Thank you, Madam Saint Pierre.
Mr. Chairman, I too appreciate the opportunity to address the committee and to share with you some specifics of public procurement from the perspective of PWGSC that I have realized over my 20-plus years in public procurement.
This will be a fairly quick overview, starting with the contracting principles and objectives and leading up to a typical contracting process. We've provided a number of slides that really only introduce a number of the issues and topics related to public procurement. My focus will be on the process and the management control framework that supports that process.
Public procurement is not just about buying something at the lowest possible cost. We are committed to doing the best possible job for taxpayers on behalf of our clients. Each procurement file that goes through our offices is handled in a manner that respects the principles and objectives as shown on this slide.
We often illustrate public procurement as a balancing act, wherein we endeavour to supply multiple needs—client operational requirements, socio-economic objectives, industry demands, cost to taxpayers—and all with considerable oversight and review by both public and private interests.
The legislative and regulatory framework in which public procurement operates is at times daunting, making the task of the procurement officer one that is effectively managed by trained professionals within PWGSC and client departments.
Public procurement is a job. It's a career within PWGSC, not simply an added function carried out by a program or project manager. Our procurement officers are trained to carry out their roles. They fully appreciate that they represent the Government of Canada when they solicit bids or undertake contract negotiations, often involving millions of taxpayer dollars.
Madam Saint Pierre, in her opening remarks, stated that PWGSC, on behalf of the government, spends approximately $12 billion annually through procurement. Now, this total of course varies each year and is reported in two databases, one via the Treasury Board Secretariat, as required by our trade agreements, by calendar year, and the second within PWGSC's database, where we report on fiscal year or the budgetary year. Thus, when you take a look at procurement numbers, a bit of a cautionary note: you may see figures that sometimes do not always reconcile. Make sure you're looking at calendar year versus the fiscal year.
Now, slide 5 is provided really to illustrate that the contracting is carried out by many entities within the government. You will see here that government departments issue a significant number of low-dollar-value contracts. When I refer to “low dollar value”, I'm referring to less than $25,000.
PWGSC, in fact, only issues about 10% of the number of contracts, but this represents between 80% and 90% of the dollar value spent on procurement each year. So again on this slide, you can see the less-than-$25,000 contracts, awarded mainly by client departments, the 109, 110 client departments, comprise in the order of 368,000 or 370,000 documents, for just under $1 billion.
Slide 6 is provided to illustrate how we buy things. The government contract regulations require that we solicit bids, except in some excluded situations. “Electronic tendering”—as I go down the left-hand column—refers to our posting a notice of opportunity on the government electronic tendering service, commonly known as MERX. “Traditional competitive” is inviting tenders through source lists. An ACAN, or advanced contract award notice, is posted when we think there is only one supplier who is capable of meeting our needs. It signals our intention to negotiate with that supplier and invites others who think they can satisfy the requirement to challenge it. You will see on this slide, “non-competitive row”, almost the bottom right-hand corner, that the majority of our contracting is awarded as a result of competitive processes.
On slide 7, I've attempted to show what we buy, and that everything is classified via a goods and services identification number, GSIN, some 17,000 categories of goods and services that we buy. They're all classified into various groupings, again down the left-hand column: goods, services, construction, telecommunications, and architectural and engineering services.
The numbers on the chart represent the authority limits for entry into contract. You will note they are highest when we follow an electronic tendering process. Why? That's because it is the most open process. Again, this is when we post the opportunity on MERX, the government electronic tendering service. For any contract above the high values you see on these charts, we are required to seek the authority of Treasury Board to enter into the contract.
I'll spend one more moment on this chart. Look at goods, electronic tendering, you'll see two figures on the top, $30 million and $40 million. The department or the minister has $40 million worth of authority as assigned by Treasury Board Secretariat to enter into a competitive contract whereby we have solicited bids electronically. If we use source lists, next column, that authority drops to $10 million. If we go non-competitive or sole-sourced, the authority drops to $2 million. So sole-sourced, anything above $2 million, goods, contracts, we're required to go to Treasury Board submissions.
The number just to the left of those three that I pointed out, $30 million, $7.5 million, and $1.5 million, those are the numbers that are delegated within the department to officials, to bureaucrats. So between $30 million and $40 million for electronic tendering, we have to go to the minister; again, above $40 million we go to Treasury Board. Below $30 million, the ADM has a matrix that delegates it throughout the entire department to all levels of the organization.
The figures below that, the $400,000 across the board, are authorities that can be delegated to client departments to enter into contract. Of note, for goods that authority must be delegated by the Minister of Public Works and Government Services to other departments. All departments have been delegated $5,000, not $400,000, and there are only in the order of 16 that have accepted $25,000 delegations, a few more in the pipeline right now.
I'll move on to the final slide. This was really one that could take me a long time to go through, but I've tried to summarize it as well. I first used this slide to describe the process to the public accounts committee when they were reviewing the 2003 reports of the Auditor General on sponsorship and advertising.
The slide attempts to summarize a typical--and I must stress this, typical--process for contracting within Public Works and Government Services. It shows the various key stages of a contract, from inception, defining the requirement, to paying for the services received.
A couple of key points on the slide: First of all, responsibilities are segregated. You'll see at the top of the slide, outside the boxes, I've indicated project and payment authority in the customer department and contract authority within PWGSC. Our responsibilities are segregated, and the authorities are well articulated in the contract. Where there are joint responsibilities, these are generally well defined and understood by both the client department and Public Works and Government Services.
Secondly, contracts are not awarded in a factory. There is no one-size-fits-all approach to every requirement. Where this may be possible in areas of recurring needs, for example, standing offers or supply arrangements are put in place. Many people are involved, and a series of checks and balances are employed, depending on the risks associated with each procurement, whether those risks be determined by dollar value or other sensitivities.
As you go through those nine boxes on this chart, you will see checkpoints of approval authorities, legal risk reviews by our colleagues in the Department of Justice, contract quality control reviews, Treasury Board reviews, etc. There's a series of them.
The next point I'd like to make is that procurements are planned and advertised, bids are received and evaluated, and contracts are approved and awarded and managed with professional quality and care. Each step respects the principles of open, fair, and transparent procurement.
With that, I'd like to hand off to my colleague, Marshall Moffat, to deal with the OSME.