Government Operations Committee on Sept. 29th, 2011

[Frank Brunetta]

As I mentioned in my earlier response, I believe it has. The degree to which it's strengthened, I can't say, and that's one of the reasons I'm undertaking the evaluation.

[Jacques Gourde, Conservative, Lotbinière—Chutes-de-la-Chaudière, QC]

Thank you very much.

[The Chair, NDP, Pat Martin]

Thank you, Jacques.

Denis Blanchette.

[Denis Blanchette, NDP, Louis-Hébert, QC]

Good afternoon, Mr. Brunetta, and welcome.

Your playing field, if I can call it that, includes some 325,000 contracts for which you have received 110 complaints, which isn't a lot.

What do you think? Could we say that, generally speaking, public service employees are awarding contracts properly?

[Frank Brunetta]

Thank you for the question.

To make one slight correction, while there are roughly 300,000 to 350,000 contracts let by government every year, I do not see oversee that volume. The mandate of the office is such that I can investigate only once I receive a formal complaint. The mandate is fairly prescriptive as outlined in the regulations.

The question you were asking was whether the process is fair and equitable...? I'm sorry.

[Denis Blanchette, NDP, Louis-Hébert, QC]

In your opinion, following not just the processing of complaints, but also the reviews that you do, do you think that contracts are awarded properly in most cases?

[Frank Brunetta]

I'll use the context you provided. There are roughly 300,000 to 350,000 contracts issued every year. When I look at the CITT numbers, I believe the CITT receives about 100 complaints in any given year. We receive 100 complaints. The numbers would suggest that the system is working. But when you look at that sort of volume, it would be naive to think that we wouldn't have issues here and there. Taking a step back and looking at it holistically, I believe the system is working. Certainly, there are issues. I'm not sitting here trying to tell you that there are not. On the whole, this is a big machine that's operating. Very few issues are surfacing to our office or to the CITT that would suggest otherwise.

When we look at some of the investigations we do, we step back every time an investigation is completed to try to assess what went wrong, to get out of the detailing and try to determine whether it's a systemic issue. In the vast majority of cases that we've looked at in the past year, at least since I've been there, it's been administrative errors and oversights, people trying to cut corners. I haven't seen to date, and I want to caution the committee that it's early for me, any reason to suspect there's untoward activity or issues. It's administrative. I'll call them blunders.

[Denis Blanchette, NDP, Louis-Hébert, QC]

Also, based on your experience and on your colleagues' experience, how would you describe most of the problems you encounter.

Are they problems with perception as to how the federal government works? It's seen as quite big. Are they genuine problems? Or is it not a matter of education or information regarding access to these contracts?

[Frank Brunetta]

Thank you for your question.

I would characterize the issues in two categories.

The first is a category of...I'll call them new entrants to government contracts. The callers and the complaints we get are primarily around a lack of understanding of how things work. Small and medium enterprises trying to get their foot in the door are having difficulty. At times the way it's expressed is that it's overwhelming. They just don't understand how to do business. There's an opportunity to help those folks.

For the people who are already doing work for government, the second category, the issues that we're hearing about there are primarily around the administration of the contract. Once the contract is let and agreements are in place and the work begins, there are often verbal agreements to change the process. This is not untypical. Imagine doing work in your own home and you ask a contractor to remove a wall and then you realize there are three vents behind it you hadn't anticipated. It's very similar in the government process. You start a job expecting something and something new comes up. Quite frankly, the rules require you to sit down and do a formal change and to have the work stop. We have very diligent public servants who want the work to continue. There's a deadline. So there's a verbal agreement. People say yes, go ahead, make that change, and we'll deal with the paperwork later. It's inevitable that when that paperwork comes in there's something that hadn't been expected. That's when the dispute begins. That's where we get the call.

The second part of that equation is late payments. As I mentioned earlier we do get calls from suppliers to government who feel that they're not getting paid on time. Those would be the categories.

[The Chair, NDP, Pat Martin]

We're well over time.

Thank you, Mr. Blanchette.

Mr. Trottier.

[Bernard Trottier, Conservative, Etobicoke—Lakeshore, ON]

Thank you for coming in today.

You mentioned 300,000 to 350,000 contracts per year and 110 complaints. That's not a lot. Obviously the process isn't perfect. You mentioned that of those complaints, a lot of those are because of the bid evaluation and selection process and the criteria not being visible. There's a difference when it comes to services versus goods procurement. I think, especially, that a lot of subjective criteria comes into play when you're looking at the capability of certain vendors to execute work.

Could you describe where you might have seen some issues with the selection criteria, how those were established, and some of the scoring of bidders--where you had to look at some subjective criteria to determine whether they were actually capable of doing the work? It's not just a question of awarding it to the lowest-cost bidder, if there's a strong sense that this bidder is not actually capable of executing the work that they say they are capable of doing.

[Frank Brunetta]

Are you asking for examples of subjective criteria?

[Bernard Trottier, Conservative, Etobicoke—Lakeshore, ON]

Is that a problem that was perceived in some of the complaints that you did investigate, that the bid evaluation and selection process was flawed and there was a need to take some corrective action and fix the process?

[Frank Brunetta]

Thank you for the question.

Yes, we do get complaints where there is a perception that the bid evaluation process was somehow skewed or inappropriate. But you have to understand that in a bidding process there are clear winners and clear losers, and the losers will always try to understand why they didn't win.

When we look at some of these complaints, I can't honestly say that the issues fall on one side or the other. In a lot of cases, the departments have done everything well and the evaluation criteria are clear. What they may have done better is communicate with the supplier. That is where a lot of our issues come up. The process is flawless, the documents are flawless, but for reasons unbeknownst to us there is a reluctance to debrief the bidder comprehensively, and that leads to a perception that things are not what they should be.

There are cases, and we've dealt with one recently, where we found the bid evaluation criteria to be subjective and we brought that to the attention of the department.

I believe in that case, Janet, we actually recommended compensation to the complainant because we felt he had been unfairly dealt with.

[Bernard Trottier, Conservative, Etobicoke—Lakeshore, ON]

I have a follow-up question.

When it comes to transparency and openness in procurement, are there any structural barriers that you see, especially in these $100,000 service contracts, where certain competent bidders aren't being allowed to put bids forward because of some barriers? Might there be some criteria that the government establishes that has little to do with the actual ability to execute the work, a barrier that's been imposed on them and therefore fails to give opportunities to small and medium enterprises, service enterprises in particular?

[Frank Brunetta]

I'll have to turn to my colleagues to see whether we have examples of that.

[Janet Labelle, Principal, Procurement Inquiries and Investigations, Office of the Procurement Ombudsman]

Thank you for the question.

Actually, we did do an investigation last year that is reported in the annual report you have in front of you. In that particular instance there was a mandatory technical requirement for a certain level of professional designation. The issue was that the complainant felt there were other opportunities for him having a different type of professional designation.

We did the investigation and found that notwithstanding that it did not preclude him from bidding--because he didn't bid—the department agreed with our findings and has actually undertaken a study to see if perhaps they can add more accreditations and designations to open up this field.

[Bernard Trottier, Conservative, Etobicoke—Lakeshore, ON]

Related to that, when it comes to some interprovincial trade barriers that might exist, is there any evidence that there are certain government procurement practices that aren't allowing enterprises from across the country to bid on contracts?

I guess my experience relates more to services contracts where that kind of thing could be very mobile, but because of some trade barriers--it could be professional designations and other things--SMEs aren't able to bid on contracts that take place in other provinces.

[Frank Brunetta]

I don't believe we've done enough work to provide an adequate answer to that. This area is one that hasn't crossed our office yet.

[The Chair, NDP, Pat Martin]

Mr. Trottier, that concludes your time.

If I might, I would ask for a point of clarification based on some of your answers, Mr. Brunetta, or perhaps actually Janet.

We were talking about 325,000 contracts roughly per year for the federal government valued at $20 billion. You were saying that 90% of those are under $25,000 and therefore would be within the realm of the office of the ombudsman for complaints.

[Janet Barrington]

Yes, that would be correct.

[The Chair, NDP, Pat Martin]

So we understood that correctly. But I understand that roughly 60% of those are not tendered. Is that correct?

[Janet Barrington]

Yes, that's what we found in the study we carried out in 2008.

[The Chair, NDP, Pat Martin]

Could you then tell us, if you know, what would be the total value of untendered contracts given out by the government per year? If the 325,000 equal $20 billion, and 90% of those are under $25,000, the remaining 10% may be very valuable. I'm only trying to get an idea of the dollar value of the total contracts that fall under the jurisdiction of this office.

[Frank Brunetta]

Mr. Chairman, perhaps we can get back to you with that. I don't know that we have that answer handy.