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Procurement Ombudsman works to raise awareness

Don Wall
Procurement Ombudsman works to raise awareness

Who knew Canada had a Procurement Ombudsman?

It’s not used very often — even with some 100 federal agencies doling out over $18 billion in federal contracts each year, the office received only 399 contacts in the 2015-2016 reporting year.

The Interim Procurement Ombudsman (PO), Lorenzo Ieraci, explaining what the office does in a recent interview subsequent to the publication of the office’s 2015-2016 report, admits it has an awareness problem.

The office saw an increasing number of written complaints — 52 — but still has to rely on outreach to reach out to suppliers.

"Whether it is that the procurements are being done perfectly, or it’s that a lot of people simply don’t know that we exist, we are trying to find that out and that is why we are trying to increase our awareness through outreach events," said Ieraci.

A major reason why phones have not been ringing off the hook from the construction sector — although sectoral records are not kept, Ieraci said — stems from the average value of federal contracts viewed in light of the office’s mandated upper threshold. The PO can only formally investigate federal contracts valued at a maximum $25,000 for goods and $100,000 for services. While that amounts to 92.4 per cent of all contracts issued by the government in terms of numbers, it only covers 4.5 per cent of the value of all contracts. Thus, the PO can’t touch billion-dollar builds such as, say, the federal Champlain bridge contract in Quebec — or even contracts in the hundreds of thousands.

Beyond that restriction, there’s another that severely limits the extent to which it can adjudicate disputes over typical federal construction contracts, Ieraci acknowledges — subcontractors are out of bounds. Only contracts between the federal government and suppliers can be investigated.

"You’ve hit on a nerve for a lot of suppliers and it is the reason in my annual report I specially highlighted that," said Ieraci.

"Unfortunately the way the rules are written right now, there is very little that we can do."

Why then, should the construction industry — major beneficiaries of federal procurement — bother to take note of the PO’s reports or attempts at outreach? Here, Ieraci, who among his duties works as a certified mediator for the office, has a convincing and practised answer.

"You are going to get tired of hearing this, but our motto is, we are here to help," he said.

Essentially, any inquiry about the federal procurement process, regardless of the value of the contract, could start with his office, said Ieraci. For higher-value contracts, the proper step for suppliers with complaints is the Canadian International Trade Tribunal (CITT), which administers trade treaties.

Domestic trade issues, between Canada and the provinces, may be governed by the Agreement on Internal Trade, Ieraci notes. Beyond that, there is the PO’s valuable role in raising problems with the federal ministries and agencies involved. Simply making a phone call tends to bring attention to an issue.

"If somebody calls us up and says, I got a problem with the way department XYZ awarded this contract, it is a $2-million contract, and we went to the CITT and they told us for whatever reason they can’t look at it, but I’m still upset, there are a couple of things that we might be able to do," said Ieraci.

First, he said, they would bring the issue to the attention to the senior decision makers in the department.

"We can’t force the department to do anything, but we can raise it to the deputy minister or the head of the organization, and our experience is, when we raise something and say, there might be a problem here, they have a tendency to take a look at the problem."

Payment is only ranked fourth among the problems the PO saw in 2015-2016, behind evaluation and selection plans, evaluation of bids and procurement strategy, and ahead of statements of work. Ieraci says in his experience, calls from the PO office regarding payments tend to get a quick response.

Two other functions of the department are also effective in helping solve procurement problems, Ieraci said. Annual procurement practice reviews compiled by the office sum up the year’s complaints, or are the result of selected studies, and are submitted to departments and agencies and brought to the attention of parliamentarians. The difficulty in submitting a bid in the first place is the source of frequent complaints, Ieraci said — but departments are listening when the PO talks, and steps to improve procurement procedures are being taken, he said.

"What I can tell you is that the federal procurement system is burdonsome, it is paper-based, and it takes a long time," said Ieraci. "Some suppliers have said just the process of trying to register and submit a bid is so onerous that it’s a disincentive for them to submit bids."

And while it is little used, given the volume of government contracts issued each year, Ieraci says the free mediation function has proven to be effective when it is used. In 2015-2016 the PO completed seven reviews of supplier complaints, a high-water mark for the office.

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