PROCUREMENT OMBUDSMAN’SANNUAL REPORT 2020-2021

Letter to the Minister of Public Services and Procurement

Dear Minister,

Pursuant to paragraph 22.3(1) of the Department of Public Works and Government Services Act, it is an honour to submit the Procure- ment Ombudsman’s Annual Report for the period of April 1, 2020 to March 31, 2021 (fiscal year 2020-21).

Sincerely,
Alexander Jeglic
Procurement Ombudsman
Ottawa, July 30, 2021

Message from the Procurement Ombudsman

Alexander Jeglic

Looking back on this past year, I find myself once again remarking that we have experienced a year unlike any other. In 2020-21, the COVID-19 pandemic drastically changed the way we live and work. This strange new reality has resulted in an unprecedented focus on federal procure-ment. From early acquisitions of personal protective equipment (PPE) to the focus on vaccines, federal procurement has become a topic of dinnertime conversations in households across the country.

Procurement has been at the forefront of Canada’s response to COVID-19. We saw an influx of new suppliers as Canadian businesses answered the call to supply the federal government with PPE and other medical supplies; a new portal to mobilize industry to provide supplies and information on PPE; and a temporary increase in emergency con-tracting limits to allow for the rapid acquisition of goods and services deemed essential to Canada’s response.

Last April, my office initiated a study on emergency procurement. In examining how emergency procurement practices have been utilized in response to past disasters, we found that a pressing emergency can justify exceptions to certain rules and regulations. But it does not pro-vide justification to set aside the duties of fairness and transparency that exist in non-emergency situations. Procurement practitioners should still, as always, diligently document their files to ensure their decisions can withstand public scrutiny.

At a time when the health, safety and livelihoods of Canadians are intrinsically tied to federal procurement efforts, the need for transparency is significant.

One key area of my mandate is reviewing complaints from Canadian suppliers about the award and administration of federal contracts. This year, despite hosting fewer town hall meetings with suppliers and shifting to a virtual platform for our outreach activities, we heard from more suppliers than ever before. What we didn’t hear, however, were many complaints regarding contracts related to COVID-19. One possible explanation is that it is too early given the extended deadlines to disclose information related to emergency transactions. Given the volume of goods that the federal government is purchasing, it is also likely that the value of many of these procurements may be subject to the jurisdiction of the Canadian International Trade Tribunal which holds responsibility for reviewing complaints regarding contracts valued at or above $26,400 for goods and $105,700 for services. Another possible explanation is that the reduced visibility on some of these transactions is due to the invocation of the national security exception which may prevent suppliers from knowing the outcome of procurement processes and, in so doing, impede their ability to seek recourse. At a time when the health, safety and livelihoods of Canadians are intrinsically tied to feder-al procurement efforts, the need for transparency is significant.

I anticipate that formal complaints on contract award processes and mediation requests on existing contracts may come in the future, as more information is made available. My office is ready to assist Canadian suppliers in resolving these issues, but we need to be alerted as soon as someone becomes aware of any issue, as strict timelines are involved. For now, as Canada focuses on recovering from the pandemic, I would like to reaffirm the importance of the 4 priorities that I established at the beginning of my mandate in 2018.

Procurement Ombudsman’s priorities

Simplification

The complexity of the federal procurement process is something that I repeatedly hear about from suppliers and federal officials alike. It can be notoriously lengthy, burdensome, and hard to navigate. This often creates barriers to entry for small and inexperienced suppliers, and deters suppliers from bidding on opportunities.

I encourage departments to be more proactive and take the time to provide unsuccessful bidders with valuable information about how their proposals were evaluated and where they could improve.

Simplifying the federal procurement process would make it easier for new suppliers to do business with the government, and for federal buyers to efficiently acquire goods and services. My office has seen some progress in this area and we are encouraged by government-wide initiatives such as e-procurement and the simplification of terms and conditions of contracts to improve readability and understanding.

As part of my 5-year plan to review the procurement practices of the top 20 federal departments, my office is identifying opportunities for simpli-fication and highlighting good practices such as standardizing procure-ment documents, including option periods in contracts, and consistently providing detailed debriefings to unsuccessful suppliers. As we carry out our reviews, we are beginning to see the consequences of having an overly complex procurement process in the form of reduced competi-tion. To date, we have launched 10 reviews of these top 20 departments and have completed 4. In these reviews, we have found that an alarming 53% of the competitive solicitation processes reviewed resulted in only 1 bidder. It is important to understand the main causes of this trend, be-cause competition is one of the principal ways in which Canada ensures that it is receiving a fair price and achieving best value for taxpayers.

Transparency

Transparency in federal procurement is more important than ever. The sharing of information following contract award, such as through regret letters and award notices, is often the first way for a supplier to detect that the procurement process was not conducted appropriately. In this respect, there is a direct link between transparency and accountability of public funds.

There is a need for some departments to be more transparent in their regret letters. I encourage departments to be more proactive and take the time to provide unsuccessful bidders with valuable informa-tion about how their proposals were evaluated and where they could improve. It is a matter of mutual respect and transparency that will ultimately prove beneficial for all parties, as suppliers will have the information necessary to improve their proposals and increase their chance of winning contracts, while federal buyers (on behalf of Canadian taxpayers) will receive higher-quality proposals.

The Knowledge Deepening and Sharing initiative has become one of the main ways in which we contribute to strengthening the knowledge and capacity of the federal procurement community.

This year drew attention to the importance of transparency in Canada’s supply chains. When the pandemic hit at the beginning of last year, disruptions were amplified by the interconnected nature of supply chains, with issues well beyond our borders impacting Canada’s ability to purchase goods. Working with suppliers to better understand their supply chains is crucial to managing the risk of future disruptions. This year, my office has also watched with interest the level of transparency surrounding emergency procurement, and plans to continue to monitor this issue in the coming year. If issues persist, this may be an area where we will launch a review to assess the procurement practices of implicated departments and agencies.

Knowledge deepening and sharing

Since 2018-19, my office has undertaken independent research into procurement topics of interest to our stakeholders. It began as a way for us to better understand the root causes of some of the recurring issues we hear about. Now, it has also become one of the main ways in which we contribute to strengthening the knowledge and capacity of the federal procurement community. The aim of these studies is to share knowledge and provide meaningful guidance to suppliers and federal departments. In 2020-21, we shared the results of these research studies at 3 events.

In addition to completing a study on emergency procurement, we also completed 2 new studies. The first study explores the potential impact of a chief procurement officer (CPO) at the federal level, and finds that the CPO model has the potential to address some of the persistent issues in federal procurement, including the lack of standardization and coordination across government departments and the slow pace of reform.

The second study builds on our study of emergency procurement, and is intended to help parties to a federal contract understand the key components of a force majeure clause in instances where un-foreseen events interfere with the parties’ abilities to perform their contractual obligations.

Growth in dispute resolution services

I believe that when a dispute occurs about the terms and conditions of a federal contract, suppliers and buyers should have access to a quick, inexpensive and effective mechanism to work through and resolve the issues together. As an impartial and independent organization, my office is uniquely situated to provide mediation services for federal departments and suppliers that have encountered issues during the administration of a contract. This is why I continue to encourage federal departments to include language in their contracts agreeing to make every reasonable effort to settle disputes amicably, and notifying suppliers about the avail-ability of the Office of the Procurement Ombudsman’s (OPO) dispute resolution services. Suppliers have previously brought to my attention that they have greater confidence in mediation sessions led by an impartial and independent organization such as OPO, rather than dispute resolution services offered by the department engaged in the contract dispute.

Diversity and inclusion

An important theme of the past year has been diversity and inclusion. My office continued our commitment in this area by hosting our third annual Diversifying the Federal Supply Chain Summit, geared toward connecting diverse business owners with organizations that can help them successfully bid on and obtain federal contracts. At the summit, we heard directly from diverse suppliers about the barriers they face in doing business with the federal government, and the need for more diversity and inclusion in the procurement process.

As the Government of Canada moves to adopt a formal policy for engaging in social procurement, it is crucial that we prioritize the collection and analysis of data on diverse communities across the country.

In 2020-21, my office conducted a diversity survey of federal depart-ments in hopes of obtaining baseline data on diversity initiatives in federal procurement. We drew attention to the need for data in our knowledge deepening and sharing study on social procurement, which was published in 2019-20. A key factor raised in this study was that data collection is a known challenge and a hurdle for most organizations. Yet data is crucial to establishing baselines, setting meaningful targets and measuring progress against these targets. As well, it helps the federal government understand how racialized communities currently contrib-ute to the federal supply chain, and how procurement processes may negatively and disproportionately impact these communities. In short, information is the first step to taking meaningful action. As the Govern-ment of Canada moves to adopt a formal policy for engaging in social procurement, it is crucial that we prioritize the collection and analysis of data on diverse communities across the country.

This year, we saw a call to action on anti-racism, equity and inclusion in the federal public service. This call to action includes not only equipping ourselves with the knowledge and tools to address these matters, but also making meaningful change to address the systemic barriers and disadvantages faced by marginalized communities. While COVID-19 has impacted all of us, the impacts have been worse for some groups, including racialized communities. Over the past year, my office has taken action internally by holding an all-staff learning session on unconscious bias, including multiple diversity- and inclusion-related courses on employee training plans, and committing to a 50/30 diversity target to achieve a 50% female and 30% diverse workforce within 5 years. While work is underway across the federal public service to address the sys-temic barriers and disadvantages, I echo the call to action against racism, discrimination and bias, as there is still much more work to be done.

Update on regulatory changes

Last year, I proposed changes to the Procurement Ombudsman Regulations in 2 areas that limit the effectiveness of my office:

• To enable the Procurement Ombudsman to recommend compensa-tion of more than 10% of the value of the contract, up to the amount of actual lost profit incurred by a complainant
• To enable the Procurement Ombudsman to compel (rather than request) departments to provide the documentation necessary for OPO to conduct reviews of supplier complaints and reviews of departmental procurement practices

The challenges of this past year have reconfirmed the importance of having an independent and impartial ombudspersons office that is em-powered to help Canadians. This year, I would like to reiterate the need for these changes and also request a new change that is long overdue:

• The title of my position and the name of the office should be changed to reflect the nature of the role and office. Similar changes have recently been implemented for newly appointed ombudspersons at the federal level. It is seminally important that an ombudsperson represent all people, and for this reason I strongly request that the name of the role and the office be changed from the “Procurement Ombudsman” to the “Procurement Ombudsperson.”

Looking ahead

Many new developments are planned or underway in federal procure-ment that have the potential to bring about significant change. Some of these new developments include:

• The adoption of a formal vendor performance management policy: This policy is designed to improve accountability during the contract management phase and incentivize good performance.
• A policy on the federal government’s approach to social procurement: Over the years, OPO has often heard from procurement officials seeking policy coverage to facilitate the award of contracts taking into account social factors.
• A new procurement directive:The updating or replacement of the Treasury Board ContractingPolicy has been a topic of discussion for many years, and is eagerlyanticipated by both federal departments and suppliers.
• Implementation of an electronic procurement system:Among the anticipated benefits of an electronic procurement system, OPO is optimistic that it will enable federal organizations to compile useful data on the diversity of suppliers both bidding on, and obtaining, federal contracts

These upcoming changes represent an evolution of procurement at the federal level, and my office will continue to help suppliers and federal government buyers with any new issues that arise

Alexander Jeglic
Procurement Ombudsman

The Office of the Procurement Ombudsman

Our mission

We promote fairness, openness and transparency in federal procurement.

Our mandate

The Department of Public Works and Government Services Act provides the following authorities for the Procurement Ombudsman:

Review procurement practices:

Review the practices of federal departments for acquiring goods and services to assess their fairness, openness and transparency, and make appropriate recommendations to the relevant department.

Review complaints related to contract award:

Review complaints respecting the award of any contract that would have been subject to the Canadian Free Trade Agreement, were it not for the value of the contract falling below the applicability thresholds. This applies to the acquisition of goods valued below $26,400 and services valued below $105,700.

Review complaints related to contract administration:

Review complaints respecting the administration of any federal contract for the acquisition of goods or services, regardless of dollar value. Provide alternative dispute resolution: Ensure that an alterna-tive dispute resolution (e.g. mediation) process is provided for federal contracts, regardless of dollar value, if the parties to the contract agree to participate.

OPO supports the Principles on the Protection and Promotion of the Ombudsman Institution (“The Venice Principles”).

Our federal ombudspersons community

An ombudsperson is a public official who is responsible for acting as an impartial intermediary between the public and the government. At the federal level within Canada, there are several ombudsperson offices that are responsible for helping Canadians navigate issues in their respective fields.

In solidarity with other federal ombudsperson offices, OPO supports the Principles on the Protection and Promotion of the Ombudsman Institution (“The Venice Principles”). These principles recognize the im-portance of ombudsperson institutions, and provide guidance for their effective establishment and functioning.

More specifically, OPO would like to call attention to the following key principles:

• The government should support and protect the ombudsperson in-stitution and refrain from any action undermining its independence.
• The independence of the ombudsperson institution should be pro-tected through a direct reporting relationship to Parliament, so that the ombudsperson may inform Parliament on the lack of compliance by the public administration without risk of interference.
• The ombudsperson institution should have sufficient and indepen-dent budgetary resources to ensure full and effective discharge of its responsibilities and functions.
• The ombudsperson should have unrestricted access to all relevant information necessary to carry out investigations, including informa-tion which might otherwise be legally privileged or confidential.
• Any individual should have free and unhindered access to the ombudsperson, and be able to file a complaint.
• The ombudsperson should be immune from legal process in respect of activities carried out in their official capacity for the institution, and this legal immunity should apply after they leave the institution.

For an ombudspersons office to effectively fulfill the role of an impartial intermediary between the public and the government, the principles noted above are of paramount importance.

2020-21 by the numbers

Total number of procurement-related cases

The total number of cases reflects the number of times that OPO was contacted by a stakeholder. Examples of stakeholders include suppliers, a federal government buyer, or an association representing either one. A new case is created each time a stakeholder brings a procurement- related issue to our attention. A case often includes more than 1 issue, and the 437 cases resulted in 612 issues being raised.

Nature of cases

Origin of cases (top departments)¹

This year, the highest number of cases were related to the following 4 departments: Public Services and Procurement Canada, Depart-ment of National Defence, Royal Canadian Mounted Police, and Correctional Service Canada. It is important to note that these federal organizations are also some of the top procurers by volume. As such, it is reasonable that we would hear the greatest number of issues about the departments that conduct the highest volumes of contracting activity.

Who contacted us

How we reached our stakeholders

Total number of outreach events in 2020-21: 51

Top 10 issues

OPO tracks issues raised by our stakeholders in order to identify recurring issues in the federal procurement process.

OPO tracks issues raised by our stakeholders in order to identify recurring issues in the federal procurement process. We record this information as it is provided to us, and use it to identify and analyze the top issues over a given year. This helps us set the direction of our activities, including our reviews of departmental procurement prac-tices and the selection of topics for our research studies.

When a supplier or federal department contacts our office, our team works to understand the issue and categorize it according to the different elements of the procurement process. Sometimes this in-formation is brought to our attention anonymously, as both suppliers and federal officials who contact us have the option of excluding their name and contact information. Our Top 10 issues is a collection of what we have heard over the last year. We have not validated the accuracy of the information that was shared with us, except where an issue prompted a formal investigation of the complaint. We report this information so procurement stakeholders are aware of the issues being raised to our office’s attention.

This year, there were 17 distinct issues that ranked or tied in our Top 10. In the table that follows, similar issues have been grouped to-gether. For example, “refusal to pay” and “payment is late” have been grouped together under “The stakeholder reported payment issues.” We recognize that there are important nuances between each of the issues, and that these nuances can have a direct impact on their remedy. As such, we have also presented each of the distinct issues as well as the number of times that issue was reported to OPO.

As mentioned earlier, OPO had a total of 437 procurement-related cases in 2020-21. These cases included 308 issues that were linked to the following phases of the procurement process:

We also recorded an additional 304 issues related to the overall procurement process; these included topics like how to do business with the federal government, requests for general procurement information, and questions regarding OPO’s mandate.

Top 10 issues in federal procurement

In 2020-21, the Top 10 issues, as reported by our stakeholders, were as follows (including an example for each issue):

How we help

We investigate complaints from suppliers

The Procurement Ombudsman can launch an investigation into for-mal complaints from suppliers about the award and administration of certain federal contracts. To launch an investigation, the complaint must meet the criteria identified in the Procurement Ombudsman Regulations, including:

• The complaint must be from a Canadian supplier.
• The complaint must be filed in writing within 30 working days after public notice of the award of the contract or, if there was no public notice, within 30 working days after the day on which the award of the contract became known or reasonably should have become known to the complainant. In instances where the supplier is unable to meet this filing deadline through no fault of their own, the Procurement Ombudsman may extend this filing deadline to a maximum of 90 days.
• The contract would have been subject to the Canadian Free Trade Agreement, were it not for the value of the contract falling below the applicability thresholds.
• The facts and grounds on which the complaint is based are not and have not been the subject of an inquiry before the Canadian International Trade Tribunal or a proceeding in a court of compe-tent jurisdiction.
• There are reasonable grounds to believe that the contract was not awarded in accordance with regulations made under the Financial Administration Act.

In 2020-21, we received 51 written complaints about the award of a contract, the administration of a contract and general procurement issues. 4 of these met the criteria referenced above: 1 complaint resulted in a formal investigation, and in the other 3 instances, OPO’s involvement led to the resolution of the issue such that an investigation was no longer required. The remaining complaints failed to meet the above criteria and OPO provided information and responses to the stakeholder as required.

In addition, OPO completed 2 investigations launched in 2019-20 in accordance with the legislative timelines set forth in the Regulations. Further details on each investigation are provided below:

Ombudsman determines Department of Fisheries and Oceans correctly awarded contract for vessel charter services

In November 2019, the Procurement Ombudsman received a writ-ten complaint from a supplier (the Complainant) about a contract awarded by the Department of Fisheries and Oceans (DFO) for ves-sel charter services to conduct oceanographic and biological acoustic surveillance. The Complainant protested the award of the contract on the basis that the winning bidder/vessel was foreign-flagged, be-lieving that preference should be given to Canadian companies. The Procurement Ombudsman concluded that since none of the excep-tions in Section 6 of the Government Contracts Regulations were met permitting the contracting authority to set aside the requirement to solicit bids, DFO was neither required, nor permitted, to avoid soliciting bids and to award the contract directly to the Complainant. The Procurement Ombudsman further concluded that DFO correctly awarded the contract to the responsive bidder with the lowest price, and that any concerns with foreign suppliers being invited to bid should have been raised with DFO prior to bid closing.

Acquisition of hotel accommodation services by the Department of National Defence

In February 2020, the Procurement Ombudsman received a written complaint about a contract awarded by the Department of Nation-al Defence (DND) for hotel accommodations for Canadian Armed Forces personnel in Cologne, Germany. The Complainant protest-ed the award of the contract, believing that the hotel proposed by the winning bidder was not within the prescribed 1500 metres of the Cologne Cathedral, and that the Complainant was entitled to a debriefing that included the tender results as well as information from the winning bidder’s proposal. The Procurement Ombudsman’s investigation found both of these claims to be without merit.

While DND should have specified that the distance from the Co- logne Cathedral would be measured ‘as the crow flies’ as opposed to another measurement method such as Google Maps, the onus was ultimately on the Complainant to seek clarification of matters consid-ered ambiguous or uncertain. DND evaluated the bids consistently and the contract was correctly awarded to the lowest priced compli-ant bidder. On the second issue concerning the information provided to the Complainant in the debriefing, OPO considered DND to have provided the Complainant with an adequate debriefing regarding its own proposal and that of the winning supplier.

Acquisition of services for the inventory of bat populations on islands in the Saint Lawrence River by Public Services and Procurement Canada

In September 2020, the Procurement Ombudsman received a written complaint about a contract awarded by Public Services and Procure-ment Canada (PSPC) on behalf of Environment and Climate Change Canada regarding bat inventory services on islands in the Saint Law-rence River. The contract was awarded as a call-up under a Regional In-dividual Standing Offer (RISO). The Complainant contacted OPO to pro- test the award of the contract to a lesser-qualified company for a higher price than what the Complainant had quoted. The Complainant became aware of the opportunity after being contacted by the top-ranked RISO holder about acting as a potential subcontractor to deliver the services in question, as this RISO holder did not possess the capacity to deliver these services. PSPC engaged in discussions with the top-ranked RISO holder and its proposed subcontractor (the Complainant) before award-ing the contract to the next highest-ranked RISO holder.

The complaint raised 2 issues: 1) whether the services fell within the scope of the RISO and PSPC was permitted to award the contract to 1 of the 6 qualified suppliers under the RISO by way of a call-up; and 2) whether PSPC had an obligation to award the contract to the Com-plainant. The Procurement Ombudsman’s review concluded that neither of these issues had merit, and that PSPC was justified in awarding the contract to 1 of the 6 qualified suppliers under the RISO. Notwithstand-ing this conclusion, the Procurement Ombudsman noted that PSPC’s participation in three-way discussions with a potential contractor and its proposed subcontractor (the Complainant) may have blurred the lines about the roles of the parties and created false expectations on the part of the Complainant.

Procurement practice reviews allow OPO to examine the entirety of a department’s procurement activity, not just the lower-dollar-value contracts that OPO sees in our reviews of complaints related to contract award.

Update on a previous investigation

In addition to completing 3 formal investigations, OPO followed up with the Royal Canadian Mounted Police (RCMP) about a review launched regarding a contract for janitorial services. In November 2019, the Pro-curement Ombudsman received a written complaint about a janitorial services contract awarded by the RCMP for one of its detachments. The Complainant, the incumbent service provider, claimed the contract had been awarded to a RCMP employee who worked in that detachment and had been involved in processing the invoices under the previous contract. The Complainant claimed this gave the employee an unfair advantage and allowed the employee to underbid the Complainant. The contract was terminated by the RCMP in 2019-20 and as a result, the OPO review was also terminated, as required by the Procurement Ombudsman Regulations. OPO nonetheless followed up with the RCMP and the Complainant, and confirmed that the situation has been re-solved to the satisfaction of all parties and was informed that the RCMP intended to reissue the solicitation for janitorial services.

We review departmental procurement practices

The Procurement Ombudsman also conducts comprehensive, systemic reviews of departmental procurement practices to assess the practices’ fairness, openness and transparency. Procurement practice reviews allow OPO to examine the entirety of a department’s procurement activity, not just the lower-dollar-value contracts that OPO sees in our reviews of complaints related to contract award. Through these reviews, OPO provides recommendations in areas that require improvement and also highlights good practices. As one of the Procurement Ombudsman’s key priorities, opportunities for simplification are also highlighted in these reviews. The office also conducts follow-up reviews to ensure recommendations have been implemented.

In October 2018, the Procurement Ombudsman approved a 5-year plan to examine the 3 highest-risk procurement elements across the top 20 federal departments identified based on the value and volume of their annual purchasing activity. This year, OPO completed 2 reviews and launched an additional 6 reviews that will be completed within the legis-lated timeline and reported on in OPO’s 2021-22 annual report.

The objective of these reviews is to determine whether procurement practices relating to evaluation and selection plans, solicitation, evaluation of bids and contract award are conducted in a fair, open and transparent manner. To determine this, OPO examined whether departmental procurement practices were consistent with Canada’s obligations under national and international trade agreements, the Financial Administration Act and the regulations made under it, the Treasury Board Contracting Policy and, where applicable, depart-mental guidelines. Summaries of the reviews completed this year are provided below.

Reviews completed in 2020-21

1. Procurement practice review of Employment and Social Development Canada (ESDC)

ESDC was selected for review as part of OPO’s 5-year review plan. Following this selection, an initial review of the contracting data revealed that the majority of ESDC’s procurement activity involved contracts for which PSPC or Shared Services Canada (SSC) acted as the contracting authority, or consisted of call-ups against a standing offer, which prohib-ited OPO from assessing ESDC’s practices against the lines of enquiry mentioned above. As a result of the small number of contracts that fell within OPO’s review program, OPO decided to conduct a micro-review of ESDC’s procurement practices, which involved an assessment of 10 procurement files, as opposed to the 40 files that are typically selected under this review program.

The Procurement Ombudsman made 3 recommendations to ESDC:

• Implement measures to ensure that the existing guidance regarding the development of evaluation criteria is implemented by ESDC’s project authorities, and that ESDC’s Procurement Group exercises the necessary oversight to ensure that evaluation criteria are com-municated in a clear, precise and measurable manner.
• Implement measures to ensure that communications with suppliers support the preparation of responsive bids, including ensuring that suppliers be provided adequate time to prepare and submit tenders.
• Implement measures to ensure evaluations are carried out in accor-dance with the planned approach and are appropriately documented to support the transparency of the award process.

The full report is available on OPO’s website. A follow-up review will be completed in 2 years to assess the implementation of ESDC’s action plan to address the recommendations.

2. Procurement practice review of Environment and Climate Change Canada (ECCC)

The Procurement Ombudsman made 4 recommendations to ECCC:

• Establish a mechanism to ensure clarity and accuracy in evaluation criteria, selection methodologies and bidder instructions to avoid discrepancies in the bidding processes.
• Establish mechanisms to ensure that relevant information is shared with all suppliers simultaneously, and ensure that all relevant communications with suppliers are properly documented.
• Establish mechanisms to ensure that bid evaluations adhere strictly to the evaluation criteria in solicitations, are carried out in accordance with planned approaches and are appropriately documented.
• Establish a mechanism to enforce the requirement to document every decision of business value and maintain up-to-date and complete procurement files.

The full report is available on OPO’s website. A follow-up review will be completed in 2 years to assess the implementation of ECCC’s action plan to address the recommendations.

We follow up on previous reviews

In addition to completing 2 formal reviews, OPO also followed up on the recommendations made in 2 reviews that were completed in pre-vious years. The purpose of the follow-up exercises was to determine whether the departments implemented the Procurement Ombuds-man’s recommendations.

The assessment of progress made against recommendations was based upon each department’s self-assessment and statements about its plans and actions, coupled with supporting documentation. For each recommendation in the original review, OPO reviewed the information provided for overall reasonableness and credibility.

The purpose of the follow-up exercises was to determine whether the departments implemented the Procurement Ombudsman’s recommendations.

1. Follow-up of the procurement practice review of Elections Canada

In 2017-18, OPO conducted a procurement practice review of bid solicitation processes of the Office of the Chief Electoral Officer (Elections Canada) and made 2 recommendations:

• Ensure all solicitations meet the Treasury Board Contracting Policy and the Election Canada’s Procurement and Contracting Guide requirements for establishing bidding periods, with particular em-phasis on those requirements below $25,000.
• Ensure the evaluation criteria and selection methodology are in-cluded in the solicitation documents, particularly on those require-ments below $25,000.

As part of the follow-up review, OPO requested Elections Canada provide information on actions planned or implemented as a result of the recommendations. OPO found Elections Canada’s self-assess-ment to be reasonable and credible. The documentation provided by Elections Canada was sufficient to demonstrate its implementation of the recommendations and that actions have been both planned and taken to strengthen the fairness, openness and transparency of its procurement practices.

2. Follow-up of the procurement practice review of Courts Administrative Service (CAS)

In 2017-18, OPO conducted a review of the procurement management control framework of CAS and made 6 recommendations:

• Amend the Contract Review Committee’s Terms of Reference to clearly describe the committee’s role, responsibilities of members, membership, and processes and procedures, including the methods by which the committee will report to senior management on its activities and results.
• Formally document, approve and implement departmental procure-ment guidance, including procedures and guidelines. Consideration should also be given to documenting the process and controls for contracting for legal services.
• Document the process for assessing procurement risk and the use of risk information to support decision making.
• Develop, implement and maintain a departmental procurement plan.
• Establish formal documented mechanisms for monitoring procure-ment activities.
• Review controls in place to ensure proper disclosure of contracts under the Treasury Board Secretariat Guidelines on the Proactive Disclosure of Contracts, which came into effect January 1, 2018.

As part of the follow-up review, CAS self-assessed the implementation of each of these 6 recommendations as “full implementation.” In its assessment, OPO determined that 5 of the 6 recommendations had been fully implemented, and that greater work was required to develop, implement and maintain a departmental procurement plan in line with recommendation 4.

While CAS had clearly defined the purpose of a departmental procurement plan, they would benefit from complete and up-to-date procurement information to set out upcoming procurement priorities and to allow for the proper planning and management of ongoing pro-curement and contracting activities. CAS has recently drafted a more strategic procurement plan that will be finalized in Q1 of 2021-22. It is likely that, if approved, this new document will be sufficient to fully address the recommendation.

Reviews to be completed in 2021-22

As part of the 5-year review plan, the Procurement Ombudsman launched an additional 6 reviews in 2020-21, which will be completed in 2021-22. These include reviews of Parks Canada; the Royal Canadian Mounted Police; Transport Canada; Immigration, Refugees and Citizenship Canada; the Canada Border Services Agency; and Natural Resources Canada.

In addition to the planned reviews included in the 5-year plan, the Procurement Ombudsman also has the ability to launch ad-hoc reviews if there are reasonable grounds to do so. This year, an ad-hoc review of procurement practices associated with the award of directed contracts to WE Charity was initiated. This review involved contracts awarded by 4 federal organizations: Global Affairs Canada, the Canada School of Public Service, the Privy Council Office and the Public Health Agency of Canada. The review will be completed within the regulatory deadline in 2021, published on OPO’s website and reported on in our next annual report.

We offer fast, effective and cost-efficient alternative dispute resolution services

OPO offers alternative dispute resolution (ADR) services, e.g. mediation, to suppliers and federal officials for contractual disputes or any other issues that arise between the parties to a federal contract. Either the supplier or the government organization can request these services, and both must agree to participate in this voluntary process.

Engaging in mediation offers all parties to the contract the opportunity to be heard in front of an impartial and independent third party.

The growth of ADR services continues to be 1 of the Procurement Ombudsman’s key priorities. In the past year, OPO started to use vid-eo-conferencing platforms to conduct “face-to-face” mediations without requiring participants to travel to the location of the mediation. As the office continues to operate in a virtual setting, staff are gaining knowl-edge and improving practices associated with virtual mediation in order to best serve the needs of stakeholders.

Engaging in mediation offers all parties to the contract the opportunity to be heard in front of an impartial and independent third party. If a de-partment refuses to participate in mediation and fails to resolve the dis-pute with the supplier, the result can be a loss of trust in the mechanism established by Parliament to serve the needs of suppliers. This is one of the main reasons why the Procurement Ombudsman asked 83 federal departments to include language in their contracts agreeing to make every reasonable effort to settle disputes amicably, and to clearly and transparently notify suppliers about the availability of OPO’s dispute resolution services. To date, most departments have already agreed to include this language in their contracts and the Ombudsman strongly encourages all remaining departments to include the requested ADR language as quickly as possible.

In 2020-21, OPO received 9 requests for ADR services:

• In 1 case, both parties agreed to use our ADR process, and their issues were formally resolved with a settlement agreement.
• In 3 cases, the department declined to participate in the ADR process.
• 2 cases were deemed to not meet the Procurement Ombudsman Regulations and could not be considered further.
• 3 cases were resolved after March 31, 2021, and will be reported on in the next fiscal year.

Our evolving role

The Chief Procurement Officer model shows potential to address some of the persistent issues in federal procurement including the lack of standardization and coordination across government departments, and the slow pace of reform.

Knowledge deepening and sharing

One of the ways OPO contributes to strengthening the federal pro-curement community is by conducting and sharing research to better understand issues in federal procurement. Each year, OPO engages in a scan of the federal procurement environment to identify emerg-ing trends, recurring issues and knowledge gaps. From this analysis, topics are selected that are of interest to our stakeholders, including buyers and suppliers.

Once topics are confirmed and studies completed, the office seeks to share the information from the studies as broadly as possible. This year, OPO presented the findings of our study on emergency procurement at the Supply Chain Canada National Conference, at the Canadian Institute for Procurement and Material Management Virtual Summit and to PSPC’s Client Advisory Board.

OPO also completed 2 additional studies. A summary is provided below, and the full reports are available on OPO’s website.

Chief procurement officer

This study recommends that the federal government consider cre- ating a chief procurement officer (CPO) as a leader for procurement at the federal level. Through an examination of jurisdictions that have established a CPO, both within Canada and internationally, the study finds that the CPO model shows potential to address some of the persistent issues in federal procurement including the lack of standardization and coordination across government departments, and the slow pace of reform. Benefits of having a CPO in place include more cohesion of policy and guidance, increased oversight, and greater standardization, training and professionalization of the procurement function.

Force majeure

Building on OPO’s study of emergency procurement, this study was undertaken during the COVID-19 pandemic for the purpose of helping parties to a federal contract understand the key components of a force majeure clause and to explain its utility. A force majeure clause is intended to define the types of relief available to the parties to a contract in the event that unforeseeable circumstances prevent them from fulfilling their contractual obligations. This clause typically includes a list of events that would qualify as ‘force majeure’ (such as a tornado or a pandemic) and identifies options available to the parties should these events occur. The COVID-19 pandemic is expected to leave many federal contractors unable to fulfill their contractual obligations as originally contemplated. As a result, it is anticipated that many of these contractors may seek to obtain relief from their contractual obligations through the force majeure clause. The study seeks to provide some clarity to the federal procure-ment community (both buyers and suppliers) about the legal framework related to a force majeure clause.

Diversity and inclusion

Diversifying the Federal Supply Chain Summit III

Consistent with OPO’s commitment to increase the diversity of suppli- ers in the federal supply chain, the office hosted its third annual Diversi-fying the Federal Supply Chain Summit to connect under-represented Canadian business owners with representatives from the Government of Canada, supplier councils and other organizations that can help them access federal contracting opportunities.

The summit was held virtually due to the restrictions on public gather-ings. As a result, over 800 attendees participated from across Canada.

The summit featured 3 half days of programming that included a variety of presentations, workshops and concurrent information sessions. Sup- pliers benefited from various workshops and presentations where they learned more about the programs, tools and resources that are available to help them do business with the Government of Canada.

They also had the opportunity to engage with representatives from the Government of Canada and various supplier councils and organi- zations, including the Office of Small and Medium Enterprises at PSPC, the Business Development Bank of Canada, Women Business Enterprises Canada and the Canadian Council for Aboriginal Business.

The feedback received from participants reaffirms the ongoing need for these types of initiatives. They serve as a forum to connect suppli-ers with federal procurement stakeholders and raise awareness about the resources created to help diverse suppliers. Some of the key mes-sages heard loud and clear are the need to implement social procure-ment policies to increase the diversity of bidders on federal contracts, and the need for clear and transparent data to assess the outcomes of these policies.

OPO is committed to continuing our efforts to diversifying the federal supply chain. Planning for the fourth annual summit is underway.

It was an excellent use of my time, and I got a huge amount of benefit from it, and information which will benefit my company and colleagues. This was my first Summit, but it definitely won’t be my last. — Canadian supplier

Diversity survey

Recognizing the importance of baseline data to improving supplier diversity moving forward, OPO surveyed federal departments to gain information on diversity initiatives in the federal government. We received responses from 72 of the 83 federal departments and agencies surveyed. The survey showed that while there are some positive developments and awareness, there is still much work to be done. The survey also underscored the significant need for baseline data. OPO will continue to gather information on such initiatives in order to better understand the current state of efforts to expand procurement to under-represented groups, and to better support these important initiatives.

How we are doing the work

OPO recognizes that the federal government has a way to go in terms of increasing the diversity of its workforce. In an effort to move this important issue forward, our office has committed to lead-ing by example and will ensure that our human resources practices take into account diversity in all our hiring decisions.

In an effort to make OPO more reflective of the diverse population we serve, we have committed to deliver on the 50/30 challenge: bringing OPO’s teams to 50% women and 30% diverse groups within 5 years.

OPO is passionate about the need for greater diversity in the federal supply chain. This passion has led us to create an annual summit to connect diverse suppliers with stakeholders, and to conduct independent research into social procurement. While the volume of goods and services that OPO acquires on an annual basis pales in comparison to large federal departments, OPO is committed to engaging in social procurement at every opportunity.

OPO is also committed to considering accessibility requirements in all of our procurement activities. This is consistent with the amendment to the Treasury Board Contracting Policy that requires departments to consider accessibility in the procurement of goods and services.

In addition to accessibility considerations in OPO procurements, the office took action to improve accessibility in all of our activities. After soliciting feedback and information from accessibility experts, we ensured that accessibility considerations were integrated in the planning and implementation of our outreach activities. Some examples of measures taken for in-person gatherings include the use of high-contrast tablecloths for individuals with visual impairments, increased chair and table spacing for those with reduced mobility, and designated zones for wheelchairs and other mobility aids. OPO also ensured that the venue used for the second annual Diversifying the Federal Supply Chain Summit in Toronto had automatic doors installed throughout to ensure individuals with reduced mobility could access all areas.

This year, in addition to providing simultaneous sign language inter-pretation services during our outreach activities, OPO also ensured that our selection of online platforms was reflective of our commit-ment to reduce barriers to accessibility.

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Supporting suppliers

How we engaged with the supplier community

Despite the limitations on public gatherings, OPO continued efforts to connect with Canadian suppliers to raise awareness of OPO’s ser-vices and to provide them with a platform to share their experiences.

In 2020-21, OPO hosted 6 virtual multi-city town halls that gathered approximately 500 suppliers across Canada, and participated in 4 trade shows.

OPO uses the information provided by suppliers to identify the key issues they face in doing business, or trying to do business, with the federal government. OPO raises awareness of these issues in multiple ways to make sure decision makers are aware of concerns expressed by suppliers. These issues inform OPO’s decision making and help identify problematic areas of federal procurement that would benefit from a review. OPO also makes departments aware of these issues so that they can be proactive in addressing them.

How we reached diverse suppliers

Consistent with OPO’s ongoing commitment to increasing the diversity of the federal supply chain, in addition to hosting the Diversifying the Federal Supply Chain Summit, OPO undertook outreach activities to specifically reach diverse supplier groups. OPO delivered presentations at an event hosted by Stó:lō Community Futures, an organization that offers business counselling and business loans to small- and medium-sized Indigenous businesses, and to the Canadian Black Chamber of Commerce. OPO also participated in 2 events organized by the Women’s Enterprise Centre, a non-profit organization devoted to helping women start, lead and grow their own business.

Despite the challenging circumstances of the past year that prevent-ed in-person meetings with suppliers, OPO continued efforts to con-nect with Canadian suppliers. OPO remained committed to ensuring that outreach activities were as inclusive as possible and that every stakeholder could access and benefit from OPO’s services.

Transitioning to an online platform enabled OPO to expand its reach to simultaneously connect with suppliers across Canada, including in Miramichi, New Brunswick; Summerside, Prince Edward Island; Saanich, British Columbia; and Trois-Rivières, Quebec. This approach to outreach allowed OPO to make the most out of a challenging situation, and provided a forum to connect with suppliers in smaller regions in Canada where OPO may not have traditionally visited. Suppliers in these regions may not have previously had the opportu-nity to come together and share their experiences in doing business with the Government of Canada, and OPO plans to continue to en-sure they are given a voice through future online outreach activities.

This collaborative arrangement offers suppliers the opportunity to have a summary of their complaint shared with both organizations simultaneously so that it can be assessed in a timely manner.

How we are working with the Canadian International Trade Tribunal to help suppliers

OPO recognizes the significant benefits of ongoing collaboration with the Canadian International Trade Tribunal (CITT) to better serve the needs of Canadian suppliers that encounter procurement issues. That is why the Procurement Ombudsman and the Chair-person of the CITT established a Memorandum of Understanding (MOU) that came into effect on October 1, 2020. The MOU facil-itates improved supplier access to each organization’s respective complaint review mechanisms. It enables both organizations to immediately share information related to complaints, with the com-plainant’s consent, so that suppliers are quickly advised of the dead- lines to file their complaints with the appropriate organization. This collaborative arrangement offers suppliers the opportunity to have a summary of their complaint shared with both organizations simul-taneously so that it can be assessed in a timely manner. It also allows both organizations to quickly determine jurisdiction so that suppliers can file their complaint with the appropriate body, reducing the risk that the supplier will miss one of the filing deadlines. In addition to simplifying the complaint process for suppliers, the MOU allows for continued co-operation between OPO and the CITT in other areas, including the possibility of collaborating on the development of knowledge deepening and sharing studies that are of interest to both suppliers and federal departments.

Since the MOU came into effect in October 2020, OPO has received 22 cases from the CITT. OPO is using the information in these com-plaints to identify and track procurement issues, and inform future decision making regarding our selection of areas for review.

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Strengthening the federal procurement community

How we engaged with federal officials

In 2020-21, OPO continued our efforts to strengthen and support the federal procurement community.

OPO attended 14 information-sharing sessions with federal officials where we shared information that our office heard from Canadian suppliers and other stakeholders. The meetings provided an open forum for discussion with regard to any issues in the procurement process. At-tending events with the procurement community allows OPO to share the issues that we hear from Canadian suppliers, and bridge the gap between suppliers and the federal procurement community. Bringing these issues to their attention allows them to understand the challenges that suppliers face when navigating the federal procurement process.

OPO also attended a number of online events such as the Canadian Institute for Procurement and Material Management Virtual Summit. Here OPO learned more about the issues that buyers experience when procuring for the Government of Canada. We also raised awareness about the services that OPO offers to support them, namely alternative dispute resolution, including mediation services.

OPO understands that it can be more difficult for stakeholders outside the National Capital Region (NCR) to engage with our office. We seized the opportunity that these sessions gave us to continue our efforts to reach out to stakeholders everywhere in Canada, well beyond the limits of the NCR.

Office of the Procurement Ombudsman clauses

We believe that awareness of and access to OPO’s services should be as easy as possible for Canadian suppliers. The most obvious place to start is in federal departments’ procurement and contract documents. That is why the Procurement Ombudsman wrote to the deputy heads of 83 departments and asked them to add standard language about OPO’s services in their solicitation documents, contracts and regret letters. These clauses provide suppliers with clear information on filing a complaint with OPO, or seeking the office’s dispute resolution (e.g. mediation) services.

To date, 93% of departments have responded, and we expect full support from government departments and agencies as part of the government’s commitment to enhancing transparency.

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Appendix A

Statement of operations for the year ended March 31, 2021

1. Authority and objective

The position of Procurement Ombudsman was established through amendments to the Department of Public Works and Government Services Act. The Procurement Ombudsman’s mandate is further defined in the Procurement Ombudsman Regulations. The Office of the Procurement Ombudsman’s mission is to promote fairness, openness and transparency in federal procurement.

2. Parliamentary authority

The funding approved by the Treasury Board for the operation of the Office of the Procurement Ombudsman is part of Public Works and Government Services Canada’s (PWGSC)² appropriation, and conse- quently, the office is subject to the legislative, regulatory and policy frameworks that govern PWGSC. Nonetheless, implicit in the nature and purpose of the office is the need for the Office of the Procure- ment Ombudsman to fulfill its mandate in an independent fashion, and be seen to do so, by maintaining an arm’s-length relationship with PWGSC and all other federal departments.

² The Department of Public Works and Government Services, or Public Works and Government Services Canada, is now referred to as Public Services and Procure-ment Canada.

3. Statement of operations

³ This collaboration has allowed the Office of the Procurement Ombudsman to increase efficiency by leveraging Public Services and Procurement Canada’s exper-tise in these areas, and to ensure adherence to necessary policies and procedures while respecting the independence of the office in delivering on its mandate.

4. Proactive disclosure

Compliance with the Treasury Board of Canada Secretariat and Pub- lic Services and Procurement Canada (PSPC) financial management policies requires the mandatory publication of the Procurement Ombudsman’s travel and hospitality expenses. It also requires dis- closure of contracts entered into by the Office of the Procurement Ombudsman for amounts over $10,000. Information on our proactive disclosures can be found by selecting the “Disclosure of Travel and Hospitality Expenses” link on PSPC’s “Transparency” webpage or on the “Open Canada” website by searching for “Procurement Ombuds- man.” Disclosure of our contracts is published under PSPC as the organization.