Thank you, Mr. Chair.
Thank you, honourable members for this invitation. I welcome the opportunity to discuss with you the content of the Office of the Procurement Ombudsman's 2010-2011 Annual Report.
Since being appointed in January 2011, I have benefited from the work undertaken by my predecessor, Mr. Shahid Minto, in establishing the office. Mr. Minto retired in July 2010, and the deputy procurement ombudsman oversaw the operations until my arrival.
From the time of my arrival, it has been evident that the office is made up of quality people who believe that what they are doing makes a difference to the fairness, openness, and transparency of federal procurement, and ultimately to the Canadian taxpayer. I am proud to have been chosen to lead this valued and trusted organization.
Here with me today are Janet Barrington, the director of quality assurance and risk management; Janet Labelle, director of inquiries and investigations; and Mr. Paul Morse, director of practices review.
My remarks today, Mr. Chairman, will focus on three areas covered in my report. I'll provide an overview of the office's mandate and its services. I'll provide a brief overview of the 2010-11 results achieved by the office. Then I'll give the committee a sense of where I plan on taking the office.
Let me begin with a brief overview of my office's mandate and the services we provide.
In 2006 the government enacted the Federal Accountability Act, providing, among other things, the appointment of a procurement ombudsman. The office was created through an amendment to the Department of Public Works and Government Services Act, and became fully operational in May 2008 with the coming into force of the procurement ombudsman regulations.
We have a government-wide mandate covering most departments and agencies. The three main exceptions to this government-wide mandate are the Canadian Security Intelligence Service, the staff of the House of Commons and Senate, and crown corporations.
Our mandate, as set out in legislation, is to do the four following things: review any complaints respecting the award of a contract for the acquisition of goods below the value of $25,000 and services below the value of $100,000; review any complaint respecting the administration of a contract for the acquisition of material or services regardless of that dollar value; ensure that an alternative dispute resolution process is provided if both parties agree to participate; and review the practices of departments for acquiring material and services to assess their fairness, openness, and transparency.
In addition, I am required to perform any duty respecting the practices of departments for acquiring material and services assigned to me by the Minister of Public Works and Government Services or Governor in Council.
My position reports to the Minister of Public Works and Government Services. The office's enabling legislation requires that I submit an annual report to the minister, who in turn tables the report in Parliament.
The office has approximately 25 full-time positions, with a budget of roughly $4 million. Although the office receives its funding through a Public Works and Government Services appropriation, it is approved by the Treasury Board, and only the Treasury Board can alter this appropriation.
The office is independent and operates at arm's length from federal departments and agencies. I have full control over the execution of our mandate and our day-to-day operations.
Prior to the creation of the office, the procurement system was limited in providing a recourse mechanism for suppliers dealing with issues related to the award of low-dollar-value contracts and contract administration issues.
While suppliers with issues related to the award of large-dollar-value contracts could go to the Canadian International Trade Tribunal, suppliers with issues concerning low-dollar-value contracts or contract administration issues had three choices, none of them very practical. They could attempt to have the issues addressed by the department they were dealing with, they could simply accept the issue, or they could take legal action. In creating the office, the government addressed a need for these low-dollar-supplier contracts.
Let me now move to the results of the office for the 2010-11 fiscal year. Following the retirement of the inaugural ombudsman, the office was without an ombudsman for approximately six months. The regulations prohibit the office from launching new investigations and reviews without an ombudsman; however, the day-to-day business of the office continued.
Our inquiries and investigations team is our day-to-day interface with our stakeholders. The team responds to calls and e-mails from the supplier and procurement communities.
I regard this area as a critical aspect of my office. Accordingly, we have implemented a “service first” business model, ensuring that each contact with the office receives prompt, personalized, and seamless service. Our primary objective when dealing with suppliers is to address their concerns through dialogue and information sharing before the issue escalates into a lengthy or expensive dispute.
We are also mindful of our responsibility to provide service to Canadians, and we are diligent in ensuring that issues, even those that do not fall within our mandate, are brought to the attention of the appropriate office. In executing the office's mandate, we are careful to be neither a lobbyist for a supplier nor an apologist for the federal departments.
For the period covered by our annual report, the office was contacted 329 times. Of these contacts, 110 were actual procurement-related complaints. Of the 110 complaints received by my office, 81, or 74%, were with regard to the award of a contract. The issues being raised by suppliers in this area focused mainly on the clarity in the statements of work that define requirements, the level of restrictiveness in bid evaluation criteria, and fairness in the process of evaluating bids.
Twenty-three of the 110, or 21%, of the complaints received by my office had to do with the administration of contracts. In this category suppliers typically raised concerns about late payments and about departments verbally altering contract terms and conditions after the work had begun. The remaining six, or 5%, were direct requests for practice reviews or alternative dispute resolution.
The breakdown that I provided and the types of concerns that I've outlined are fairly consistent with what the office has heard in previous years. I should mention that all complaints that met the regulatory parameters of the office were actioned.
We released three investigative reports, two carried over from 2009-10 and one that originated in 2010-11. All three complaints that led to investigations concerned the award of contracts. The office also provides alternative dispute resolution services when they are requested and all parties to the contract agree to participate. The office provides an opportunity for the parties to come together in an unbiased setting to discuss their contractual dispute. Our objective here is for the parties to reach a mutually agreeable settlement.
In 2010-11 we received 10 ADR requests. Two did not meet the requirements under our regulations. Of the remaining eight, four were declined by the departments involved, when one of the departments was pursuing its own internal dispute resolution process. Three were successfully resolved by the office and one case that was ongoing has been resolved by the office since the tabling of the annual report.
The office also conducts reviews of practices of departments requiring material and services to assess their fairness, openness, and transparency. Our reviews follow a similar methodology as performance audits, using a systemic evidence-based approach. Last year we launched four procurement practice reviews. One of these reviews was recently published and the other three are in various stages of completion.
All of the office's practice review reports are made public and available on our website.
Last year we also published a risk-based study on directed contracts under $25,000. This study was initiated in part because of comments and concerns about these contracts raised to my predecessor by this committee.
Based on the office's work in 2010-11, we noted that while departments have made strides to assist the supplier community in doing business with government, calls received by my office from suppliers suggest that more can be done. Many calls received by the office are from suppliers who are unclear about how to do business with the federal government. Likewise, we are hearing from suppliers who are confused by the government's solicitation bidding process, who have difficulty understanding solicitation documents, or who are unclear on how to submit responsive proposals for inclusion in procurement vehicles such as standing offers and supply arrangements.
What appears to be frustrating suppliers is their difficulty in obtaining information or clarification from government procurement officials. A large number of cases that come to our attention involve concerns that could have been avoided through open and clear dialogue.
We have had some cases where suppliers have been reluctant to disclose the names of departments with which they have procurement concerns, for fear of being excluded from future business opportunities. I am doing some follow-up work on these cases and hope to have a better understanding of this issue in the coming weeks.
With respect to moving forward with the office, it is my view that evolving the office from the basic start-up mode, which it has been in, to optimum operation and delivery will be essential if the office is to realize its mission in promoting fairness, openness, and transparency in federal procurement.
Instrumental in our evolution will be the implementation of the office's recently completed strategic plan. The strategic plan clearly lays out that our work will be guided by three strategic drivers: to educate, to facilitate wherever possible, and to investigate when authorized to do so.
In addition, I have initiated other activities to better position the office. For example, it's my view that the office can only be effective if it is in tune with the community it was created to serve. Accordingly, we have developed and are in the process of executing a concerted outreach program.
Also, a formative evaluation of the office's first three years of operation is being initiated. This evaluation will provide information to better understand how well the office is executing its responsibilities and to make the necessary adjustments to the nature of our work and organization.
The overarching objective in undertaking this work is to structure and equip the office to meet the expectations and fulfill the mandate envisioned by parliamentarians when the office began operating in 2008.
Thank you for the invitation to speak to you today.
Thank you very much.
We welcome any questions the committee might have at this time.
