Procurement
April 19, 2013

A tale of three stories…and the lessons learned

In the March edition, I put forward three stories about process and results that were based on real events.

In story one, after months of effort, there was no result: there were no resources for a priority project. Was process compliance appropriate and serving a useful purpose or did it create a wall that the organization could hide behind?

Instead of terminating the contract, why could there not have been a temporary hold put in place while seeking Treasury Board approval? There was high potential for embarrassment and it was safer to just cancel so the minister and Board would not know. Where does contravening clear policy fit into this picture? Was it really better to hide the whole situation from possible review?

Although the contract could reasonably have been cancelled (since legally no Board approval means a contract has no effect anyway), the organization said that termination was due to possible conflict of interest. Since nobody outside the government had raised the conflict, was this a necessary excuse? Was having the bids independently re-evaluated and then implementing the results sufficient? Why initiate the re-evaluation but not disclose that one of the bids contained wrong information? Why give one reason for an action when something else was true?

After cancellation, the re-issued procurement produced no compliant bids. One of those bidders was the previous incumbent contractor with high client satisfaction. Should that be of concern? Overall, was the focus on appearances truth or common sense?

Story two seemed straightforward: bidder A won but the department couldn’t wait for Board approval, so the contract went to bidder B. Isn’t achieving a result the goal?

Canadian law of competitive bidding says the rules of competition must be published so bidders can legitimately expect you to live by the results. Giving the contract to bidder B for a reason not clearly specified in the call for bids risks court action.

The same is true if the procurement was carried out subject to one or more of the trade agreements (and this one almost certainly was): a losing bidder could easily complain to the Canadian International Trade Tribunal, where publishing rules of competition and then not following them is a good reason for a conclusion against the government.

Not worried about possible legal action? Remember that competitive contracts over $100,000 with former public servants in receipt of a pension (FPSRP) need Treasury Board approval. If to avoid that an organization decides to contract with bidder B, that makes it (for authority purposes) a non-competitive contract. Most ministers (and therefore their departments) have a limit of $100,000 for non-competitive services contracts. So, the new non-competitive, more-than-$100,000-contract with a non-FPSRP means…magic! You have replaced one Board approval requirement with another, which surely is going to take as long. Would you want to argue to your minister and the Board that you need approval for a non-competitive contract when you had a competition winner available?

How about hiding any result where a former public servant apparently won? This sounds like falsifying the result. Isn’t that fraud? You could say in the call for bids that FPSRPs need not apply, which is not the current policy. Or you could cancel the process, which is equal to ethical insomnia.

If you really need speed of contract, specify that in the call for bids and prepare your internal systems so that a submission for Board approval is expected and fast-tracked. Live with your rules!

Story three also risks the question, “so what?” It looks like the organization got a lot more consultant time than it paid for. And payment in fourteen weeks – well, that’s really not so bad.

Free service from a contractor is great when it is given voluntarily. The more you pressure, the higher the risk that you will not get the results you expect and need. Again, how does basically blackmailing a vendor – “do this for free or no more work” – resonate with your ethical framework? Short-term results are nice but it is usually better to seek “win-win” agreements.

The contract called for cash to be available when the contractor arrived, but it was not and could not be. While the client manager claimed ignorance of that contradiction, the client was in breach of contract basically before the contract had even started. Lesson: know what you are signing.

If you did not see important elements to think about in these stories, my point is made: you really do have to think in this business of procurement.

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