Procurement
May 14, 2012

A patch with hopeful possibilities

The federal government’s new Professional Services National Procurement Strategy, continuing the use of national master standing offers and supply arrangements, offers some hope that the government will get this important area of procurement right.

Recognizing that the existing system is overly complex, cumbersome and confusing, Public Works and Government Services Canada (PWGSC) is doing a patch job: with limits to what patches can achieve, it might have been better to rip it out and start again. The devil is in the details, and in many areas the strategy lacks specifics. Many policy organizations have learned from sad experience that the best “on-paper” approach will fail if real life implementation does not meet expectations.
 
Still, what’s done is done, and we can see hope, albeit through continuing weaknesses.

Red tape continues. Buyers will have to justify using a standing offer to contract directly (up to $25,000) with a supplier without calling for bids. Using increasingly scarce government resources to justify complying with the Government Contracts Regulations is interesting. The regulations are clear: contracts under $25,000 can be awarded without calling for bids, because it is not cost-effective to do so. Why, then, will PWGSC require departments to spend time and money to “justify”?

Suppliers will have to report on a quarterly basis or risk suspension. Presumably this applies to suppliers that actually get contracts. Apparently a supplier that has demonstrated its abilities by “winning” a contract could be suspended for failing an administrative requirement?

The strategy relies heavily on a new automated system, the Centralized Professional Services System (CPSS), to be implemented “eventually.” Unfortunately, major system development processes all too often fail – too slow, too expensive, poor results. Excessive reliance on a system is risky. One wonders also whether CPSS development – and in fact this entire renewal effort – will survive government austerity measures.

Suppliers will apparently have to compete twice to provide the same services: once for standing offers, once for supply arrangements. Added to that inefficiency, access will continue to be limited, as getting listed for a supply arrangement or standing offer will not be a continuing process: the best that PWGSC offers is that the qualification period might be reduced to, for example, monthly. If CPSS is so good, why not continuous?

Qualification will continue to be based on generic criteria applicable across a government user base of 100 very different departments and agencies. This crude approach does not accept that what is good for one department may not be suitable for another.

The strategy maintains the use of per diem fees to “rank” standing offer holders. Ranking and then selecting professional service providers based only on their daily rates ignores that results are not simply the product of per diem fee and level of effort (i.e., per diem rate times number of days). A less expensive contractor that takes longer to produce may easily cost more than a more expensive professional who produces faster and better.

Price may be what you pay – but value is what you get – and as the government strives to reduce expenditures surely overall value for money must assume increasing importance.

So, strong negatives – but also strong positives: there is hope.

Departments will be able to use standing offers on a direct/sole source basis. Rather than relying on centrally-set generic qualification criteria and inappropriate per diem rankings of suppliers, they will be able to quickly find suppliers that meet their particular requirements, and negotiate agreements based on real timelines, levels of effort and resulting total price. That is value – quickly and at low cost.

CPSS will improve data capture and reporting, removing that burden from suppliers and buyers alike. Can we hope that contracting data will be publicly available, for transparency?

Above all, PWGSC says it will improve all of the processes required for the effective use of supply arrangements: qualification requirements, standardization and training. If successful, even requirements less than $25,000 could be competed faster and at less cost to buyer and seller: more competition and more value, with little if any more effort than the current process.

Perhaps then PWGSC will be able to introduce an ongoing process, where suppliers qualify once to be listed (but not ranked) for both standing offers and supply arrangements. Professionals who choose to do so could even list their per diems, for those departments that seek generically qualified resources for fixed periods.

There is hope.


John Read provides procurement consulting services to public sector clients. He retired in 2007 after more than 35 years in the federal public service, including almost 15 in the PWGSC procurement arena, ending as senior director of acquisition policy and process.

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