Office of the Procurement Ombud Releases 2023-24 Annual Report
An Overview
This month, the Federal Procurement Ombud released the Office’s Annual Report for 2023-24, which was tabled in Parliament by the Minister of Public Services and Procurement and stressed the need for immediate action to rectify the federal government’s long-standing procurement issues.
Promoting Fairness
Guided by the mission of promoting fairness, openness, and transparency in federal procurement, the Procurement Ombud is mandated to:
- Review supplier complaints about the award of certain federal contracts below $33,400 (for goods) and $133,800 (for services);
- Review supplier complaints about the administration of certain federal contracts, regardless of dollar value;
- Review the procurement practices of federal departments to assess fairness, openness and transparency, and make recommendations for improvement; and
- Provide dispute resolution (e.g., mediation) services for the parties to a federal contract.
According to the Procurement Ombud, Alexander Jeglic, the theme for this year’s Annual Report is Time for Action, as imminent changes are needed to rectify both the longstanding and recently exposed faults of the federal government’s procurement practices. Specifically, pertaining to the core procurement principles of fairness, openness, and transparency.
The 2023-24 Annual Report’s highlights are as follows:
Federal Procurement Cases, Outreach Initiatives, Alternative Dispute Resolution, and the Review of Complaints in 2023-24 by the Numbers
Cases Raised in 2023-24
Nature of the Cases:
- 429 were related to general procurement inquiries
- 104 were related to the award of a contract
- 49 were related to the administration of a contract
Sources of Contact:
- The majority of those who contacted the Office were suppliers, supplier associations, and procurement associations. Other sources of contact include federal department representatives, anonymous sources, citizens, Members of Parliament or other levels of government, and subcontractors.
Annual Comparison:
- 2023-24 saw a total of 582 cases raised to the Office, which represents a considerable increase from 2022-23, when there were 474 cases recorded.
Outreach Initiatives in 2023-24
- The Office aimed to expand its stakeholder connections through a series of outreach initiatives across Canada, both virtually and in-person, including:
- 23 presentations at procurement events
- 21 departmental meetings
- 17 meetings with procurement stakeholders
- 17 online town halls with suppliers
- 17 kiosks
- 6 university outreach events
- 5 in-person town halls with suppliers
- Continued engagement on social media channels
Alternative Dispute Resolution Services in 2023-24
The Office offers facilitation and mediation of alternative dispute resolution services to suppliers and federal officials. In 2023-24 there were 11 requests made, and of those requests:
- 5 did not go to mediation
- 3 went to mediation, but did not result in a settlement agreement
- 1 was resolved informally with the Office’s help
- 2 are ongoing processes which will be reported on in the next Annual Report
Review of Complaints
- During 2023-24, the Office launched 5 reviews of formal complaints from federal suppliers about the award of certain general contracts. Additionally, 62 written complaints were received, primarily pertaining to the award of a contract and contract administration.
Top 10 Issues Reported
Concluded from tracking, analyzing, and tabulating the issues raised by procurement stakeholders throughout the years, the following were concluded as the top 10 issues that stakeholders faced with federal procurement:
- Stakeholders felt that the evaluation criteria were unfair, overly restrictive, or biased
- Stakeholders noted that there was a complexity in federal procurement
- Stakeholders believed that the evaluation was incorrectly conducted, or the contract was awarded to the wrong bidder
- Stakeholders reported payment issues
- Stakeholders reported that the department did not respond, or responded late, to their questions
- Stakeholders believed that the department was deviating from the terms and conditions of the contract
- Stakeholders reported that debriefings were not provided or, if they were held, insufficient information was shared
- Stakeholders believed that solicitations were over-valuing price over technical merit
- Stakeholders were holders of a standing offer/supply arrangement and not getting business
- Stakeholders believed that there were significant modifications to the scope of work after the contract was awarded
Procurement Practice Reviews
The Office completed its 5-year plan to review the procurement practices of the top federal departments in terms of contracting volume and value. This effort in 2023-24 totaled the review of 631 procurement files for 17 federal departments.
From the review, the key findings were:
- The evaluation criteria are not clearly communicated in solicitation documents
- Overly restrictive criteria are used, which results in a limited number of potential bidders
- Bid evaluations are not completed in accordance with the solicitation, with several instances of contracts awarded to non-responsive bidders
- Poor documentation and failure to adequately record actions taken and the reasons for procurement decisions
Ad hoc procurement practice reviews were also completed, notably for the ArriveCAN contracts and the contracts awarded to McKinsey & Company.
The Office also conducts follows-up on procurement practice reviews approximately 2 years after the initial review. In 2023-24, 3 follow-up procurement practice reviews were completed.
Recommendations from the Procurement Ombud
A Government-Wide Vendor Performance Management System: According to the Office, there has never been a greater need for a Vendor Performance Management (VPM) program, which would provide the mechanism to track information on supplier performance and share that information across all federal departments and regions. Through the creation and adoption of a functional government-wide VPM, the Office foresees significant benefits to the federal government’s procurement practices.
A Chief Procurement Officer: The creation of a Chief Procurement Officer is a potential position that the Office has researched over the years, and again was reexamined in 2023-24. Specifically, with a focus upon how the role could address the long-standing procurement issues, including the procurement policies and people. Additionally, the Chief Procurement Officer would be tasked with leading the creation and implementation of the government-wide VPM program.
Mandate Changes: To bolster the relevancy of the Office for all stakeholders, the following regulatory changes were reiterated:
- To provide fair and reasonable relief to suppliers negatively impacted by the erroneous and/or improper award of contracts, it is recommended that the compensation should be greater than 10% of the value of a contract.
- Federal departments must provide documentation to support accurate and transparent reviews of complaints and procurement practices.
- Review complaints related to the Procurement Strategy for Indigenous Businesses set-asides program, to ensure all suppliers have access to the Office’s redress mechanisms.
- Additional mandate changes are currently being analyzed by the Office, including the mandatory participation of departments in alternative dispute resolution services when requested by suppliers.
Funding: The Office’s budget, which has remained static for over 15 years, has faced inflationary pressures, funding constraints, and an increasingly difficult operating environment to effectively deliver on its mandate. With an ever-growing demand for the Office’s services, a permanent funding solution is required that will support the hiring of a select number of additional permanent staff to effectively review federal procurement practices and make recommendations to improve the system.