Most public authorities in Canada allow sole source direct contracting in only a very limited range of cases.
Even if managers are strongly committed to the idea of open contracting, the interpretation of the process can still be problematic.
A supplier is not a monopoly merely because it is the only source of supply known to a departmental manager.
A procurement is not an emergency simply because managers failed to plan adequately and put off the purchase until the last minute.
Disclosure of a proposed contract does not breach a duty of confidentiality merely because it could lead to the disclosure of information that managers (or even elected officials) might consider embarrassing.
If a system of open procurement is to work, there needs to be a clear understanding when the above conditions would apply. There also needs to be some method of verifying that on the facts of a given case, one of these criteria does apply.
Verification is important because while it is one thing to set a policy, it is quite another to see that it is followed. In order to ensure unjustified recourse is not made to sole sourcing, it is necessary to monitor the issue of such contracts carefully.
At the very least, managers who issue contracts of this type should be required to make a formal record as to why this was done.
Moreover, except in the case of emergency procurement, they should be required to issue the contract on at least a limited basis so that recourse was made to sole sourcing only as a last resort.
In short, if the idea of open competition is a sound one, then those who wish to depart from that norm ought to be required to show that it is necessary to do so.
When you look at the history of sole sourcing going back 20 years, in many cases, the same problems with the system still apply.
In the 1998 report of the auditor general of Canada, the subject of sole and single contracting was discussed in detail.
An audit carried out in connection with that report discovered that, for the most part, limited information could be found in the relevant files to justify the use of a sole source direct contract approach.
In some cases there was no information to indicate the relevant benefits of the procurement decision, nor was there any information to suggest the specifications that had to be satisfied by the supplier were of an exceptional nature.
Instead of the criteria set by the Treasury Board, the most common reason for directing the contract to a sole source was given as “prior experience.”
These findings raise the question of whether an individual manager should be allowed to decide whether to proceed by the single source method.
In the 1999 report of the auditor general of Canada on Sole-Source Contraction for Professional services: Using Advance Contract Award Notices, it was determined that only 11 per cent of the 50 single source contracts that were audited had justification on file that complied with the conditions stipulated in the Government Contract Regulations.
Most of the decisions made to single source were made on the basis that the supplier was the only one capable of providing the service required — but in 89 per cent of the 50 cases, the uniqueness of the contractor had either not been established or was not supported in fact.
Commenting upon these two reports, the Commons Standing Committee on Public Accounts observed that in either instance, the situation is completely unacceptable…“the process of awarding most of the contracts audited in this sample would not pass the test of public scrutiny.”
Stephen Bauld is a government procurement expert and can be reached at swbauld@purchasingci.com.
Some of his columns may contain excerpts from The Municipal Procurement Handbook published by Butterworths.
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