Introduction to Public Procurement Council Workshop December 15, 2014 1
Canadian Public Procurement • Canada the most litigious Country in the area of Public Procurement • 1981 Supreme Court of Canada Decision – Ontario v. Ron Engineering & Construction Ltd. – Revolutionary impact on the law of tendering in Canada – Created Procurement “Contract A” environment 2
The Five Major Implied Duties • Canadian procurement case law has established five major implied duties of procuring agencies: – Duty to run a fair process – Disclosure duty – Duty to reject non-compliant tenders – Duty to award to the winning bidder – Duty to award the contract as tendered 3
Brampton’s Purchasing By-law (2012) • Required by the Municipal Act, 2001 • Alignment with Inter-Government Agreements – Agreement on Internal Trade (AIT) – Federal Government and Provinces – Ontario and Quebec Trade and Cooperation Agreement • Adopts Honourable Madam Justice Bellamy’s Procurement Recommendations from the “Toronto Computer Leasing Inquiry” (MFP Scandal) • Reflects Current Canadian Public Procurement Environment 4
Purchasing By-law • Based on 3 over-arching principles – Fair, Open and Transparent Procurement – Best value for the taxpayers’ dollars – Procurements conducted when there is no internal capacity to deliver (e.g. snow clearing 15/85) • By-law developed with extensive consultation – With all departments and Internal Audit – Internal and external legal counsel – Benchmarking with other public sector entities 5
Purchasing By-law Principles • Principles prescribed by the Agreement on Internal Trade – Non-Discrimination – Transparency – Fair Acquisition Process – Exceptions (from competitive procurement) – Canadian Content – Language – Confidentiality • Additional Principles – Ethical Procurement – “Green” Procurement 6
Council Involvement in Procurement • Council approves Annual Budget • Any Council input on a procurement must occur after budget approval and before a procurement process commences • Council is directly involved and gives approval to commence a procurement process for a procurement expenditure for: – All procurements $1,000,000 and greater, and/or – Procurements of community interest, significant risk or security concerns 7
Council Involvement in Procurement • Only prior to procurement process • Due to procurement case law the opportunity for Council to affect change at the end of a procurement process is very limited due largely to: • The Duty to Award to the winning bidder, and • The Duty to Award the contract as tendered • The outcome of a procurement process determines the winning bidder 8
Procurement Contract Awards • Staff conducts procurement in accordance with Purchasing By-law • Contract award is an administrative process, adhering to the 5 Implied Duties: – Duty to run a fair process – Disclosure duty – Duty to reject non-compliant tenders – Duty to award to the winning bidder – Duty to award the contract as tendered 9
Reporting To Council • Comprehensive reporting to Council – Enables effective oversight – Provides full, transparent disclosure • On a quarterly basis the report provides summary of purchasing activities for the previous quarter and cumulative year-to-date activities • Reporting includes: • Contract awards • Consulting contract awards • Contract extensions • Single-Sourced contract awards • Sole-Sourced contract • Emergency contracts/Purchase awards Orders • Purchasing By-law • Disposal of surplus goods and non-compliance equipment • Non-Standard Results 10
Exclusions From Competitive Procurement • Direct Negotiated Process – Exclusions from competitive procurement are consistent with provisions set-out in Agreement on Internal Trade (AIT) – Single-source and sole source procurements: • Specifically defined by AIT • Remain subject to the approval limit requirements of the By-law • Must be approved by City Council when they meet the test of: – $1 million and greater, and/or – Community interest, significant risk or security concerns 11
Exclusions From Competitive Procurement • Definitions – “ Single-Source ” means there is more than one source in the open market but only for reasons of function or service one vendor is recommended – “ Sole-Source ” means there is only one source of supply • Exceptions defined in By-law are consistent with the Agreement on Internal Trade 12
Exclusions From Competitive Procurement • Emergency Procurements – Must meet the By-law definition of an emergency • An unforeseeable, serious emergency situation where the immediate purchase of goods, services or construction is essential in order to maintain a required service or to prevent danger to life, health or property, and • The goods, services or construction cannot be obtained in time by means of an open, competitive procurement method – Chief Administrative Officer or Department Head(s) are authorized to use the direct (emergency) procurement method for any dollar value 13
Tie Bids • When there are two or more identical winning bids: – Tie bid language must be consistent with provisions of the Agreement on Internal Trade • Cannot discriminate on the basis of geographic location (e.g. local contractor) – Tie Bid Process • Tie bid resolved with a coin toss (consistent with procurement best practice and legally recognized) 14
Approval Thresholds Tenders and RFPs (excluding Consultants) 15
Approval Thresholds Consultants 16
Approval Thresholds Direct Negotiation Approval Requirements Procurement Value Required Approvals Up to $5,000 Purchasing Card or Cheque Requisition $5,000 to $100,000 Purchasing Agent and Dept Head $100,000 to $1,000,000 Purchasing Agent and Dept Head and Treasurer Purchasing Agent and Dept Head and $1,000,000 and over Treasurer and Chief Administrative Officer • Limited application as per Agreement on Internal Trade 17
Council Workshop Due Diligence in Public Procurement – February 9, 2015 Council Workshop on Procurement – Guest Speaker: Mr. Paul Emanuelli – Recognized as one of Canada’s leading public procurement lawyers – Hailed by Who’s Who Legal as one of the ten top public procurement lawyers from around the world – Program Director of Osgoode Professional Development’s Certificate in Public Procurement Law and Practice and the author of multiple publications, including the leading textbook Government Procurement – Provided significant guidance in the development of the City of Brampton’s current Purchasing By-law 18
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