1. Ministry of Government and Consumer Services
Procurement Myths and Realities
Get Back Your Ability to Manage
How to be effective in your job and still comply with
the Broader Public Sector Procurement Directive
November 13, 2014
Iris Ko, Director
Sara Volo, Project Lead
Supply Chain Ontario
3. • Develops and implements Ontario Public Sector (OPS) procurement
strategy
• Identifies and implements procurement process improvements
• Provides strategic advice to government on complex and high dollar value
procurements
• Advocates and supports the adoption of leading supply chain and back
office practices among the province’s broader public sector (BPS)
• Supports the implementation of the OPS and BPS Procurement Directive
3
Supply Chain Ontario
4. annual government procurement spend
87%
$6+ billion
of spend is
with vendors
located in
Ontario
50K+
vendors
each
year
9 1
education/higher
learning sector
purchasing
collaborative
200+
BPS entities have or are
participating in supply chain
or back office initiatives
2.5K +
annual
ministry
procurements
hospital
sector
shared service
organizations
60+
enterprise VOR
arrangements
valued at
$450+ million
4
Supply Chain Ontario Cont’d
5. 5
Why Procurement Rules are Important
• Multiple trade agreements require Ontario’s procurement processes to be fair, open,
transparent, geographically neutral and accessible to qualified vendors
– "Ontario-Quebec Trade and Co-operation Agreement
– Agreement on Internal Trade
– Canada-United States Procurement Agreement
– Canada-European Union Comprehensive Economic and Trade Agreement (pending
ratification)
• Canadian Commercial Law
– Competitive procurements conducted by ministries are subject to and conducted in
accordance with the laws of competitive bidding (sometimes referred to as contract
A/contract B)
• Bid Dispute
– Every procurement process could be subjected to a formal dispute resolution process with
differing remedies depending on value and whether the procurement is covered by a trade
agreement
• Auditor General/Ombudsman’s Office
– Public procurement processes are frequently the subject of review by independent oversight
entities
6. 6
Broader Public Sector Accountability Act (BPSAA)
• The Broader Public Sector Accountability Act, 2010 (BPSAA) provides
the authority for the Management Board of Cabinet to issue directives
governing the procurement of goods and services by designated
broader public sector organizations.
• The BPSAA also contains rules on:
• Lobbyists and Consultants
• Compensation Arrangements (Restraint)
• Public Reporting of Expense Claims
• Expense Claims: Allowable Expenses
• Perquisites
7. Designated BPS Organizations
• “designated broader public sector organization” means,
(a) every hospital,
(b) every school board,
(c) every university in Ontario and every college of applied arts and technology and post-secondary
institution in Ontario whether or not affiliated with a university, the enrolments of
which are counted for purposes of calculating annual operating grants and entitlements,
(d) every approved agency designated as a children’s aid society under subsection 15 (2) of
Part I of the Child and Family Services Act,
(e) every community care access corporation,
(f) every corporation controlled by one or more designated broader public sector organizations
that exists solely or primarily for the purpose of purchasing goods or services for the
designated broader public sector organization or organizations,
(g) every publicly funded organization that received public funds of 10 million dollars or more
in the previous fiscal year of the Government of Ontario, and
(h) every organization that is prescribed for the purposes of this definition;
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8. • The BPS Procurement Directive:
- provides consistent procurement practices for designated BPS organizations
- establishes that publicly funded goods and services are acquired by BPS organizations
through a process that is open, fair, and transparent
- establishes accountability through each stage of the procurement process
- maximizes the value that BPS organizations receive from the use of public funds
• The BPS Procurement Directive substantially aligns with:
- Provincial Trade Agreements
- MBC Procurement Directive
• The directive is comprised of:
– A mandatory Code of Ethics designed to support an ethical, professional and accountable
supply chain
– 25 mandatory requirements
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BPS Procurement Directive
9. Accountability Organizations must be accountable for the results of their
procurement decisions and the appropriateness of the
processes.
Transparency Organizations must be transparent to all stakeholders.
Wherever possible, stakeholders must have equal access to
information on procurement opportunities, processes and
results.
Value for Money Organizations must maximize the value they receive from the
use of public funds. A value-for-money approach aims to
deliver goods and services at the optimum total lifecycle cost.
Quality Service
Delivery
Front-line services provided by Organizations, such as
teaching and patient care, must receive the right product, at
the right time, in the right place.
Process
Standardization
Standardized processes remove inefficiencies and create a
level playing field.
9
BPS Procurement Principles
10. • Goal
– An ethical, professional and accountable supply chain
• Personal Integrity and Professionalism
– All BPS supply chain participants must act, and be seen to act, with integrity and
professionalism. Honesty, care and due diligence must be integral to all supply chain
activities within and between BPS organizations, suppliers and other stakeholders. Respect
must be demonstrated for each other and for the environment. Confidential information must
be safeguarded. Participants must not accept gifts and favours, provide preferential
treatment, publicly endorse suppliers or products or engage in any other activity that would
create, or appear to create, a conflict of interest.
• Accountability & Transparency
– Supply chain activities must be open and accountable. In particular, tendering, contracting
and purchasing activities must be fair, transparent and conducted with a view to obtaining the
best value for public money. All participants must ensure that scarce public sector resources
are used in a responsible, efficient and effective manner.
• Compliance & Continuous Improvement
– All BPS supply chain participants must comply with this Code of Ethics and the laws of
Canada and Ontario. Participants should continuously work to improve supply chain policies
and procedures, to improve supply chain knowledge and skill levels, and to share leading
practices.
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Supply Chain Code of Ethics
12. 12
25 Mandatory Requirements - Highlights
MR #3. Competitive Procurement Thresholds
• Organizations must conduct an open competitive procurement process
where the estimated value of procurement of goods or services is $100,000
or more before tax.
– The $100,000 threshold refers to the total value of the procurement.
– For procurements that span multi-year periods, the total would be the value of all the years
combined. When determining the total value of a procurement that contains options for
extension, the value of all extensions should be included in the total value.
• Organizations must competitively procure consulting services irrespective
of value.
• Organizations must not reduce the overall value of procurement (e.g.,
dividing a single procurement into multiple procurements) in order to
circumvent competitive procurement thresholds.
13. Competitive Procurement Thresholds
Goods, Non-Consulting Services and Construction
Total Procurement Value Means of Procurement
$100,000 or more Open competitive process
Consulting Services
Total Procurement Value Means of Procurement
$0 up to but not including $100,000 Invitational or open competitive process
$100,000 or more Open competitive process
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14. • Prior to commencement, any procurement of consulting services must
be approved in accordance with the Procurement Approval Authority
Schedule for Consulting Services below.
Procurement Approval Authority Schedule (AAS)
for Consulting Services
Procurement
Method
Procurement Value Approval Authority
Invitational
Competitive
$0 up to but not
including $100,000
Organization’s AAS for goods and
non-consulting services
Open Competitive Any value Organization’s AAS for goods and
non-consulting services
Non-competitive*
$0 up to but not
including $1,000,000
President, CEO or equivalent
$1,000,000 or more Board of Directors or equivalent
*Exemption-based only
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Consulting Services
15. • Consulting Service Provider
– "Consultant" means a person or entity that under an agreement, other than an
employment agreement, provides expert or strategic advice and related services for
consideration and decision-making.
– "Consulting Services" means the provision of expertise or strategic advice that is
presented for consideration and decision-making.
• Non-Consulting Service Provider
– A “Non-consulting Service Provider” is an individual/company who contracts to provide
services, other than consulting services to another individual or business. Examples may
include “consultants” such as property brokers, head hunters or trainers.
• Employee
– An “employee” is typically on payroll, with deductions made at source. An individual may be
hired on a full or part time, temporary or permanent basis. The organization reserves the right
of direction and control over the employee’s actions, has the power to dismiss the individual
and provides the tools and equipment for the job.
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Service Providers: Definitions
16. 16
“Consultant”
is a person or entity that under an agreement, other than an employment agreement, provides expert
or strategic advice and related services for consideration and decision-making.
Technical
Consulting
i.e. strategic
advice related to
actuarial science,
appraisal,
community
planning,
employment/
placement,
engineering,
health sciences,
interior design,
realty, social
sciences
Policy
Consulting
i.e. the provision
of advisory
services to
provide policy
options, analysis
and evaluation
Communication
Consulting
i.e. the provision
of strategy and
advice in
conveying
information
through various
channels and
media
Management
Consulting
i.e. helping improve
performance, primarily
through the analysis of
existing problems and
development of plans
for improvement,
including organizational
change management
assistance and
strategy development
Information
Technology
Consulting
i.e. advisory
services that help
clients assess
different technology
strategies,
including aligning
their technology
strategy with their
business or
process strategy
Further Clarifications
• An individual or organization is considered a “consultant” if they provide the
following services:
17. 17
25 Mandatory Requirements - Highlights
MR #9. Evaluation Criteria
• Your organization must develop, review and approve evaluation criteria for
competitive procurements before conducting the procurement process.
• All competitive procurement documents must clearly outline any mandatory,
rated and other criteria that will be used to evaluate the submissions,
including the weight of each criterion.
18. Using evaluation criteria to procure best value for money
• The BPS Procurement Directive includes several requirements related to evaluation
criteria intended to ensure that vendors are selected for public procurements in a fair
and transparent manner.
• Specifically, the Directive requires organizations to:
– Determine the evaluation criteria for procurements prior to beginning the competitive
procurement process. This helps determine the type of competitive document you will use.
– Include the evaluation criteria and evaluation methodology in the procurement documents so
suppliers understand how they will be rated.
– Follow the evaluation criteria outlined in the competitive procurement documents when
selecting the winning submission.
– Award the bid to the submission that receives the highest evaluation score and meets all
mandatory requirements set out in the competitive procurement document.
• In other words, the evaluation process and scoring must be 100% consistent with
what was in the competitive document that bidders responded to.
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19. • There are three types of evaluation criteria, which correspond to three stages in the
evaluation process.
• Mandatory
– Mandatory evaluation criteria identify the minimum requirements that are
essential to the successful provision of goods or services.
– These requirements are rated on a pass/fail basis.
– Bids that fail to meet the mandatory requirements are given no further
consideration. In other words, bids that fail to meet the mandatory criteria are
disqualified. There should be no evaluation of the rated or price criteria for
disqualified submissions.
– Mandatory evaluation criteria must be designed so that a “meets” or “does not
meet” response is easy to determine.
– Mandatory criteria should be kept to a minimum to ensure that no bid is
unnecessarily disqualified.
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Types of evaluation criteria used in RFPs
20. • Rated
– Rated evaluation criteria are used to determine the relative technical merit of
each proposal.
– Rated evaluation criteria provide a means to assess and distinguish one
proposal from another.
– Each rated evaluation criterion should have a weight or score assigned to allow
respondents to know how much each criterion is worth in the overall scoring.
– Rated criteria may include:
• Quality, quantity, transition costs, delivery and servicing
• Environmental considerations
• Capacity of supplier to meet the business need
• Supplier’s experience
• Alternative strategies or solutions
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Types of evaluation criteria used in RFPs cont’d
21. • When can you consider an alternative strategy for your business requirement?
− Organizations may request suppliers to provide alternative strategies or solutions
as a part of their submission.
− Organizations must establish criteria to evaluate alternative strategies or solutions
prior to the commencement of the competitive procurement process.
− Alternative strategies or solutions must not be considered unless they are
explicitly requested in the competitive procurement documents.
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Types of evaluation criteria used in RFPs cont’d
Alternative Strategies
22. • Price
– Price is the third component of the evaluation process.
– The proposed price/cost is considered separately from and after scoring the mandatory and
rated criteria.
– The bid administrator should open the pricing envelope after the rated criteria are scored.
– The details: Weights and scores
– Each procurement document must clearly indicate the weights and scores for each type of
evaluation criteria.
– A few points to keep in mind:
– You should allocate the maximum justifiable weighting to the price/cost component of the
evaluation criteria.
– Where feasible, you should perform a sensitivity analysis on the selected criteria and
assigned weighting before finalizing the criteria in the procurement document.
– You must document all evaluation scores and notes and include them in the procurement file.
Note that this information is part of the public record and subject to audit.
– Detailed notes are helpful in the event of a vendor debrief or bid dispute.
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Types of evaluation criteria used in RFPs cont’d
23. • Mandatory Requirement #9 – Evaluation Criteria, states that maximum justifiable weighting
must be allocated to the price/cost component of the evaluation criteria. Maximum justifiable
weighting does not require organizations to allocate the largest percentage of weighting to price,
but rather, it is intended to encourage organizations to assign maximum weighting to price that is
appropriate for the given procurement, in the context of value for money with price being one of
multiple criteria. It is important to recognize that the allocation of weighting to price will vary by
type of procurement, and in some instances, price will be the predominate factor, while in other
instances, specifications may be more important.
• Organizations should assess weighting on a case-by-case basis. For example, when procuring a
life saving device, reliability may have a higher weighting than price. Conversely, when procuring a
good or services such as stationery, price would likely have a higher weighting. In the spirit of
value for money when all other things are equal, price should be given the most significant
weighting possible.
• Each organization has the discretion to determine what the maximum justifiable weighting for the
price/cost component should be. To reiterate, this does not mean that price has to be the highest
overall evaluation component, but rather, that each criteria of the evaluation (and the assigned
weighting) has been carefully thought through.
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Types of evaluation criteria used in RFPs cont’d
Maximum Justifiable Weighting
24. 24
25 Mandatory Requirements - Highlights
MR #21. Non-Competitive Procurement
• Organizations should employ a competitive procurement process to achieve
optimum value for money. It is recognized, however, that special
circumstances may require organizations to use non-competitive
procurement.
• Organization may utilize non-competitive procurement only in situations
outlined in the exemption, exception, or non-application clauses of the
Agreement on Internal Trade (AIT) or other trade agreements.
• Prior to commencement of non-competitive procurement, supporting
documentation must be completed and approved by an appropriate
authority within the organization.
25. 25
25 Mandatory Requirements - Highlights
MR #22. Managing the Contract
• Procurements and the resulting contracts must be managed responsibly and
effectively.
• Payments must be made in accordance with provisions of the contract. All invoices
must contain detailed information sufficient to warrant payment. Any overpayments
must be recovered in a timely manner.
• Assignments must be properly documented. Supplier performance must be managed
and documented, and any performance issues must be addressed.
• To manage disputes with suppliers throughout the life of the contract, organizations
should include a dispute resolution process in their contracts.
26. 26
25 Mandatory Requirements - Highlights
MR #22. Managing the Contract cont’d
– For services, organizations must:
• Establish clear terms of reference for the assignment. The terms should
include objectives, background, scope, constraints, staff responsibilities,
tangible deliverables, timing, progress reporting, approval requirements and
knowledge transfer requirements.
• Establish expense claim and reimbursement rules compliant with the
Broader Public Sector Expenses Directive and ensure all expenses are
claimed and reimbursed in accordance with these rules.
• Ensure that expenses are claimed and reimbursed only where the contract
explicitly provides for reimbursement of expenses.
27. • To support implementation of the BPS Procurement Directive, the Ministry
of Government and Consumer Services website offers:
– The Directive in English and French, available in HTML and in PDF format
– FAQs on the Directive
• In addition:
– The BPS Procurement Directive Implementation Guidebook has been developed and is
available online
– The BPS Procurement Directive Toolkit is available online
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BPS Procurement Directive Implementation Support
28. • The strategic role of procurement in enhancing public services delivery and
outcomes is increasingly being recognize by government and other key
stakeholders.
• Ontario intends to increase the ability to use procurement proactively and
strategically to support innovation development and adoption, especially in
healthcare sector.
• As part of the effort, our ministry has developed an Innovation Procurement
Initiative that will enable and foster innovation in Ontario by
– Building on best practices of other jurisdictions
– Aligning with other innovation initiatives across government
– Addressing challenges and creates opportunities
– Leveraging the OntarioBuys program
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Innovation Procurement
29. Stakeholders report operational and policy challenges - some real, some
perceived - as barriers to conducting or supporting innovation procurement
Challenges
• Fiscal constraints
• Complexity of the public sector (funding models, independent governance structures and
differing program objectives)
• Scarce access/dialogue with purchaser or payer bodies
• Insufficient ability/capacity to use procurement proactively and strategically
• Organizational culture (risk aversion)
• Change management impacting multiple stakeholders
• Data availability, measurement of success and ability to replicate and disseminate
success stories
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Procurement Challenges
30. Current Landscape
Product Development Lifecycle
R&D (pre- commercial development) Commercialization
Product
idea
Solution
design
Prototype First test
products
Commercial end
products
Adoption
Generally, this is
where Ontario
BPS procurement
activities start
and suppliers
push products to
BPS
Valley of death: Gap between
development and commercial sales.
Many products and companies fail at the
demonstration and scale up stage
Public and private support
typically end at the first test
product stage
31. R&D (pre- commercial
development)
Commercialization
Demand Pull Model
Product
idea
Solution
design
Prototype First test
products
Commercial
end products
Adoption
Buyers & End
Users start
the cycle by
identifying
needs
Product Development Lifecycle
Engage
Innovation
Community
This model is consistent with initiatives led by European jurisdictions
32. • Stronger and integrated government policy and funding programs to leverage
public sector spend to incent innovation
• Leadership ability to drive
innovation
• Strategic procurement skills
• Opportunities for economic
development
32
Innovation Procurement Strategy and
Anticipated Outcomes
33. • Hospital Supply Chain Network (HSCN)
– HSCN is a national network, dedicated to developing and implementing leading practices,
enhancing efficiency and effectiveness through professional development programs, and to
provide networking opportunities where hospital supply chain professionals can share
experiences and solutions to common challenges.
• HSCN developed a framework and guidelines for competitive procurement
documents to support innovation procurement. The lessons learned from
this project will be transferrable to the education sector.
• To do this, HSCN reviewed, and revised current RFP and agreement
templates and created new supporting templates and tools for the
procurement of innovation.
• HSCN will provide training on the use of the new templates to hospital
buyers and guidance materials on developing specifications and evaluation
criteria that can be used in outcome or solutions based RFPs.
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Innovation Procurement Initiative Highlights
Innovation Procurement Tools and Training
34. • Investigating procurement processes that support innovation
– Early market engagement strategies: Strategies that allow buyers to work with vendors in
ways that are open, fair and transparent.
• The strategies help buyers to:
– to learn about market capabilities and what is available,
– let the vendor community know about upcoming procurements, and
– discuss what the priorities and needs of the buying organizations are.
• Examples of early market engagement strategies: Reverse trade shows, design
competition
– Innovation Procurement Models: Procurement models that support innovation. These models
can be more complex than specification based procurements. The models tend to have
more flexibility and more collaboration with vendors than traditional procurement models.
Examples include:
• Procurement for a “solution” rather than a requirement
• Multi-stage procurements
• Multiple vendor/collaborator procurements
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Innovation Procurement Initiative Highlights
Explore New Procurement Processes
35. Contact Information
Iris Ko
Director, Strategic Policy and Innovation Branch
Supply Chain Ontario
Iris.Ko@ontario.ca
416 314-1919
Sara Volo
Project Lead
Supply Chain Ontario
Sara.Volo@ontario.ca
416 326-9675
For more information, visit:
www.doingbusiness.mgs.gov.on.ca
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