potential to
create, fairness deficiencies, the Fairness Monitor will inform the project
team of its concerns and seek a resolution.
If a resolution cannot be reached, the Fairness Monitor will immediately
advise DOB.
The
Fairness Monitor will submit a final report to DOB, which includes, among other
things, the Fairness Monitor’s overall attestation of assurance on the fairness
of the monitored activity and any unresolved fairness deficiencies
observed. The report will be made public
after tabling with Senior Management.
DOCUMENT
2
FAIRNESS COMMISSIONERS
Recent research by Aird & Berlis LLP, Barristers and
Solicitors in Toronto suggests that:
·
“There appears to be
little doubt that fairness commissioners are being appointed more often by a
broader range of public sector organizations than was the case just a few years
ago, both in Canada and abroad.
·
Organizations in
various sectors routinely appoint a fairness commissioner on their more
complex/sensitive projects, here are some examples in Ontario:
o
Ontario Power
Authority use fairness commissioners for major energy procurements
o
City of Toronto
appoints a fairness commissioner as needed, such as the recent TTC purchase of
204 new low-floor streetcars
o
Ontario Community Care
Access Centres appoint a fairness commissioner on all of their health services
procurements
o
Infrastructure Ontario
has a standing offer approach and selects a fairness commissioner from the
eligible list for most of their large infrastructure projects
o
The Toronto-area
regional municipalities and transportation authority routinely appoint fairness
commissioners on their larger projects
o
Smaller organizations
are also more often appointing fairness commissioners to more complex or
sensitive procurements’ such as the City of Guelph on two recent projects, and
West Perth Power Inc. on a recent procurement for a smart-metering project
·
The Government of
Ontario also makes extensive use of fairness commissioners, including on large
information technology projects
·
The Government of
British Columbia routinely uses fairness commissioners, on large information
technology projects
The City of Brampton
has used fairness commissioners in the past although it does not have a written
policy on their use. Hamilton's
purchasing policy mentions the use of fairness commissioners, but does not
provide details on when they will be used.
The City of Oshawa hired a fairness commissioner once, for a $40 million
P3 project. The commissioner hired was a
former judge for the area, and was paid an honorarium. This was described as an exception to the
rule given the size and profile of the project as they generally do not use
them. Niagara Region does not currently
use fairness commissioners, but is interested in changing their policy to incorporate
their use. The Region of Peel and the
City of Mississauga do not currently use fairness commissioners.
Aside from individual procuring
organizations, there are others that fully support the use of fairness
commissioners and actively promote the on-going development of the role. For
example, in a 2005 paper the Canadian Council for Public-Private Partnerships
commented that its members “applaud the use of Fairness Commissioners” and
expressed the hope that standard measurements for determining fairness could be
developed to make the role even more meaningful.
Outside Canada, the role of fairness
commissioner also appears to be growing. In Australia, for instance, the
Department of Finance and Deregulation formally published its Guidance on
Ethics and Probity in Government Procurement in 2005. In the United States,
many public bodies make use of fairness commissioners, California being
particularly notable.”
In response to the
specific question as to use of this type of service in the private sector,
Denis Chamberland, a member of the firm states that “... it does happen, but not too
often. As you know the procedural fairness requirements apply only to the
public sector. But organizations sometimes decide to run a procurement as
though they’re subject to the public rules.”
Howard Grant of PPI consulting, a well-known procurement
expert and fairness commissioner is “not aware of any private sector
organisations that use fairness services.”
He suggests that in the Public sector, the Federal government and
Federal crown corporations such as Canada Post, and EDC, make extensive use of
fairness commissioners, as do the Provincial governments of Ontario, Alberta,
and British Columbia. Also using these
services are Provincial crown corporations such as Ontario Lottery and Gaming
Corp., as well as Municipalities such as Calgary, Winnipeg, and Toronto.
DOCUMENT
4
The City is committed to the highest standards of integrity with
respect to dealing with vendor complaints, which shall be handled with fairness
and equity for all participants.
All vendor complaints, whether addressed to elected officials or to
staff, are to be referred to the Chief Procurement Officer (“CPO”). All complaints must be in writing, signed by
an official of the vendor’s company.
Furthermore, the vendor must have received a de-briefing from the City’s
Purchasing staff as a prerequisite to filing a complaint. The Chief Procurement Officer shall review
the objection and determine, in consultation with the City Clerk and Solicitor
where necessary, whether the objection is material, in accordance with the Purchasing By-Law. An objection may be considered to be “not
material” if it is frivolous or vexatious in nature or solely related to any
listed irregularities as defined in Schedule “A” of the Purchasing By-law.
Where the complaint or objection is determined not to be material, the
making of the award shall proceed in accordance with the Purchasing By-Law.
In all cases where written complaints are considered material, the
procurement process will be suspended to permit the following process to be
completed.
Phase One: Program Manager,
Purchasing
The vendor submitting the complaint will be invited by the Senior
Purchasing Officer involved in the procurement process, to attend a formal
debriefing, to discuss the bidder’s concerns or to go over the reasons why the
complainant’s bid or proposal submission was not selected. The debriefing will follow the Guideline
attached as Appendix A.
In recognition of the vendor’s right to timely access, Phase One should
be actioned within five business days, and will be available as soon as the
tender call document is released. During Phase One, the Program Manager,
Purchasing, is authorized to try to resolve, by employing alternate dispute
resolution techniques, the complaint.
However, he can immediately re-direct any complaint to Phase Two, where
the complaint appears to be material, those having significant factual or
interpretive disagreements, or involving legal principles.
Where substantive issues are present, or where the matter could not be
resolved in Phase One, the complaint will escalate to the attention of the
Chief Procurement Officer. Where there
was a Fairness Commissioner assigned to the procurement process, the CPO will
assemble a Panel and review the matter with the Fairness Commissioner, the City
Clerk and Solicitor and any other member of the senior staff that is
necessary. In the event that a Fairness
Commissioner was not assigned to the procurement process, the CPO will engage
one for the purposes of the Phase 2 review Panel.
Within ten business days, the Panel will meet with the vendor, to
better understand the complaint, and to outline the City’s position on the
matter in writing, and the factual reasons which support the position.
If, at the completion of Phase Two, there is a better understanding and
acceptance of the City position, the procurement will resume, including the
contract award. If the vendor is not
satisfied with the explanation, the complaint may proceed to Phase Three.
In this phase, the complaint would be elevated to the appropriate
Standing Committee and Council for final resolution. As such, a staff report would be prepared,
setting out all the factual, procurement and legal issues, as well as the
results of Phase One and Phase Two of the Comprehensive Complaints Process for
consideration of Committee and Council.
When
Why
a “best practice”
Who
·
If the debriefing is a face-to-face meeting, then establish
the rules up front. Make it clear that
the reason for the meeting is to explain the evaluation process, and why the
respondent was unsuccessful.
DOCUMENT 5
PURCHASING DATA (2008)
The first pair of charts includes the geographical vendor breakdown for
the 2008 purchasing contracts included in the four delegation of authority
reports, including the purchase of items that are not available locally.
Total $ of Vendors |
|
% Breakdown by $ of Vendors |
||||
Ottawa & Surrounding Area |
|
$532,857,585.35 |
|
Ottawa & Surrounding Area |
|
85.0% |
Ontario (not Ottawa area) |
|
$25,020,425.82 |
|
Ontario (not Ottawa area) |
|
4.0% |
Quebec |
|
$1,606,311.80 |
|
Quebec |
|
0.3% |
Other locations |
|
$4,378,591.34 |
|
Other locations |
|
0.7% |
Not available locally |
|
$62,815,615.27 |
|
Not available locally |
|
10.0% |
TOTAL |
|
$626,678,529.58 |
|
TOTAL |
|
100.0% |
The second set of charts adjusts the data to
reflect the fact that some of the goods and services consumed annually by the
City are not available locally (e.g. transit buses are not manufactured in Ottawa, nor is winter rock salt mined
locally, for example).
Total $ of Vendors |
|
|
|
% Breakdown by $ of Vendors |
|
|
Ottawa & Surrounding Area |
|
$532,857,585.35 |
|
Ottawa & Surrounding Area |
|
94.5% |
Ontario (not Ottawa area) |
|
$25,020,425.82 |
|
Ontario (not Ottawa area) |
|
4.4% |
Quebec |
|
$1,606,311.80 |
|
Quebec |
|
0.3% |
Other locations |
|
$4,378,591.34 |
|
Other locations |
|
0.8% |
TOTAL |
|
$563,862,914.31 |
|
TOTAL |
|
100.0% |
DOCUMENT 6
M E M O /
N O T E D E S E R V I C E |
|
To / Destinataire |
Mayor and Members of City Council |
File/N° de
fichier: |
From / Expéditeur |
M. Rick O’Connor, City Solicitor |
ACS2008-CMR-LEG-0026-IPD |
Subject / Objet |
Procurement and
Grants Policies – Litigation Exclusion / Politiques
d’approvisionnement et de subventions – exclusion du litige |
Date:
November 10, 2008 |
BACKGROUND
Earlier this year, City
Council inquired about the ability of the City of Ottawa to temporarily suspend
both business relationships and grants to persons or organizations engaged in
litigation with the City. The purpose of
this memorandum is to provide both a legal opinion, as well as guidance, on the
City of Ottawa’s ability to initiate a litigation exclusion to its Procurement
Policy that would prohibit vendors and suppliers of goods, services or
construction who have legal actions pending against the City from doing
business with it while such matters are unresolved. In addition, this exclusion could also
prohibit persons, associations and not-for-profit organizations from applying
for grants under various City programs while any lawsuit by such person,
association or organization was still pending against the City.
RESPONSE
Having reviewed the
relevant federal trade agreements and provincial legislation set out below, it
is suggested that there exists sufficient legal authority to enact a litigation
exemption with respect to the City’s procurement and grants policies.
LEGAL
AUTHORITY
a) Trade Agreements:
By way of background, it
should be noted that Canada currently is a party to a number of trade
agreements, namely: (1) the North
American Free Trade Agreement (“NAFTA”); (2) the World Trade Organization Agreement on Government Procurement (“WTO-AGP”);
and, (3) the Agreement on Internal Trade
("AIT."). As an aside, the Canada-Korea Agreement on procurement of
Telecommunications Equipment was rescinded in 2005. Although negotiations are ongoing for a new
Agreement between Canada and Korea, as of the date of this memo, no such
agreement has been concluded.
With the exception of the Canada-Korea
Agreement, the balance of the above-noted agreements require the Federal Government
of Canada to maintain an independent bid challenge authority. Parliament has implemented these agreements
into Canadian legislation to ensure that the procurements covered by these
agreements are conducted in an open, fair and transparent manner and, where
possible, in a way that maximizes competitiveness. The Canadian International Trade Tribunal has
been designated as the bid challenge authority for contracts involving the
Federal Government.
Although NAFTA came into force in Canada on
January 1, 1994, the Federal Government has not extended its coverage to
provinces and municipalities. Similarly,
the WTO-AGP that came into force on January 1, 1996 is limited to Federal
departments and agencies and, consequently, provincial or municipal governments
are not included under it.
With respect to the AIT that came into force
on July 1, 1995, it is an agreement among the federal, provincial and
territorial governments of Canada. The
AIT is intended to reduce and eliminate barriers to the free movement of
persons, goods, services and investments within Canada and to establish an
open, efficient and stable domestic market.
Parties to the AIT have been working toward removing existing
inter-provincial trade barriers, preventing the establishment of new barriers
and harmonizing inter-provincial standards.
The AIT is founded on six general
principles, intended to prevent governments from erecting new trade barriers
and reducing existing ones, namely: (1) non-discrimination (i.e. establishing
equal treatment for Canadian persons, goods, services and investments); (2)
right of entry and exit; (3) no obstacles to trade; (4) limiting adverse
impacts arising from legitimate trade objectives; (5) eliminating barriers
caused by differences in standards and regulations across Canada; and, (6)
ensuring transparency to promote information being fully accessible to all
interested parties. In so far as the AIT
is concerned, it could be argued that such a litigation exclusion is
supportable pursuant to the fourth principle of the agreement, namely: that it
is a legitimate trade objective with limited adverse effects intended to
promote harmonious and effective business relationships between the City and
prospective vendors and suppliers of goods, services or construction to
it.
Finally, there is some legal authority to
suggest that the AIT also applies to municipal governments. Nevertheless, since
it currently does not have a practical enforcement mechanism set out within it
with effective consequences, it arguably constitutes a political accord, rather
than an adjudicative code, among the federal, provincial and municipal
governments in Canada.
b) Provincial
Legislation:
In addition to the trade agreements, reference must
also be made with respect to Ontario’s Discriminatory
Business Practices Act (the “Act”),
which applies to all “persons” (including municipalities) in the province. As stated in Section 2, the Act’s purpose is: “to prevent discrimination in Ontario on the ground of race, creed,
colour, nationality, ancestry, place of origin, sex or geographical location of persons employed in or engaging in
business” [emphasis added].
The Act
has broad application and is only subject to only three exceptions: (1) the
withholding of services or employment in the course of a lawful labour dispute;
(2) a discriminatory business practice sanctioned by the Government of Canada;
and, (3) a discriminatory business practice directed towards a province or
territory other than Ontario that is sanctioned by it.
In essence, the Discriminatory Business Practices Act does not prohibit
discrimination on the basis of pending or existing legal actions against
another party. Consequently, such a
policy could be justified as a lawful form of discrimination in business practices
that is not currently prohibited. More
specifically, the limited prohibition would only be in effect while a legal
action by a prospective vendor or supplier was pending and unresolved against
the City. Since this party would always
have control over the prosecution or continuation of such a legal action, it
arguably could make an informed decision on the merits of pursuing such a
course of action in the first place or, alternatively, maintaining it. Further, based on the current shortfalls of
the AIT with regard to effective remedies for complainants, the City could take
a measured risk by relying upon the fourth principal noted above without having
to worry about significant adverse consequences in the event of a successful
challenge to the proposed policy.
Finally, in the case of grants, the City is
not subject to the above considerations and has more latitude in setting the
eligibility requirements for such grants. Pursuant to Subsection 107(1) of the Municipal Act, 2001, the City has the
broad authority to provide grants on any terms that Council considers
appropriate. Furthermore, as the proposed litigation exemption in the area of
municipal grants would not appear to conflict with other provincial or federal
legislation, it would require the enactment of a policy by Council to bring
about the desired change.
LITIGATION
EXCLUSION IN OTHER MUNICIPALITIES
A brief review of various municipalities in
Ontario has revealed that the use of such litigation exclusions in either
procurement policies or tender documents was not unusual. In this regard, the following municipalities
have implemented some form of litigation exclusion in either their respective
purchasing policies or tender documents:
1.
City of Windsor;
2.
City of London;
3.
City of Brantford;
4.
Regional Municipality of Niagara;
5.
Regional Municipality of Waterloo;
6.
City of Kitchener;
7.
City of Sarnia;
8.
City of Hamilton;
9.
City of Greater Sudbury;
10.
City of Brampton;
11.
District Municipality of Muskoka;
12.
City of Oshawa;
13.
Municipality of Chatham-Kent; and
14.
Town of Markham.
A similar search for such a provision for
grants policies revealed that all eight municipalities that provided responses
indicated that they did not have a policy related to prohibiting grants to
organizations currently involved with litigation with the municipality. A
summary table presenting the results of the practices of other municipalities
in respect to litigation exclusion for procurement and grants policies are
attached as Document 2 and Document 3 respectively.
SUPPLIER
PERFORMANCE PROVISIONS
As noted above, a litigation exclusion
considers whether the person or organization is engaged in a legal action
against the City at the time the City initiates the procurement process.
Conversely, a supplier performance provision of a purchasing by-law operates
differently in that it considers whether the person or organization has entered
into contracts with the City in the past and performed poorly.
Pursuant to City of Ottawa Purchasing By-law
No. 50 of 2000, the City Treasurer may, in consultation with the City
Solicitor, prohibit an unsatisfactory supplier from bidding on future
contracts. Such a prohibition applies to suppliers that in the past have failed
to meet contract specifications, terms or conditions, and/or health and safety
requirements. The relevant provisions of
the Purchasing By-law have been attached as Document 1.
The City has rarely taken the significant
step of removing the ability of a vendor to compete for future municipal
contracts. However, what takes place on
a more routine basis, is Supply Management, along with the operational branch,
engages in a meaningful debate with the vendor intended to clarify
expectations, communicate potential outcomes, and leverage the City position as
a major local consumer to encourage suppliers to improve service levels, and
meet contractual obligations.
FINANCIAL
IMPLICATIONS
While receipt and consideration of this memorandum
by Council has no financial implications, implementation of such a policy may
result in an increase in costs to the City.
In effect, such a prohibition against doing business with persons or
companies litigating with the City has the potential to decrease the pool of
available service providers. Furthermore, in the absence of a detailed file
review of those persons or organizations litigating with the City, it is
difficult to assess the overall impact of such a policy on the City’s
Procurement Policy or its various grants programs.
In some instances, the City may wish to conduct
business with an entity that, due to extenuating circumstances (e.g. the need
to preserve legal rights in the face of a limitation period), has initiated
litigation against the City. Council may choose to address this concern by
retaining the discretion to accept a bid where the City Treasurer, in
consultation with the City Solicitor, are satisfied that the litigation will
not impact the ability of the parties to further engage in reasonable business
relations.
NEXT
STEPS
In the event that Council enacts a
litigation exclusion, the City must ensure that it does not act in bad
faith. In essence, there must be solid
commercial reasons for adopting the litigation exclusion including saving on
costs associated with engaging in relations with parties that are prone to
litigation and avoiding the risk of breaching confidentiality when dealing with
parties against whom the City is engaged in litigation. Conversely, the City
must be careful not to initiate the exclusion in order to punish a particular
individual or organization that will foreseeably be adversely affected. For
these reasons, Council should ensure a fair and open process leading up to the
exclusion’s enactment, including consultations with the Business Advisory
Committee, Business Improvement Areas, and the Arts, Heritage and Cultural
Advisory Committee, among others.
Finally, a litigation exclusion would affect
only applications for grants and procurement processes initiated subsequent to
Council having passed a Motion that amends the Purchasing By-law and directs
City Staff to revise relevant purchasing and grant documents. In effect, there
is no legal authority for Council to make such a policy change retroactive.
This is for the information of Council.
Original Signed By
M. Rick O’Connor
City Solicitor
MRO/pc
Attachments:
Document 1 – Provisions of City of Ottawa Purchasing By-law No. 50 of 2000
Document 2 - Summary of Municipalities with a Litigation Exclusion Policy for Procurement
Document 3 - Summary of Municipalities with a Litigation Exclusion Policy to Deny Grants
Document
1
City of Ottawa Purchasing By-law No. 50 of
2000
SUPPLIER PERFORMANCE
37. (1) The
Director shall document evidence and advise Supply Management in writing where
the performance of a supplier has been unsatisfactory in terms of failure to
meet contract specifications, terms and conditions or for Health and Safety
violations.
(2) The City Treasurer may, in consultation
with the Director Legal Services, prohibit an unsatisfactory supplier from
bidding on future contracts.
Document
2
Summary
of Municipalities in Ontario with a Litigation Exclusion Policy for Procurement
Sixteen municipalities in Ontario were contacted in
August of 2008. The purpose of this
research was to explore whether other municipalities in Ontario have by-laws,
policies, or practices related to prohibiting businesses that are currently in
litigation with them from bidding on and obtaining municipal contracts.
Of the sixteen municipalities contacted, eight
municipalities have adopted a lawsuit prohibition by-law or policy applicable
to bidders interested in bidding on municipal contracts for goods, services or
construction. Six of the sixteen municipalities have no such policy or by-law
but have inserted lawsuit prohibition clauses into purchasing / tender
documents. Two of the sixteen municipalities have neither inserted clauses into
purchasing / tender documents nor adopted a lawsuit prohibition by-law or
policy.
# |
MUNICIPALITY |
RESPONSE |
COMMENTS FROM THE MUNICIPALITY |
1. |
City of Windsor |
By-law |
Purchasing By-law |
2. |
City
of London |
Policy |
Purchasing Policy |
3. |
City
of Brantford |
By-law |
Municipal Code |
4. |
Regional Municipality of Niagara |
By-law |
Procurement By-law |
5. |
Regional
Municipality of Waterloo |
By-law |
Purchasing By-law |
6. |
City
of Kitchener |
Policy |
Council Policy |
7. |
City
of Sarnia |
Policy |
Policy |
8. |
City
of Hamilton |
Policy |
Policy in place on Sep
5, 2007 (unable to verify current status) |
9. |
City
of Greater Sudbury |
No By-law/ Policy |
Tender documents contain lawsuit prohibition clause |
10. |
City
of Brampton |
No By-law/ Policy |
Purchasing documents
contain lawsuit prohibition clause |
11. |
District
Municipality of Muskoka |
No By-law/ Policy |
Tender documents
include broad past performance clause |
12. |
City of Oshawa |
No By-law/ Policy |
Tender documents
include lawsuit prohibition clause |
13. |
Municipality of Chatham-Kent |
No By-law/ Policy |
Tender documents
include lawsuit prohibition clause |
14. |
Town of Markham |
No By-law/ Policy |
Purchasing documents
include lawsuit prohibition clause |
15. |
City
of Sault St. Marie |
No By-law/ Policy |
No lawsuit prohibition
clause inserted into documents |
16. |
City of Toronto |
No By-law/ Policy |
No lawsuit prohibition
clause inserted into documents |
Research of Ontario municipalities re
Procurement and organizations in litigation with the municipality 15/09/08
Document 3
Summary
of Municipalities in Ontario with a Policy to Deny Grants to Organizations in
Litigation with the Municipality
Thirteen municipalities in Ontario were
contacted in September of 2008. The
purpose of this research was to explore whether other municipalities in Ontario
have policies related to denying municipal funding to organizations currently
in litigation with them.
Eight of the thirteen municipalities
contacted responded to the request for information. As identified in the table below, none of the
8 municipalities that responded has a policy that denies funding to
organizations in litigation with the municipality.
# |
MUNICIPALITY |
RESPONSE |
COMMENTS
FROM THE MUNICIPALITY |
1. |
City of Windsor |
Does not have such a policy |
Stated this has not been an issue as of
yet. |
2. |
City of London |
No response |
|
3. |
Regional Municipality of Niagara |
Does not have such a policy |
Stated that perhaps they should consider
such a policy. |
4. |
Regional Municipality of Waterloo |
Does not have such a policy |
Stated that perhaps they should consider
such a policy. |
5. |
City of Kitchener |
Does not have such a policy |
Stated this has not been an issue as of
yet. |
6. |
City of Sarnia |
No response |
|
7. |
City of Hamilton |
Does not have such a policy |
No comments made. |
8. |
City of Greater Sudbury |
Does not have such a policy |
Stated that perhaps they should consider
such a policy. |
9. |
City of Brampton |
No response |
|
10. |
District Municipality of Muskoka |
No response |
|
11. |
City of Oshawa |
No response |
|
12. |
Municipality of Chatham-Kent |
Does not have such a policy |
No comments made. |
13. |
Town of Markham |
Does not have such a policy |
No comments made. |
Research of Ontario
municipalities re Grants and organizations in litigation with the municipality
11/09/08
PURCHASING BY-LAW - REVIEW
RÈGLEMENT SUR LES ACHATS - ÉTUDE ET REVUE
ACS2009-CMR-FIN-0058 CITY WIDE/À L'ÉCHELLE DE LA VILLE
Mr. O’Connor noted that the report had been
tabled at the CSEDC meeting of 1 December 2009 for further public consultation
and review. Since that date, pursuant to
the Committee’s direction, staff met with Rob Collins, the City’s Chief Technology
Advisor, on 8 January 2010. Staff also had
an extensive briefing with the Business Advisory Committee (BAC) on 12 January
2010. He noted that the previous day the
BAC forwarded their comments and recommendations on the report, which had been
circulated to Committee members. Also,
legal and procurement staff met with outside legal counsel with regards to many
of these ideas that had been raised both with BAC and Mr. Collins. As a result, staff have done some reviews and
revisions which were presented to Committee.
During the presentation, Mr. O’Connor noted
that subsequent to 8 July 2009, there were additional matters raised at
Committee and Council regarding procurement, including the use of fairness
commissioners, whether or not Council could enact a local preference policy,
and litigation exclusion with regards to
procurement. All of these things were
added to this report.
In reference to the model being proposed, Mr.
O’Connor noted that it was a modified version of the process adopted by the
City of Toronto, which would retain City Council as the ultimate authority.
Mr. O’Connor suggested the “single point of
contact” would belong in two areas with respect to how Committee limits the
debate or discussion on procurement processes underway or currently going
through a complaints process. He
referenced an article in the Montréal Gazette over the weekend that indicated
the City of Montréal had tabled their budget and it included $10 million to
fight corruption in that municipality.
As part of that, their procurement process would prohibit bidders from
discussing during the bidding process any matters, except for the single point
of contact in their procurement office or in their operations. He noted this is what the City of Toronto
has and is what is being recommended through some motions staff crafted for the
benefit of Committee.
Mr. O’Connor suggested that, not only during
the procurement process, but up until the panel report is tabled at this
Committee, bidders should not be discussing the matter with anyone other than
the single point of contact or the Chief Procurement Officer.
Chair Jellett wished to thank the Business
Advisory Committee for the hard work they had put into this process. He informed the Committee that the City
Solicitor drafted a number of motions to reflect the discussion he had with
BAC.
Rob Sproule, Chair of the Business Advisory Committee (BAC),
stated that BAC was blessed to have several participants with considerable
knowledge in the procurement area. He spoke
to a written presentation, which is held on file with the City Clerk. His main points are as follows:
Mr. Sproule advised
that BAC supported the objection process.
The local preference provision caused concern, and the discussion was
that if the evaluation criteria were properly crafted, it would be unlikely
that there would be a tie.
The BAC did have
concerns with discretion being given to the City Treasurer (for the litigation
exclusion), and following the additional comments from the City Solicitor,
perhaps having provisions that precluded people from being part of a tendering
process. Although, giving staff the
opportunity to provide relief would be better than having staff step in when
there is litigation on the table already.
Mr. Sproule suggested that it might be more useful if staff are able to
provide relief if the rules are overly onerous in a particular situation.
Councillor El
Chantiry agreed with BAC’s comments with respect to elected officials being too
involved in the competitive purchase process.
In response to a follow up question from the Councillor, Mr. Sproule did
not think there had been any discussion about limiting involvement when the
evaluation criteria are developed. He
suggested that there could be an approval process on evaluation criteria, or a
more fulsome discussion, as it would be better to consider the range of
alternatives at the front end of the process and make a determination there on
what is sought after. Councillor El
Chantiry advised that he would be asking staff the same question when the
opportunity arose.
Councillor El
Chantiry thanked BAC for the additional proposed recommendations as it captured
what was missing in the report. Mr. Sproule
noted his agreement that there should not be a blank litigation exclusion, given
that the City could be at fault at times and companies should not be
penalized.
Councillor
Chiarelli stated that he was interested in the distinction between organizations
that say the City should be run more like a business. Mr. Sproule explained that BAC opposed the
recommendation that the City Treasurer be given the ability to rule somebody
unable to bid. The discussion was that a
blanket, unfettered right for staff to make a decision about who was or was not
eligible, was a recipe for more litigation.
BAC’s recommendation was that there should be a series of policies and
scenarios developed in advance so there is no appearance of favoritism, or the
opposite, in staff making decisions. He
emphasized that there must be good, solid well-based guidelines for staff in
reaching any decisions they are going to make.
He reiterated that perhaps making those guidelines and regulations on
the heavy side, and giving staff the right to grant relief if the circumstances
seem appropriate, would be less likely to draw litigation than having staff
imposing penalties on people who are already engaged in litigation.
Councillor
Chiarelli remarked that Councillors are elected to make decisions such as those
surrounding procurement. He said there
are arguments for and against Councillors being involved in the process, noting
that the issue had recently been raised by radio hosts with differing opinions,
specifically concerning the bus call procurement. He questioned how Councillors could balance
the responsibility and the accountability, because someone will have to make
the decisions and it becomes a question of whether that someone is accountable
for it.
Mr. Sproule replied
that the goal of radio hosts is to generate discussion to produce a better
show. He added that when there is
turmoil at the award end of any contract it usually means the evaluation
criteria were not adequate. Council
would be much wiser investing the time , effort and thought at the front end of
the process before the tenders go out since the evaluation criteria are
public. A better job at that end will
eliminate virtually all the problems at the award end of the contracting
process.
In response to a
question from Councillor Desroches, Mr. Sproule agreed that there should not be
an ability to bar somebody from the procurement process if they were engaged in
some form of litigation in the past. The
only concern that he mentioned earlier was that there be guidelines for staff
in making that decision, and that it not be left to what, from the outside,
would appear to be an arbitrary decision making process.
Councillor Desroches
noted that Mr. Sproule remarked that he supported the reorganization of resources
so that there is a strong procurement officer.
The Councillor advised that the City is currently spending over $800
million a year in contracts and procurements, and that number is expected to
grow. He noted there may be some that
would criticize this and say that the City is adding a layer. Mr. Sproule did not see it as adding a layer
and suggested that setting policies and facilitating service will continue to
grow making it important that there be an independent, objective procurement
process.
Councillor
Desroches reiterated his earlier remark that the rules need to protect the
taxpayer but the City should also have a friendly face for business in the local
business community. Staff have been
working with the local business industry to offer workshops in order to explain
the process and provide insights on how to do business with the City. The Councillor suggested that he would rather
see the work done upstream with business rather than during the procurement
process. Mr. Sproule agreed and restated
that decisions should be made on the criteria at the front end of the
purchasing process. He added that education
workshops and maintaining a liaison with local businesses is easily done
through these workshops or Chambers of Commerce. He supported the Councillor’s view that a
good working relationship with the business community is important and there
are a number of ways to make that happen.
Councillor
Wilkinson referred to the “criteria” referenced by the delegation. She thought the problems that developed last
year, which she was very involved in, were based more on the criteria and how
they were used than on the whole system.
The Councillor expressed her concern with the number of people who are
disqualified before beginning the process because of the way the criteria are currently
set up. She used the example of calling
out the stops on buses, noting the company that got the contract for Toronto
was disqualified by Ottawa as not being technically capable. Mr. Sproule supposed that in larger, more
complex procurement processes, bringing in an independent fairness commissioner
to assist at the request stage would go some way towards dealing with
that. He added another option with
respect to a communication strategy with the local business community would
assist in bringing forward concerns on why the last process for procuring a
particular good or service was not fair, and adjustments can be made going
forward.
Councillor
Wilkinson stated that she was told by some companies that they would not bid
for the City because of the way the evaluation is done. She advised that there was a meeting taking
place on 5 February at the Nepean Sportsplex for information technology (IT) companies
to review the five-year IT plan and the procurement system. Invitations have just recently been sent out
but she asked if Mr. Sproule or a Member of BAC would be interested in
attending that event. Mr. Sproule
indicated he would aim to be there.
With respect to
local preference referred to by the delegate, Councillor Wilkinson noted that the
Federation of Canadian Municipalities moved a motion because of the “buy
American” policy, and thought it interesting that the Province has criteria for
25 percent buy-in-Ontario content but enforces another rule for municipalities.
Councillor
Wilkinson questioned whether the criteria could include things like having
local people available to work on the materials. Since this would be in Canadian dollars it
would eliminate the worry about transfers if there were additional costs. She also questioned how Councillors would go
about viewing those criteria. Mr.
Sproule thought the criteria could accomodate such things as the Councillor
suggested and added that Councillors could ask to review the criteria with
staff in advance of the proposal going out.
Councillor
Wilkinson suggested the IT Sub-committee might be able to take on some of that
responsibility. Mr. Sproule commented
that with complex issues, the details should be managed at the front end of the
process to avoid costly problems at the back end.
Councillor
Wilkinson noted that in the case of technology procurements in particular, the
product specified in the beginning and obtained at the end of a two-year
process may already be outdated. She
thought it might be possible to change the process to ensure that the most up
to date product would be the one obtained at the end of a process.
Mr. Sproule replied
that can be a complex discussion because trying to be cutting edge is usually
risky and expensive, while being a step or two behind the curve, especially on
technology, is sometimes safer and less expensive. Every procurement process will be different
depending on its focus, so the details should be firm for each process at the
front end..
In response to Councillor
Wilkinson’s concerns in instances when businesses win their litigation against
the City, Mr. Sproule suggested that is why the BAC saw the need to expand
policies, guidelines and procedures concerning litigation. There is a wide range of possible
circumstances, and in fairness to both suppliers and staff, he suggested it was
important to spend the time at the front end on establishing fair guidelines
and allowing staff some flexibility within those priorities.
Councillor
Wilkinson concluded by expressing her appreciation for Mr. Sproule’s attendance
at Committee and the work put in to the notes sent to Committee in advance, as
that is the kind of information that is very helpful from an Advisory
Committee.
Councillor Brooks
expressed concerns about how to create a balance between local and
multi-national businesses, bearing in mind the taxpayers who will eventually
pay for it all. Mr. Sproule reiterated
there is not one solution that would cover all of the City’s procurement
processes. Discussion needs to occur at
the front end when criteria are being set to determine who it might screen
out. He noted there may be a tendency
sometimes to restrict the number of possible bidders because it makes it less
complicated and there may be other instances where having a strong local
service and support component is critically important. Every situation is going to be different so
it is important that the discussion occur at the front end when the evaluation
criteria are being set, in time to get feedback from staff on the potential
impact of moving each of the criteria one way or another.
In response to a
follow up question from the Councillor, Mr. Sproule stated that Council would
be responsible for setting the terms of reference and the rules under which
this process is going to run. Those will
be presented by staff, in consultation with other municipalities, and with
legal counsel and procurement professionals.
There is a lot of new work being done in this area at the federal,
provincial and municipal levels, and guidelines are available.
Councillor Brooks commented that in the past,
there were many examples where a decision was made but the outcome did not
reflect the criteria because it had changed during the process. His last question, which the Councillor noted
was partly directed to staff, was if this new approach would identify the
individual. Mr. Sproule suggested that
staff would be in a better position to respond to that question. Both the Chair and Mr. O’Connor responded to
that question affirmatively.
Having finished with questions to the
delegation, Committee proceeded to address their questions to staff. The Chair noted that there were five motions
which had been prepared, but had not yet been introduced.
Councillor Brooks expressed his appreciation
for the staff presentation, which he suggested was very clear, concise. He referred to the presentation regarding the
Chief Procurement Officer and asked what the additional cost are related to
this position. Ms. Simulik confirmed that
there would be an additional cost but the intention would be to absorb that
cost within the Finance Department.
Councillor Brooks also inquired if other
staff would be added under the Chief Procurement Officer. Ms. Simulik confirmed that existing staff are
in place to support this position. She
also confirmed that, further to the Councillor’s earlier question, that the
Chief Procurement Officer would be the person responsible if things went off
track. Further, she noted that, in
discussing the matter with Jeff Byrne, Manager of Supply, and Rob Collins,
Technology Advisor, if through the process things began to go off track, this
position would have the authority to pull the procurement and start from the
beginning. That is why the position must
be at that level, as often this position would need to break that news to a
General Manager or Deputy City Manager that we are pulling the plug and
starting over.
Councillor Brooks, made reference to Ms.
Simulik’s earlier comment pertaining to slide reference to Slide 7 (re:
Fairness Commissioners) that the intent is not to increase costs. He suggested something more definite than
that was needed.
In response to a question from the Councillor
regarding the City Treasurer’s earlier comments pertaining to the Fairness
Commissioners, Ms. Simulik explained that, currently, the majority of the
purchasing is for capital works in which a budget already is established. The Chief Procurement Officer (CPO) would identify
in advance projects that require a fairness commissioner and the CPO would ensure
that there is appropriate room within that capital budget to absorb it. She noted staff had provided information on
how much had been spent to date on fairness commissioners. Ms. Simulik suggested that, given the magnitude
of the projects, the amount is not particularly significant. She maintained it is something that should be
done more often and advised that it would be built into the capital component
of those works.
Councillor Brooks wished to be clear with regards
to the language, as “intent” has certain connotations with it. With regards to the local preference referred
to in the presentation, he noted that 95 per cent of the annual purchasing
dollar is spent in the local area, and wondered what dollar figure that
represented. Ms. Simulik stated that the
amount was approximately $750 million dollars.
With regards to the local preference, and
“buy local,” Councillor Brooks inquired how it could be enforced with the
labour and discrimination laws. Mr.
O’Connor explained that the City could not invoke a policy locally, because the
Discriminatory Business Practices Act is
very clear, it cannot be discrimination on the basis of geography. He reiterated that the suggestion is that it
could be used as one of the criteria for a tiebreaker, but as noted by Mr.
Collins in his discussions with staff, there have only been two ties in the
last several years in all of these procurements, and both times the proponents
were local; therefore it was decided by a flip of a coin.
Mr. O’Connor agreed with the statement made
by Councillor Wilkinson earlier in that the Province has its own criteria, but added
that they are the ones that passed the Discriminatory
Business Practices Act, therefore staff would need to refer to them. He suggested what they would fear on a larger
policy issue would be 444 different local preference policies that would then
become unmanageable for most businesses.
Councillor Brooks asked staff to define
local. The City Solicitor noted that
staff had given that some consideration with regards to a definition, and what
they would recommend if Council wanted to go down that path, would be to borrow
the term that is used currently in the Agreement on Internal Trade by the
federal government, because they have a “Canadian Supplier” definition, which
they define as “A supplier who has a
place of business in Canada.” If converted to a local supplier, it would be
a supplier with a place of business in the City of Ottawa. He reiterated that this would only be for the
purposes of a tie breaker. He suggested
the Treasurer or Manager of Supply could speak to the other criteria that the
City has for tie breakers that may be of interest to the Committee.
Again with regards to the local preference,
Councillor Brooks inquired, in a situation where there are six or seven
companies claiming to be local, and six or seven multinational corporations, if
this would seen as moving into more legal debate. Mr. O’Connor agreed and noted that whenever
there is a procurement issue, and if it was based on a tie, that would
certainly be something that lawyers would want to examine. He
suggested it could indeed be problematic with a legal challenge down the
road.
Councillor Brooks wondered how a situation
could be prevented such as a multinational company attempts to monopolize
certain local businesses and other local businesses would not be able to
compete because they small companies.
Mr. O’Connor suggested that it could not be prevented and suggested the Councillor was raising
some of the reasons why Committee may not accept this. He noted this was the same discussion BAC
had, with respect to how ‘local’ was defined. He added that even if there is a legal
definition, it would not prevent companies in affiliating or creating a
corporate structure on a temporary basis for the term of the contract.
Councillor Desroches was pleased that the
procurement process has come forward, and suggested that the City should look
at the experiences of other jurisdictions and the wreckage that they have
experienced through very difficult procurement processes that really rattled
the foundation of the public’s confidence in government. He followed up on his earlier question to Mr.
Sproule, regarding how the City could help businesses and asked staff their
perspective on the status of a session that was hosted by the City and the
federal government. Mr. Byrne informed
Committee that the session went very well with 250 registered participants and
another session is schedule with the Federal government and the Province on 3
March.
With respect to the Chief Procurement Officer
position, Councillor Desroches believed it would provide consistency to ensure
that the rules are enforced with integrity and fairness in the process. He referred to the Smart Bus process and
asked staff to confirm that the CPO would have the full scope of the entire
City of Ottawa and not just one or two branches. Ms. Simulik explained that purchasing is
responsible for adherence to the by-law for the entire corporation including OC
Transpo, Ottawa Police and the Ottawa Public Library, which is the reasoning
for the elevation of this position. She
added that problems in the last year related to the Information Technology (IT)
area but with the establishment of the IT Sub-committee, it will be responsible
for developing procurement strategies and reviewing evaluating criteria. She highlighted that there is an average of
1500 contracts a year, noting that two out of the 1500 last year did not go
well.
Councillor Desroches asked that if we approve
and engage of Chief Procurement Officer I don’t think we are done I think this
is the first phase of how we strengthen procurement, this is an important area
for us because we are going to achieve a lot of our efficiencies through
procurement so I don’t think we are finished today in terms of strengthen it I
would like to think we are not learn from the school of hard knocks and how we
can continue to improve this, and I would think that should be part of that
persons mandate, on the job to look at over the course of the next year or the
next two years of their mandate and come back to committee with where we need
to tighten things up, because I don’t think we are done today and I don’t want
to learn from the school of hard knocks that we have not plugged some holes.
In response to a question from the
Councillor, Ms. Simulik agreed that there is still a lot of work within the procurement division in
terms of structuring and establishing a strategic sourcing unit, which will be
responsible for such things as compliance.
She added that there will also be an annual and mid-term review of the
purchasing by-law, twice a term review of governance.
Councillor El-Chantiry restated his question
earlier with respect to solidifying the scope prior to the RFP process to
ensure no changes are made. The City
Treasurer advised that there will be a mechanism in place that will define the
evaluation of the bidders, which is what the IT Sub-Committee will be tasked
with preparing.
In response to a further question from the
Councillor, Mr. O’Connor clarified that the recommendations on page 18 of the
staff report were from the Bellamy report.
He added that staff prepared some motions based on their discussion with
BAC and should Council wish to move in that direction, and motions get passed
with the complaints process or the single point of contact, he suggested that
it would be acceptable for Committee to provide direction in terms of the
complaints process.
Councillor El-Chantiry referred to the recommendation, noting some are requesting Council be removed completely from the process, but asked if it would be possible for staff or the Fairness Commissioner’s Office, the Clerk or Treasurer and/or the Procurement Officer to include a couple of individuals such as a university professor to review the process in the early stages. He added that it would only come before Council as a Whole if there was a problem with the policy without knowing any details with respect to the applicants. Mr. O’Connor clarified that the Councillor was referring to increased flexibility on the review panel and advised that it would be the responsibility of the Chief Procurement Officer who would presumably be the head of the Panel to voice that there is a need for particular advice in a certain area.
Ms. Simulik explained, in a request for clarification from Councillor Wilkinson, that if the City is entering into a process where it may be considered a successful challenged, the Chief Procurement Officer could stop the process and have it re-start with new rules in place to ensure there is no risk. Further, she explained that the Chief Procurement Officer will have a duel role in that this person would responsible for all procurements and ensuring the City gets best value.
In addition, currently all vendor are offered a debriefing from the Procurement Officer to advise as to how they did in the procurement.
Councillor Wilkinson questioned the process for the complaints that are received during the process. Mr. Byrne explained that they are currently listening to complaints during the process with regards to the evaluation criteria. Once the bids solicitation list document is made public, the industry has the opportunity to provide comment, which are taken very seriously and discussed at a high level and then a decision is made as to whether a revision is required.
In reference to Councillor Wilkinson’s last question with respect to the motion on the litigation that was prepared by staff, she noted that it did not include that the criteria be approved by the Committee. The City Treasurer assured that because it is a guideline, it would automatically be brought back to this Committee for approval.
Councillor Bloess did not believe
that all concerns were captured with respect to local suppliers. Mr. Byrne
used the example of maintenance contracts, noting that specifications would
include such things as a response time will no more than eight hours or that
repair work will be done locally. He
advised that statistics reflect that 95 per cent of the work is currently
provided locally.
At this juncture, Acting Chair Desroches requested Committee to
consider the motions put forward.
Councillor El-Chantiry read the following motion:
WHEREAS the Business
Advisory Committee received a comprehensive presentation from staff at their
January 12th, 2010 meeting;
AND WHEREAS the
Business Advisory Committee has submitted a memo, dated January 18th,
2010, which sets out their comments and recommendations on the Report on the
Purchasing By-Law Review; and,
AND WHEREAS the
Business Advisory Committee supports a litigation exclusion on bidders, subject
to staff clarifying the circumstances under which such an exclusion would be
applicable;
THEREFORE BE IT RESOLVED
that Recommendation 5 of the Report be amended by directing staff, prior to
implementing a bidding prohibition against suppliers engaged in litigation with
the City, to clarify the grounds upon which such discretion would be exercised
(e.g. when a supplier has committed fraud against the City or one of its boards
or corporations, has a history of failing to perform under the terms of a
contract or has been found to be in breach of health and safety conditions) and
to consult with the Business Advisory Committee with respect to same.
At this point, Mr. O’Connor reminded Committee that the following
wording be included in the motion: “back
to Corporate Services and Economic Development Committee for approval”.
Committee then approved the motion, as amended:
Moved by E. El-Chantiry,
WHEREAS the
Business Advisory Committee received a comprehensive presentation from staff at
their January 12th, 2010 meeting;
AND WHEREAS the
Business Advisory Committee has submitted a memo, dated January 18th,
2010, which sets out their comments and recommendations on the Report on the
Purchasing By-Law Review; and,
AND WHEREAS the
Business Advisory Committee supports a litigation exclusion on bidders, subject
to staff clarifying the circumstances under which such an exclusion would be
applicable;
THEREFORE BE IT
RESOLVED that Recommendation 5 of the Report be amended by directing staff,
prior to implementing a bidding prohibition against suppliers engaged in
litigation with the City, to clarify the grounds upon which such discretion
would be exercised (e.g. when a supplier has committed fraud against the City
or one of its boards or corporations, has a history of failing to perform under
the terms of a contract or has been found to be in breach of health and safety
conditions) and to consult with the Business Advisory Committee with respect to
same and report back to the Corporate
Services and Economic Development Committee.
CARRIED
Moved by E. El-Chantiry,
WHEREAS the
Business Advisory Committee received a comprehensive presentation from staff at
their January 12th, 2010 meeting;
AND WHEREAS the
Business Advisory Committee has submitted a memo, dated January 18th,
2010, which sets out their comments and recommendations on the Report on the
Purchasing By-Law Review; and,
AND WHEREAS it is
important that adequate notice be given to the business community of any
significant changes to the City’s Purchasing By-law;
THEREFORE BE IT
RESOLVED that, as part of the City of Ottawa making the formal amendments to
its Purchasing By-law, staff consult with the Business Advisory Committee to
ensure that the roll-out of these new City procedures will be brought to the
attention of the business community in a timely manner.
CARRIED
Councillor El-Chantiry read the following motion:
WHEREAS the Business
Advisory Committee received a comprehensive presentation from staff at their
January 12th, 2010 meeting;
AND WHEREAS the
Business Advisory Committee has submitted a memo, dated January 18th,
2010, which sets out their comments and recommendations on the Report on the
Purchasing By-Law Review; and
AND WHEREAS the
Business Advisory Committee has stated, “in order to ensure the integrity of
the competitive system, the City is strongly urged to restrict the flow of
information to and or involvement by any person(s) not directly involved with a
competitive purchase”.
THEREFORE BE IT
RESOLVED that, the Chief Procurement Officer and/or the City’s contact person
identified in a formal procurement process be the only official points of
contact for bidders in a City procurement process or a complaint thereof and
that bidders shall not contact either elected representatives or other staff
regarding that bid; and
THEREFORE BE IT
FURTHER RESOLVED that, should a bidder fail to comply with such protocol, it
shall forfeit its award of contract from the City without any claim whatsoever
for loss or damages against the City.
Councillor Wilkinson felt that the second paragraph was onerous and
suggested that it be removed. Mr.
O’Connor agreed that it be removed and offered to provide different wording
when the revisions are brought back to Committee. Chair Jellett confirmed that the removal of
the second paragraph be considered as a friendly amendment.
Moved by E. El-Chantiry,
WHEREAS the
Business Advisory Committee received a comprehensive presentation from staff at
their January 12th, 2010 meeting;
AND
WHEREAS the Business Advisory Committee has submitted a memo, dated January 18th,
2010, which sets out their comments and recommendations on the Report on the
Purchasing By-Law Review; and
AND
WHEREAS the Business Advisory Committee has stated, “in order to ensure the
integrity of the competitive system, the City is strongly urged to restrict the
flow of information to and or involvement by any person(s) not directly
involved with a competitive purchase”.
THEREFORE
BE IT RESOLVED that, the Chief Procurement Officer and/or the City’s contact
person identified in a formal procurement process be the only official points
of contact for bidders in a City procurement process or a complaint thereof and
that bidders shall not contact either elected representatives or other staff
regarding that bid.
CARRIED
Moved by E. El-Chantiry,
WHEREAS
the Business Advisory Committee received a comprehensive presentation from
staff at their January 12th, 2010 meeting;
AND
WHEREAS the Business Advisory Committee has submitted a memo, dated January 18th,
2010, which sets out their comments and recommendations on the Report on the
Purchasing By-Law Review; and,
AND
WHEREAS the Business Advisory Committee has endorsed the use of Fairness
Commissioners in City procurement processes, subject to certain conditions;
THEREFORE
BE IT RESOLVED that the criteria to engage the services of a Fairness
Commissioner in specific procurement processes as set out in Recommendation 2
of the Report, be adopted and expanded to also include the Recommendations of
the Business Advisory Committee dated January 18, 2010 for the management of
such services by:
a)
ensuring that the
use of Fairness Commissioners is carefully managed to avoid project delays and
increases in acquisition costs;
b)
having Fairness
Commissioner services engaged through a competitive process and that the cost
for such services to the City is fair and reasonable; and
c)
ensuring the scope
of such services is clearly defined, as part of the engagement, including
required deliverables such as written reports and presentations to Committee
and Council, if necessary.
CARRIED
Councillor Desroches read the following motion:
WHEREAS the number of workplace
deaths and injuries are at unacceptable levels; and the quality of workmanship
vital to the durability and achievement of the lowest future maintenance costs
of capital expenditures ; and the need to encourage the supply of skilled
workers and support of Provincial Labour Legislation of critical importance;
and
WHEREAS all levels of government tend to be
amongst the largest purchasers of construction and maintenance services; and
WHEREAS significant public policy goals can
be achieved by the procurement/purchasing policies of The Corporation of the
City of Ottawa;
THEREFORE BE IT RESOLVED that all Requests
for Proposals (RFP) for Construction or Maintenance Services by the City of
Ottawa include criteria in the RFP (Request for Proposals) documents for
assessing the 5-year health and safety record; the 5-year record of support for
apprenticeships; and adherence to the Trades Qualifications Apprenticeship Act
and the Apprenticeship Act of Ontario for all Contractors and Suppliers bidding
for either construction or maintenance work for the Corporation of the City of
Ottawa; and
BE IT FURTHER RESOLVED that employers who
have a sub-standard record in health and safety or a sub-standard record of
apprenticeship support or who do not respect Provincial Legislation be excluded
from bidding on publicly funded City Projects; and,
BE IT FURTHER RESOLVED that the City exclude employers
who have a sub-standard record in hiring and training apprentices from bidding
on publicly funded projects using the last 5-year history of a supplier of
construction services in the assessment process.
Councillor Desroches believed that there were useful recommendations in the motion and although staff had an opportunity to review it, he felt that more time was required to do a full analysis; therefore suggested referring it to staff prior to the entire package going forward to Council.
Councillor Wilkinson agreed with the referral but asked if there should be a specific date attached to the referral. Mr. O’Connor suggested that Committee would refer be given for Council to deal with this at its 27 January 2010 meeting.
Chair Jellett voiced his concern regarding the time frame that is referenced within the document, questioning that if a company would be exempted if it only has been in existence for three years or does not have an apprentice program because it only has two employees and both are certified electricians. Mr. O’Connor said that they also have questions about the language, and advised that if the analysis was not ready in time for Council, then it would be considered during the next governance later in the year, in the next term of Council.
Councillor Chiarelli urged Committee to vote against the motion as he felt that even though it is a good intention, the City has a vast array of policy positions, goals and objectives, and if companies are being imposed upon through the procurement process, no one will want to do business with the City.
Councillor Desroches felt that the motion deserved the opportunity to go through an analysis and added that he agreed the procurement process should not be a means by which priorities are engineered of other organizations. He referred to the second last paragraph and advised that he fully expects that contractors would comply with provincial legislation and that would be a criteria by which would be determining if they would be hired or not.
In response to a question from Councillor El-Chantiry, Mr. O’Connor advised that if possible, staff would have a response on this matter for Council on 27 January. Should staff not have the opportunity to prepare it for the Council meeting, it would be dealt with at the same time as the guidelines.
Moved by S. Desroches on behalf of B. Monette,
WHEREAS the number of workplace
deaths and injuries are at unacceptable levels; and the quality of workmanship
vital to the durability and achievement of the lowest future maintenance costs
of capital expenditures ; and the need to encourage the supply of skilled
workers and support of Provincial Labour Legislation of critical importance;
and
WHEREAS all levels of
government tend to be amongst the largest purchasers of construction and
maintenance services; and
WHEREAS significant public
policy goals can be achieved by the procurement/purchasing policies of The
Corporation of the City of Ottawa;
THEREFORE BE IT RESOLVED that
all Requests for Proposals (RFP) for Construction or Maintenance Services by
the City of Ottawa include criteria in the RFP (Request for Proposals)
documents for assessing the 5-year health and safety record; the 5-year record
of support for apprenticeships; and adherence to the Trades Qualifications
Apprenticeship Act and the Apprenticeship Act of Ontario for all Contractors
and Suppliers bidding for either construction or maintenance work for the
Corporation of the City of Ottawa; and
BE IT FURTHER RESOLVED that
employers who have a sub-standard record in health and safety or a sub-standard
record of apprenticeship support or who do not respect Provincial Legislation
be excluded from bidding on publicly funded City Projects; and,
BE IT FURTHER RESOLVED that the City exclude employers
who have a sub-standard record in hiring and training apprentices from bidding
on publicly funded projects using the last 5-year history of a supplier of
construction services in the assessment process.
REFERRED
YEAS (8): Councillors R. Bloess, G. Brooks, D. Deans E. El-Chantiry, M. McRae, M. Wilkinson, S. Desroches and Chair Jellett.
NAYS (1): Councillor R. Chiarelli.
Chair Jellett confirmed that the above motion has been referred to staff to bring back to Council or this Committee depending timing and resources. In response to a question from the Chair, Mr. O’Connor confirmed that staff would be discussing this with the Building and Trades Council as part of their consultation.
Chair Jellett noted that he has residents, mostly from snow plowing businesses that advise they cannot get a job with the City, nor can they apply to outlining municipalities as they do not hire outside their jurisdiction. Mr. O’Connor advised that staff, upon a diligent search, have been unable to find a municipality that passed a policy such as described by the Chair.
That the Corporate Services and Economic Development Committee
recommend that Council approve that:
1. The City Treasurer be directed to
establish and fill the new position of Chief Procurement Officer;
2. The criteria to engage the services of
a Fairness Commissioner in specific procurement processes as set out in this
report be adopted;
3. Subsection 9(1)(e) of the Purchasing By-law dealing with a
“substantive objection” to a procurement process be revised to adopt the
Comprehensive Complaints Process as described in this report;
4. The Purchasing
By-law be amended to reflect the use of a local preference provision as a
“tie-breaker”; and
5. Staff be directed, prior to
implementing a bidding prohibition against suppliers engaged in litigation with
the City, to clarify the grounds upon which such discretion would be exercised
(e.g. when a supplier has committed fraud against the City or one of its boards
or corporations, has a history of failing to perform under the terms of a
contract or has been found to be in breach of health and safety conditions) and
to consult with the Business Advisory Committee with respect to same and report
back to the Corporate Services and Economic Development Committee; and
6. As part of the City
of Ottawa making the formal amendments to its Purchasing By-law, staff consult
with the Business Advisory Committee to ensure that the roll-out of these new
City procedures will be brought to the attention of the business community in a
timely manner; and
7. The Chief
Procurement Officer and/or the City’s contact person identified in a formal
procurement process be the only official points of contact for bidders in a
City procurement process or a complaint thereof and that bidders shall not
contact either elected representatives or other staff regarding that bid; and
8. The criteria to
engage the services of a Fairness Commissioner in specific procurement
processes as set out in Recommendation 2 of the Report, be adopted and expanded
to also include the Recommendations of the Business Advisory Committee dated
January 18, 2010 for the management of such services by:
i)
Ensuring that the use of Fairness Commissioners is carefully managed
to avoid project delays and increases in acquisition costs;
ii) having Fairness
Commissioner services engaged through a competitive process and that the cost
for such services to the City is fair and reasonable; and
iii) ensuring the scope of
such services is clearly defined, as part of the engagement, including required
deliverables such as written reports and presentations to Committee and Council,
if necessary.
CARRIED
as amended