Government Operations Committee on Feb. 13th, 2023

[Gord Johns, NDP, Courtenay—Alberni, BC]

How could you use it to subcontract out and to avoid certain regulations that are embedded in the contract?

[Alexander Jeglic]

It's not really a risk that we've identified for contract splitting, to be honest.

[Gord Johns, NDP, Courtenay—Alberni, BC]

In your annual report, you identified that an alarming 53% of competitive solicitation processes that you reviewed resulted in only one bidder. I'm concerned that trends like this will directly result in the government's not offering a competitive process in the future or designing procurement offers in such a way that they will only go to the one bidder that has completed similar contracts.

Do you want to speak a little bit about that?

[Alexander Jeglic]

Yes, absolutely.

Just to be clear, that number has been reduced to 36%, but nonetheless, that 36% is still an alarming figure. If you're running a competitive process and you're allocating resources to do so, and you receive only one bidder, ultimately it's not much of a competitive process.

We have concerns—and we raised concerns—around some of the issues that were raised for our attention, such as the restrictive nature, perhaps, of some of the mandatory and rated criteria.

Also, one of the things that's been brought to our attention is that often suppliers are unwilling to bid when they know there's an incumbent. The rationale is that they believe the incumbent has an inherent advantage to succeed, and they therefore do not participate in those processes.

[Gord Johns, NDP, Courtenay—Alberni, BC]

I'm going to talk about some other major problems with contract reporting data. Experts like Sean Boots, who testified here at this committee, talked about this as a widespread issue.

We can look at your most recent review of the contracting policies of the Canadian Food Inspection Agency as an example. Were you able to conclude that contracts issued against standing offers had been executed according to the specific contracting procedures? If not, does that concern you?

[Alexander Jeglic]

In the follow-up review, we actually saw the implementation of our recommendation, so we were very satisfied in terms of the implementation of the recommendation.

[Gord Johns, NDP, Courtenay—Alberni, BC]

In terms of your recommendations to resolve the insufficient data you just talked about, what effect will that have on management oversight?

[Alexander Jeglic]

That's probably my number one concern. It's the lack of documentation, right?

Again, when performing the McKinsey review, that is also a concern, in that I have raised a number of times a request to potentially consider giving my office the authority to compel documentation. Currently, we don't even have the same authorities that one would have under the Access to Information Act. As a result, periodically I do question whether I would be better served to make a request under the Access to Information Act rather than requests pursuant to my own legislation and regulations.

[The Chair, Conservative, Kelly McCauley]

Thank you, sir.

As someone who files hundreds of ATIPs every year and then waits years and years, I'm not sure if that's possible.

Colleagues, before we start with the five-minute rounds, we're running a bit late. We started late, so we're going to run to 5:47 p.m. We'll do five minutes with the Conservatives and five with the Liberals and then finish up with two and a half and two and half, and then I need two or three minutes for some hopefully quick housekeeping items.

Ms. Kusie, go ahead, please, for five minutes.

[Stephanie Kusie, Conservative, Calgary Midnapore, AB]

Thank you, Chair. Thank you, Mr. Jeglic, for being here today.

Do you believe there are reasonable grounds to launch a review into the government contracts awarded to McKinsey?

[Alexander Jeglic]

Yes. As I mentioned in my opening statements, it's a combination of existing files that we've reviewed, plus the letter from the minister herself. We haven't yet performed our reasonable grounds analysis, but that's why I included the caveat of “I believe”. We have reviewed two McKinsey files as part of the 600-plus files we've reviewed, and those files have raised some concerns.

[Stephanie Kusie, Conservative, Calgary Midnapore, AB]

What concerns are those, please?

[Alexander Jeglic]

That's an excellent question. I will specifically mention those concerns because it's important that exact information be provided.

The contract was awarded on June 3, 2020, for a value of $452,000, by Innovation, Science and Economic Development, ISED. I'll just read the concerns as we reported them in our report, if you don't mind.

Under "Bid evaluation process”, and this is again general,

A significant numbers of files had issues with the bid evaluation procedures resulting in contracts being wrongly awarded or bidders incorrectly being found non-compliant.

and then,

In one file, for economic analysis services, the solicitation had 5 mandatory and 5 point rated criteria and a basis of selection of highest combined rating of technical merit and price. Two bids were received. A 3-person bid evaluation team conducted the technical evaluation and determined that both bids met all mandatory criteria and exceeded the minimum points requirement for point rated criteria. The contracting authority then completed the evaluation process by conducting the financial evaluation which determined the lower [ranking] technical [bidder] was ranked 1st overall based on its lower price and superior financial score. After the results were shared with the bid evaluation team, the technical authority said he was concerned that they may have overlooked something in the mandatory criteria and wanted to re-evaluate the 1st overall ranked bid. The contracting authority initially told the evaluators 'unfortunately, since the financial evaluation has been completed and we had already come to a consensus on the technical evaluation we cannot go back now.' The response from one of the evaluators stated he would be 'happy to delete the financial evaluation email.' Ultimately, ISED did revise its evaluation of the 1st ranked [bidder] and deemed it non-compliant for not meeting all mandatory criteria. While some aspects of the procurement process were well documented, there was a significant shortcoming with respect to documentation [on] the decision to allow the evaluators to change their evaluation of the 1st ranked bid after they learned the results of the process. The actions taken and ultimate results of this evaluation process leave ISED open to the perception that this contract was not awarded in a fair [open] and transparent manner.

We made an associated recommendation that ISED

should update its procurement guidance and training and implement an oversight process and review mechanisms to ensure that evaluations are carried out in accordance with the planned approach specified in the solicitation, and that contracts are not awarded to non-compliant bidders.

As you can imagine, the context is slightly different. We were not focused on suppliers when doing these reviews; we were focused exclusively on the practices of the department.

I can provide the second example if you'd like.

The second example is for a contract with IRCC, Immigration, Refugees and Citizenship Canada. This was a contract worth $1,593,000 awarded pursuant to the TSPS supply arrangement. It was for a service transformation strategy road map. The issue here is,

Mandatory criteria were inadequately defined, and were not limited to the essential qualifications.

In 1file for expert advice [relating] to a transformation strategy that was subject to the North American Free Trade Agreement...and the World Trade Organization...on Government Procurement...a mandatory criteria required bidders to demonstrate experience in 4 transformation studies 'where the Bidder was not involved with the implementation of the solution.' Both NAFTA and the WTO-AGP require that the conditions for participation by suppliers in tendering procedures are 'limited to those that are essential to ensure the fulfilment of the contract in question.' In this case, it is unclear why a bidder's involvement in the 'implementation of the solution' would be considered a necessary exclusion. IRCC received numerous comments from interested suppliers regarding the restrictive nature of [this] criteria. The criteria was not changed and the solicitation process resulted in only 1 compliant bid with the bidder receiving a perfect score in the technical evaluation.

[Stephanie Kusie, Conservative, Calgary Midnapore, AB]

Thank you for those valuable examples.

What is the—?

[The Chair, Conservative, Kelly McCauley]

I'm afraid that's our time.

Mr. Garon, you have two and half minutes, please.

Oh, I'm sorry. I apologize.

[Majid Jowhari, Liberal, Richmond Hill, ON]

That's okay. Thank you, Mr. Chair.

Welcome back to the committee. It's good to see you. Thank you for all the times I've reached out to your office and you've made yourself and the team available to respond to my inquiries.

You said that in general there are two sets of activities that your office and your team conduct: One is procurement practices review and the other one is complaints.

Is that a fair statement of my understanding of what you do generally?

[Alexander Jeglic]

There are still other facets, but those are certainly two aspects of the mandate.

[Majid Jowhari, Liberal, Richmond Hill, ON]

Okay. Perfect.

Can you give the committee an understanding of what triggers a complaint review or what triggers an outreach to your office to be categorized under a procurement practice or complaint review?

[Alexander Jeglic]

I can answer both of those questions.

For a practice review, as I mentioned, when we structured the five-year review, we took the information that was already being provided to our office. Perhaps a person might not be within the mandate to file a review of complaint because a year or 60 days had gone by and they were no longer able to bring a complaint, or they didn't want to file with the International Trade Tribunal. Nonetheless, we take the complaint and try to resolve it informally.

However, we also categorize it based on the issue. Feeling that you were unfairly overlooked, not being provided with a debrief, or feeling that questions were unclear are examples of issues that were brought to our attention. We categorize those, and each year we identify the top 10 in a list. When we created that top-10 list, as I mentioned, we brought it to the attention of parliamentarians by way of our annual report.

When I became ombudsman, it felt very unsatisfying to simply leave it as identifying these issues. That's why we developed these three lines of inquiry to focus on addressing and validating some of these concerns. As I mentioned, we're not through all 17 of the reviews, but we have some preliminary data that I could share with the committee on how valuable and valid some of those complaints to our offices are.

[Majid Jowhari, Liberal, Richmond Hill, ON]

Does that cover the trigger for the complaint?

[Alexander Jeglic]

We use that information to justify whether we had reasonable grounds to launch. Again, that was the question previously raised. Do you have reasonable grounds to launch? There are criteria that we need to look at.

[Majid Jowhari, Liberal, Richmond Hill, ON]

When a complaint is made, who is making that complaint?

[Alexander Jeglic]

Unfortunately, for our purposes, “complaint” has a technical meaning. Do you mean that someone brings something to the attention of our office, and what do we do with that information?

[Majid Jowhari, Liberal, Richmond Hill, ON]

What is the nature of the stakeholder that brings a complaint to you? Is it another vendor that may come to you to raise that complaint?

[Alexander Jeglic]

It's predominantly suppliers, but there are—