The Broader Public Sector Interim Measures – Mandatory or Voluntary Compliance?

The Interim Measures, effective March 18, 2019, were released by the Ontario Government to centralize the Ontario Public Service and broader public sector (“BPS”) purchasing and supply chains. It is part of the government’s plan to transition to a centralized procurement model and is applicable to hospitals, school boards, universities, colleges and post-secondary institutions, children’s aid societies and shared services organization/group purchasing organizations.

This blog focuses on the impact of the Interim Measures on BPS organizations, based on information available to us.

What are the Interim Measures?  

New procurements of goods and services valued at $25,000 or higher are subject to the Interim Measures, which request BPS organizations to use an existing Vendor of Record (“VOR”) arrangement where possible and appropriate; and ensure all new contracts have a term not exceeding two years, including any extensions. “New procurement” is broadly defined and includes any new RF[X], new limited tendering, new piggyback or extension of any existing contract beyond the current term.

Does your organization have to comply with the Interim Measures?

Funding ministries will inform BPS organizations on whether compliance with the Interim Measures is mandatory or voluntary. In order for it to be mandatory, there must be a legislative authority for the funding ministry to provide direction to the BPS organization – and the funding ministry must clearly exercise that legislation authority. For voluntary compliance, there is either no legislative authority available or legislative authority has not been exercised.

So, how will your organization know if compliance with the Interim Measures is mandatory or not? You will have to ask yourself the following questions:

  • What does your cover letter from the funding ministry say?
    • Check the cover letter and materials provided by your funding ministry to see if it explicitly states whether the requirements are mandatory or voluntary. The covering letter may state that compliance is expected as opposed to required.
    • Does the cover letter refer to any legislative authority to issue a directive to your organization?
  • Does your Ministry have legislative authority to provide directive to your organization to comply with the Interim Measures?
    • For example, for hospitals, the Interim Measures are not mandatory as the Ministry of Health and Long-Term Care does not have the legislative authority to issue procurement directives to the hospitals. Only the Management Board of Cabinet has the authority under the Broader Public Sector Accountability Act.

So, if compliance is voluntary, what does that mean for your organization? Even if the Interim Measures are voluntary, we recommend that BPS organizations should try to comply with the Interim Measures where they can in order to demonstrate that they are good “BPS citizens”.  Remember that BPS organizations still have to comply with the BPS Procurement Directive.

If you are unsure about whether your organization has to comply with the Interim Measures, feel free to reach out to DDO’s procurement team:

Kathy O’Brien – kobrien@ddohealthlaw.com

Michael Gleeson – mgleeson@ddohealthlaw.com

Pamela Seto – pseto@ddohealthlaw.com

 

Conducting Supplier Debriefings

The Broader Public Sector Procurement Directive entitles unsuccessful proponents participating in a procurement valued at $100,000 or more to a supplier debriefing. A debriefing is an opportunity for a proponent to:

  • discuss with the purchaser the strengths and weaknesses of the proponent’s submission in relation to the evaluation criteria of the procurement;
  • ask questions related to the procurement process; and
  • provide feedback on how the procurement process and the purchaser’s practices could be changed or improved.

A purchaser must include in the documents that initiate a procurement details about supplier debriefings, including the process by which a proponent can request a debriefing. A purchaser must provide proponents with at least 60 days following contract award notification to request a debriefing.

A debriefing should be a process that allows both the purchaser and a proponent to gain valuable input from the other. However, if not conducted properly, a debriefing could lead to additional questions or process-related challenges from a proponent, which would likely mean greater costs being incurred by the purchaser for staff time and legal fees.

To ensure that your organization carries out debriefings efficiently, effectively, and in keeping with applicable regulatory and contractual obligations, your debriefing processes should be formalized to ensure consistency and your staff should be educated on restrictions imposed by applicable procurement requirements and contractual obligations.

DDO is experienced in helping our clients to:

  • establish straight-forward and effective processes for addressing debriefing requests;
  • ensure that their staff are up-to-date on current legislative and regulatory requirements related to debriefings;
  • create an agenda for debriefings that will allow for consistency across debriefings and contribute to the (a) equitable treatment of proponents and (b) transparency of the process;
  • formalize document management and record-keeping procedures for debriefings;
  • train procurement staff on leading a debriefing and on identifying questions that are out of scope of a debriefing; and
  • educate staff on the confidentiality obligations that a purchaser owes to the proponents in a procurement process.

If you are interested in DDO providing your organization with advice on debriefings, or if you have any specific questions related to debriefings, please do not hesitate to reach out to me: mgleeson@ddohealthlaw.com

Educating Your Procurement Team

“An ounce of prevention is worth a pound of cure.”

One good way to help your organization avoid claims related to a procurement process is to provide some simple training to your staff members who will be participating in the procurement process. In many cases your internal evaluation team will include individuals for whom procurement is not an everyday part of their jobs. These staff members will likely be unaware of the basic principles, rules, and processes with which your organization must carry out its procurement activities.

DDO believes that there is significant value in educating your internal procurement team on such things as:

  • conflicts of interest;
  • treatment of incumbent vendors;
  • the dangers of politicizing procurement decisions;
  • confidentiality;
  • communication with proponents during the procurement process;
  • process transparency; and
  • equal treatment of vendors.

If your staff are unfamiliar with the above-listed ideas, which are essential for a properly run procurement process, a staff member could unwittingly put your organization in breach of applicable procurement rules. Such a breach could force you to re-do the relevant procurement process and put your organization at risk of a legal claim brought by an unhappy proponent.

DDO can help you to create simple and efficient tools to ensure that your procurement team has knowledge of (or, as applicable, are simply reminded of) essential procurement rules prior to their participation in a procurement process.

Contact me: mgleeson@ddohealthlaw.com

 

Beware the Scope of the CFTA

If your organization is a broader public sector organization that is subject to the procurement requirements of the Broader Public Sector Procurement Directive (the “Procurement Directive”) and the (still relatively new) Canadian Free Trade Agreement (“CFTA”), then please take note that the CFTA applies to certain procurements that the Procurement Directive does not.

The Procurement Directive requires organizations to maximize the value that they receive from “public funds”. In the Broader Public Sector Accountability Act, which is the Ontario legislation under which the Procurement Directive came into force, the term “public funds” is defined, subject to certain exclusions, as follows:

“public money of the province of Ontario that is provided by the Government of Ontario or an agency of the Government of Ontario, directly to any authority, board, commission, committee, corporation, council, foundation or organization through a grant or transfer payment or other funding arrangement, and, in the case of a school board, includes money received by the school board from taxes levied under the Education Act for school purposes.”

Based on this definition, the source of funds used for procuring a good or service is relevant to whether the Procurement Directive would apply to the procurement of such good or service. For example, if a public hospital were to purchase goods using funds that were received through charitable donations or that were proceeds from revenue-generating aspects of its activities, that purchase would not be subject to the requirements of the Procurement Directive because it would not involve the expenditure of public funds.

The CFTA, which came into effect just over a year ago (July 1, 2017), does not include a similar reference to public funds and, therefore, is not limited in application only to procurements involving such funds.

The CFTA does include an exemption related to the source of funds for a procurement, but the exemption is far more limited than an exemption for all procurements using non-public funds. The relevant exemption states that the procurement chapter of the CFTA does not apply to “procurement of goods or services financed primarily from donations that require the procurement to be conducted in a manner inconsistent with this Chapter”. In other words, in order for a procurement carried out using donated funds to be exempt, the donated funds would have to have been received by the purchasing organization under a condition that specifically required that the funds be used in a manner that conflicts with the procurement requirements of the CFTA. In our experience, the attachment of such a condition to donated funds would be unusual.

How can we help you?

DDO encourages broader public sector organizations to review their procurement policies to ensure compliance with the requirements of the CFTA. The public funds issue described above is just one of several issues on which the CFTA differs from the Procurement Directive. If you would like help in ensuring that your procurement policies are up to date, please do not hesitate to contact me: mgleeson@ddohealthlaw.com

Why Use a Fairness Commissioner?

To enhance the integrity of the procurement process, some organizations consider using a fairness commissioner. This blog post provides a brief description of the role and responsibilities of such an individual, along with the potential benefits of implementing this role.

Description

The role of a fairness commissioner was first envisioned in the Bellamy Report (the “Report”), which was released in 2005 following an inquiry commissioned by Justice Denise Bellamy. It was based on the City of Toronto’s Request for Quotation for new computer acquisition needs. The Report highlighted various findings and recommendations pertaining to the procurement process, both specifically related to the inquiry in question and more generally to apply to all types of procurements.

A copy of the Report can be found at:

https://www.toronto.ca/ext/digital_comm/inquiry/inquiry_site/report/index.html

Fairness commissioners tend to be independent third parties, usually acting as consultants, engaged especially used during complex projects. The role of a fairness commissioner should not be limited to a particular time period of the procurement process – they are to be engaged at the beginning and not just merely at the evaluation stage. The Report noted that having the fairness commissioner involved in the development of the evaluation criteria used to assess submissions is just as important as ensuring adherence to the evaluation criteria.

Advantages of a Fairness Commissioner

There are benefits to including a fairness commissioner throughout the procurement process. For example, the Report noted that having a fairness commissioner involved might make it less likely for the private sector to challenge a particular procurement, thereby saving the organization time and resources. Having a fairness commissioner as part of the procurement process also signals that the process will be more fairly managed and could encourage prospective bidders to participate.

Although not very common, procuring entities should consider whether the advantages provided by a fairness commissioner would be of interest. Consideration should be given especially in cases where:

  • the procurement process could be complex or sensitive, or
  • the goods or services procured are of high value.

DDO is available to provide guidance and best practice strategies on all aspects of broader public sector procurement.