Procurement Support Centre

Transcription

1 October Procurement Support Centre annual report 2013/14

2 Find us at: Elliott Street, Whitehorse (867)

3 Table of Contents Introduction Procurement Support Centre Operations YG Procurement Statistics Year One of PS Centre Operations: Featured Accomplishments Training Request for Analysis of Procurement (RAP) Standard Templates Performance Monitoring Framework A Look Ahead

4 Introduction In 2013, the Yukon government committed to improving the efficiency and effectiveness of procurement through updating the rules that govern procurement activities (the Contracting and Procurement Regulation and Directive) and establishing the Procurement Support Centre (PS Centre) to provide procurement advice and services. The mandate of the PS Centre is: compliance monitoring, analysis and reporting; capacity development through the provision of a procurement training program and support tools; policy development, maintenance and interpretation; operational support and advice; and, dispute resolution. In its first year of operation, the PS Centre has focused on building the foundation required to meet this mandate through defining the skills required and hiring staff, identifying and addressing priority training requirements and tools, and determining what information will be needed to strengthen performance and confidence in government procurement. A key function of the PS Centre is to provide information to government buyers, suppliers and the public about how the procurement function is working and what actions are being taken to improve the overall system. This report is one important mechanism that helps us deliver that information. While we are still assessing what data and information will be most useful to our clients, we are committed to regular, consistent and transparent reporting about the state of procurement across the Yukon government. 2

5 Although the PS Centre has formal authority in a number of areas related to the procurement rules, its most significant role and potential for added value is in the provision of fair and reasonable advice and tools to improve procurement and to increase the professionalism of procurement functions. The accomplishments described for our first year of operation, and the objectives we describe for coming years, include our activities related to building trust, credibility and collaboration with both the government and supplier communities. The PS Centre will lead in the development of the Annual Report and is open to feedback about the report and welcomes suggestions for information to include in coming years. In 2013/14, Yukon government budgeted expenses totaled $1,136 million. With more than $345 million spent on services, construction and goods, close to one out of every three dollars was spent by a Yukon government employee using a variety of procurement methods. And with 1,839 employees having authority to procure goods and services on behalf of the Yukon government, almost forty percent of YG employees can influence Yukon economic activity. As a result, maintaining the integrity of the Yukon government procurement process is crucial to protecting Yukon s public interest. 3

6 Yukon government procurement practices are guided by the principles outlined in the Contracting and Procurement Regulation that came into effect on April 1, 2013: Fairness to observe procedural policies free of bias, personal interest and conflict of interest. Openness and transparency to create the maximum number of competitive procurement opportunities, and to be transparent in the way business is conducted. Fiscal responsibility to justify contracting and procurement decisions and actions as appropriate in the circumstances. Competition to open procurement opportunities to the maximum number of respondents. Value for money to focus on efficiency, economy and effectiveness to obtain the maximum benefits with the resources available. Accountability to be willing and able to account for the way contracting and procurement activities are conducted. The Department of Highways and Public Works has committed to improving the efficiency and effectiveness of goods and services procurement on behalf of the Yukon government. Improved public sector procurement efficiency and effectiveness will enable Yukon government departments and agencies to achieve their mandates and in turn deliver maximum value for money to the Yukon public. This inaugural Annual Report outlines the PS Centre s progress towards improving the procurement of goods and services by the Yukon government in the 2013/14 fiscal year. Two significant milestones occurred in the 2013/14 fiscal year. The first was the implementation of the Contracting and Procurement Regulation on April 1, Together with the Contracting and Procurement Directive, the Regulation forms the policy and operating foundation for the Yukon government s approach to improving the efficiency and effectiveness of public sector procurement. A key feature of the approach is matching the level of effort required to complete the procurement transaction with the value and complexity of the procurement in question. Another feature is the increased emphasis on ensuring more contracts are awarded through open competitions. 4

7 The second milestone occurred in November 2013, when the Procurement Support Centre opened its doors at its new office on Elliott Street in downtown Whitehorse. Located on the ground floor of the Dakwakada Professional Building, the PS Centre is now easily accessible for all staff and clients. The new office location brings together all staff, including the PS Centre Director, two new professional positions, embedded legal counsel as well as staff from the former Contract Services unit. The Department of Highways and Public Works has committed to improving the efficiency and effectiveness of goods and services procurement on behalf of the Yukon government. 5

8 Procurement Support Centre Operations 6

9 Six full-time staff funded through an annual appropriation of approximately $775,000 deliver the PS Centre s services. A staff lawyer assigned by Yukon Justice is embedded within the Centre. The work of PS Centre staff is supported by central services supplied within Highways and Public Works including finance, policy, communications, IT systems and human resources. PS Centre staff: provide support and advice by telephone, and in-person to the 1,839 Yukon government employees authorized to procure goods and services. Employees without signing authority who prepare tender packages on behalf of supervisors also receive support and advice from PS Centre staff. Such support and advice generally takes the form of interpretations of the contracting regulation and directive, procurement planning advice, review of draft tender documents and the creation and maintenance of a variety of procurement tools including forms and templates; train Yukon government employees involved in procurement. Staff training is available through a series of internally delivered courses and on-demand externally delivered courses in advanced public procurement; handle all open tender competitions by posting tender notices, distributing tender documents and issuing addenda, receiving and logging bids and proposals, opening bids and proposals, updating the Tender Management System with live results, reviewing bids and proposals for compliance; develop and implement procurement-related policy on behalf of the Yukon government; ensure YG procurement practices are based on a strong legal foundation. A staff lawyer from YG s Department of Justice is stationed within the Centre and provides legal advice and support. PS Centre staff also track changes in trade agreements such as the Agreement on Internal Trade; and, prepare reports and maintain lists required by the Contracting and Procurement Directive. Examples include this Annual Report, the Contract Registry, the Tendering Forecast, the Supplier Directory and reports required for compliance with Chapter 5 of the Agreement on Internal Trade. 7

10 Improving the efficiency and effectiveness of Yukon government procurement relies heavily on the PS Centre s ability to collaborate with departments. To understand how effective collaboration is necessary to deliver maximum value for money to the Yukon public, consider the following two examples: The Tender Management System (TMS) is a mechanism designed and operated by the PS Centre to assist YG departments to exercise their delegated authorities to procure goods, services and construction. Use of the TMS in no way transfers delegated procurement authority from a department to the PS Centre. Thus, while a public tender may be routed through the TMS, and may benefit from advice given by the PS Centre, responsibility for ensuring best practices are known and followed remains with the 1procuring department. 2The mandate of the Acquisition Services and Planning Branch is to purchase, or to assist YG departments where authority has been properly delegated to purchase, goods and certain services such as printing and aircraft charters. The Branch helps maximize value for money by identifying opportunities for cost savings through bulk purchases on behalf of one or more departments. Cost savings are also achieved through application of the specialized purchasing knowledge of Branch staff for the purchase of high-value goods (e.g., highway graders). While the role of the PS Centre is limited with regard to direct involvement in the purchase of such goods, the Centre does retain overall policy responsibility for procurement on behalf of the Yukon government. As a result, the PS Centre regularly collaborates with the Acquisition Services and Planning Branch to ensure the activities of the Branch are aligned with the Contracting and Procurement Regulation and the Contracting and Procurement Directive. 8

11 The work of PS Centre staff is supported by central services supplied within Highways and Public Works including finance, policy, communications, IT systems and human resources. 9

12 YG Procurement Statistics 10

13 This section of the report presents an overview of Yukon government procurement during the 2013/14 fiscal year. A total of $345 million was spent by Yukon government employees in the 2013/14 fiscal year on contracts for construction, services and goods. Of that total, $110 million (or, 32%) was spent through construction contracts, $198 million (or, 57%) on service contracts and $37 million (or, 11%) on goods contracts. The tables below provide additional detail on Yukon government construction, services and goods procurement in the 2013/14 fiscal year by department. Note that the counts in the figures below include contract change orders and include increases in contract award values corresponding to the issuance of change orders. Construction Contract Awards: Value and Number Direct Award Invitational Tender Public Tender Total Community Services $76,200 $132,482 $13,278,141 $13,486, Highways and Public Works $485,434 $405,370 $95,795,985 $96,686, Total (Construction) $561,634 $537,851 $109,074,126 $110,173, % of Total Value (Construction) 0.5% 0.5% 99% 100% % of Total Number (Construction) 25% 11% 64% 100% In terms of contract value (including change orders), virtually all construction was procured through public tenders with $109 million (or, 99%) of total construction spending flowing through publicly tendered contracts. In terms of the number of construction contracts, almost two-thirds (109 or 64%) were awarded through a public tender process, 18 (or, 11%) were awarded through an invitational process and 42 (or, 25%) contracts were awarded directly. Seventyfive percent of the total number of construction contracts were awarded through competitive processes (either public or invitational tenders). 11

14 Service Contract Awards: Value and Number Community Services Economic Development Education Energy, Mines and Resources Environment Executive Council Office Finance Health and Social Services Highways and Public Works Justice Legislative Assembly Public Service Commission Tourism and Culture Total (Services) Direct Award Invitational Tender Public Tender Total $6,357,120 $1,529,492 $21,701,286 $29,587, $350,193 $80,370 $188,961 $619, $1,582,441 $652,713 $14,999,401 $17,234, $4,008,280 $289,952 $28,212,407 $32,510, $1,288,870 $1,215,488 $2,764,017 $5,268, $812,795 $246,807 $431,238 $1,490, $165,040 $32, $197, $23,624,891 $429,827 $2,519,496 $26,574, $37,923,536 $4,698,850 $25,181,504 $67,803, ,479 $1,755,927 $332,829 $1,974,579 $4,063, $355,365 $1,539,159 $77,207 $1,971, $1,623,666 $1,356,844 $2,251,774 $5,232, $1,352,447 $660,464 $3,063,981 $5,076, $81,296,028 $13,065,251 $103,365,852 $197,727,132 3, ,170 % of Total Value (Services) 41% 7% 52% 100% % of Total Number (Services) 66% 15% 19% 100% In terms of the value of service contracts (including change orders), roughly half of the total value of service contracts was publicly procured with $103 million (or, 52%) of total service contract spending flowing through publicly tendered contracts. Thirteen million dollars (or, 7%) worth of services were procured through invitational processes and $81 million (or, 41%) of services were procured through direct awards. Fifty-nine percent of the total value of service contracts were awarded through competitive processes (either public or invitational tenders). 12

15 In terms of the number of service contracts, a total of 5,170 service contracts were awarded, of which 66% (or, 3,418) were direct awards. A total of 764 (or, 15%) services contracts were awarded through an invitational tender process and 988 (or, 19%) were awarded through a public tender process. Thirty-four percent of the total number of service contracts were awarded through competitive processes (either public or invitational tenders). Goods Contract Awards: Value and Number Direct Award Invitational Tender Public Tender Total Community Services $2,345,087 $473,350 $2,305,689 $5,124, Economic Development $16,355 $96,671 $5,481 $118, Education $2,934,525 $92,892 $54,004 $3,081, Energy, Mines and Resources $443,770 $193,001 $190,017 $826, Environment $531,354 $271,273 $239,964 $1,042, Executive Council Office $79,987 $29,040 $18,104 $127, Finance $10,400 $4,550 $10,962 $25, Health and Social Services $1,617,966 $700,287 $1,544,871 $3,863, Highways and Public Works $5,100,572 $4,241,894 $11,657,234 $20,999, ,688 2,490 5,391 Justice $481,193 $204,666 $541,135 $1,226, Legislative Assembly $8,239 $25,416 $3,096 $36, Public Service Commission $135,824 $38,883 $6,191 $180, Tourism and Culture $105,145 $109,194 $11,333 $225, Total (Goods) $13,810,418 $6,481,116 $16,588,082 $36,879,616 1,224 2,959 2,596 6,658 % of Total Value (Goods) 37% 18% 45% 100% % of Total Number (Goods) 18% 44% 39% 100% 13

16 In terms of the value of goods contracts (including change orders), roughly half (45%) of the total value of goods contracts was procured through public tenders worth $16.6 million. Six and a half million dollars (or, 18%) worth of goods were procured through invitational processes and $13.8 million (or, 37%) of goods were procured through direct contract awards. Sixty-three percent of the total value of goods contracts were awarded through competitive processes (either public or invitational tenders). In terms of the number of goods contracts, a total of 6,658 goods contracts were awarded, of which 18% (1,224) were direct awards. A total of 2,959 (or, 44%) goods contracts were awarded through an invitational tender process and 2,596 (or, 39%) were awarded through a public tender process. Eighty-three percent of the total number of goods contracts were awarded through competitive processes (either public or invitational tenders). A total of 944 individual VISA cards and 16 corporate cards have been issued to Yukon government employees and departments with the intent of improving the administrative efficiency of low-value purchases. In 2013/14, a total of 31,864 VISA transactions were completed through which $5.9 million of goods and services were procured. The average VISA purchase value was $186. Expenditures made by YG employees through convenience contracts and local purchase orders are not included in the figures above. Contracts entered into under Standing Offer Arrangements are not currently identified as such in the Contract Registry, the source for the expenditure data presented. A key feature of the Contract and Procurement Directive that came into force on April 1, 2013 is the improved matching of procurement methods with contract values. The objective is to have as many contracts as possible awarded within the threshold that corresponds to the recommended procurement method used for the purchase. Proposed contract awards which exceed the thresholds can no longer be approved by a Cabinet Minister. Instead, a request for analysis of procurement (RAP) must be completed by the PS Centre. Where circumstances warrant, a request for analysis of procurement may recommend that a contract award above the threshold be approved. If a RAP recommends that a contract award not be approved, a Deputy Minister may still approve the contract award. Thus, while the objective of approach outlined in the Contracting and Procurement Directive is to have as many contracts as possible awarded within the appropriate threshold range, there will always be a small number of procurement transactions which exceed the thresholds. Indeed, the request for analysis of procurement (RAP) process was designed to ensure an appropriate solution can still be found in such 14

17 situations. In 2013/14 the PS Centre recommended 137 proposed procurements for approval after completing procurement analyses. Note that it is also possible to use a more competitive procurement method than is required according to where the proposed contract value falls within the prescribed contract award ranges. For example, while a contract valued at $20,000 may be awarded directly, a procurement authority may issue an invitational tender or even a public tender. This is encouraged as long as it is a reasonable match of effort to value and complexity. The 2013/14 fiscal year was a transition year as the thresholds for direct awards, invitational tenders and public tenders remained the same as they were under the prior Contract Directive for value-driven procurements. Under the prior Directive, the award ranges for value-driven construction and service contracts were up to $25,000 for solesource (direct) awards, $25,001 to $50,000 for invitational tender awards and greater than $50,000 for public tender awards. The award ranges for goods contracts were up to $10,000 for sole-source (direct) awards, $10,001 to $25,000 for invitational tender awards and greater than $25,000 for public tender awards 1. Also, the award thresholds for price-driven construction and service contracts were up to $10,000 for sole-source (direct) awards, $25,001 to $50,000 for invitational tender awards and greater than $50,000 for public tender awards. 1 Per provisions in the Contracting and Procurement Regulation that came into effect on April 1, 2014, the direct award threshold for services and construction has increased to $50,000 and the threshold for invitational tenders has increased to $75,

18 The top two panels in the figure below illustrate the number of contracts awarded in 2013/14 by award range for construction and services contracts. The bottom panel of the figure illustrates the number of goods contracts awarded in 2013/14 by award range. Note that the counts in the figures above are based on the initial contract values and do not consider increases or decreases in contract award values corresponding to the issuance of change orders. In consequence, the number of contracts awarded in the figure below are not directly comparable with the number of contract awards presented earlier. The figures above are important because they provide baseline data about Yukon government procurement activities as they relate to the dollar value thresholds and ranges that are recommended for use of different solicitation methods (for example, direct award, invitational or public competitions). In future years this report will look at trends in these numbers to measure competition and numbers of contracts awarded in given areas (goods, services and construction). For example, Yukon government staff issued 80 public tenders for construction in the fiscal year. We don t know yet if that is a typical statistic. 16

19 The figures above also indicate if the solicitation methods are being used as recommended in the Contracting and Procurement Directive. In some cases, Yukon government procurements exceed the policy requirements, for example, staff will use a public competition for an award in the invitational tender range. On the other hand, sometimes YG staff need to use the direct award method for awards above the direct award range, for example, in times of emergency. In the future we will report on trends in the use of recommended solicitation methods. At the PS Centre we recognize that the ideal choice is to use reasonable and adequate procedures for a given procurement. It is not required to do public competitions for low dollar value contracts the level of effort for Yukon government staff and businesses would be more than is reasonable for a small contract. There is a high number of public awards in some of the direct award ranges. It is worthy of note that a contract drawn from a publicly-tendered Standing Offer Agreement is considered a publicly tendered contract. Therefore, the number of publicly tendered contracts will not equal the number of public competitions. In 2013/14, Yukon government expenses totaled $1,136 million. With more than $345 million spent on services, construction and goods, close to one out of every three dollars was spent by a Yukon government employee using a variety of procurement methods. 17

20 Year One of PS Centre Operations: Featured Accomplishments 18

21 This section of the annual report features some of the key accomplishments at the PS Centre during 2013/14. training Almost forty percent of the Yukon government s 5,000 employees are authorized to procure goods and services on behalf of the Yukon government. Ensuring that employees with procurement authority are fully aware of the intent of the Contracting Regulation and Directive, and are familiar with procurement best practices, is crucial to maintaining the integrity of YG s procurement system. As illustrated in the charts above, an extensive number of Yukon government employees received procurement training through courses created, managed and delivered by the PS Centre. The PS Centre has so far issued a total of 1,936 procurement course certificates. 19

22 Procurement 101 was delivered via Moodle, an open source course management system, to 650 employees. A total of 717 course certificates were issued for two classroom-based courses, Procurement 201 and 202. For procurement courses with more advanced content, the PS Centre has partnered with Paul Emanuelli to deliver day long courses on specific topics Ethics and Accountability, Precision Drafting and the Art of Selection for which 238 course certificates were issued. In addition, three executive sessions were hosted, reaching a total of 69 YG senior managers. In the words of procurement training participants The better I am at understanding procurement, the more beneficial it will be for my department. Even though I am not currently involved in procurement, understanding it helps me develop context around my work environment and my branch. The more I understand the better I can be a team player. This training has put many things in perspective that I did not understand. PS Centre staff delivered procurement training on a department-specific and community-specific basis. Procurement 201 sessions were also delivered upon request to staff from the departments of Highways and Public Works, Community Services, Environment, Education and the Yukon Housing Corporation. PS Centre staff delivered Procurement 201 training in Dawson City twice in the 2013/14 fiscal year reaching employees from Highways and Public Works, Energy Mines and Resources, Health and Social Services, Community Services and Environment. Course participant feedback was very positive for all courses delivered or organized by the PS Centre. Out of all procurement course participants, 90% rated their course as good or excellent. request for analysis of procurement (rap) The Yukon government is a small organization relative to the span and diversity of its program delivery obligations across an extensive area of northern Canada. While the most the Yukon government s procurement transactions are run-of-the-mill, a small number will always fall outside the norm. To mitigate the financial and legal risks associated with unusual procurements, procurement authorities are required to complete an analysis of the proposed procurement. 20

23 Requests for Analysis of Procurement are professional analyses of proposed procurement transactions. The analysis performed, and the resulting consultation and recommendation, provides a measure of assurance to staff and management that the proposed procurement transaction meets the letter, spirit and intent of YG s procurement regulations and policy. Alternatively, the PS Centre analysis may identify practical and sound alternatives to the proposed procurement transaction. PS Centre staff are available to assist all YG employees through the completion of a Request for Analysis of Procurement. In its first year of operation, the PS Centre received and processed 210 RAPs. The vast majority were requests to direct award contracts above the direct award threshold. Analyses were also completed for change orders intended to increase the contract value in excess of the threshold of the original procurement, for bypassing the lowest bidder and for requests to award a contract where all invitational bids received were above the invitational threshold. Some examples include: $60,000 direct award contract to engage a lead investigator for a study being conducted in partnership with a major university. The contract with the partnering university stipulates the use of that particular lead investigator, as they are affiliated with the university. No competition possible. $7,268 change order to a direct award contract for road design work, propelling the contract above the direct award threshold, due to unforeseen design changes needed during construction. 21

24 $55,856 contract awarded based on an invitational tender. The contract estimate was well below the invitational threshold when tendered, however the lowest bid received was above the threshold. Re-tender was not considered to be costefficient given the relatively small difference between the threshold and the lowest bid. $75,000 direct award consulting contract, based on a preferred vendor who came highly recommended to the procurement authority. After analysis and discussion, the procurement authority withdrew the RAP, due to insufficient factual evidence to support the direct award. After one year of RAPs, the PS Centre is becoming more efficient and consistent in the analysis and processing of RAPs. At the same time, the procurement authorities are becoming more familiar with the rules surrounding RAPs and are getting more efficient at gathering the required evidence to support a RAP request. We expect that in fiscal year 2014/15 there will be fewer RAP requests, and more competitive procurement. standard templates As noted earlier, procurement authority is widely dispersed among 1,839 Yukon government employees. Such wide dispersion brings with it significant exposure to financial and legal risks and potential for internal and external operating inefficiencies and inconsistencies. 22

25 Financial risk can arise when staff in YG departments use different contract forms to purchase the same type of good or service and the contract forms are not all designed to result in maximum value for money. Legal risk can arise when different versions of a contract for purchase of the same type of good or service continue to be used by various departments when it is known that some older versions contain problematic terms and conditions. Exposure to financial, legal and reputational risks is perpetuated by the use of non-standardized contract forms. Internal operating inefficiencies arise from the use of different contracting terms and processes across departments that must be separately reviewed, understood and implemented. Contract training is also more difficult because YG departments are using various contract terms with different interpretations or effects. External inefficiencies arise when contractors must review and follow different contracting processes depending on which department is procuring the goods or services. To reduce the potential risks and inefficiencies, the Contracting and Procurement Directive requires that YG staff use standard government procurement documents available from Highways and Public Works. The first of the standard templates to be drafted is a construction contract template. Representatives from Highways and Public Works, Community Services, the Yukon Housing Corporation, the Yukon Contractor s Association and the Consulting Engineers of Yukon reviewed the construction template. The construction template will be used for fixed price construction where the work or project is completed for a fixed cost or amount. Other contract templates currently being drafted include a consultant contract template for engineering and architectural services and a unit price construction contract. ps centre performance monitoring framework A results-based performance monitoring framework was developed in 2013/14 to help facilitate the efficient and effective operation of the PS Centre. Based on a logic model developed collaboratively with PS Centre staff, the framework provides a comprehensive overview of PS Centre activities, outputs and desired outcomes. Implementation of the framework by PS Centre staff is underway and the indicator data being collected will be used to monitor PS Centre operations. The framework will also serve as a foundational component for a future outcome-based evaluation of the PS Centre. 23

26 A Look Ahead 24 Thank you for your interest in the operations and achievement of the PS Centre. We look forward to sharing the results of our continued efforts to improve the effectiveness and efficiency of Yukon government procurement practices.

27 While much was accomplished at the PS Centre in its first year of operations, the changes required for full implementation of the approach outlined in the Contracting and Procurement Directive must be introduced in a measured manner. Highlights of the initiatives we are now working on to further improve Yukon government procurement practices include: Standing Offer Agreements: practices for the tendering of standing offer agreements will be reviewed in consultation with YG departments to ensure that contracts awarded via standing offer arrangements meet the letter, spirit and intent of YG s procurement regulations and policy. Internal Compliance Monitoring: a comprehensive program to monitor compliance by YG departments with the Contracting and Procurement Directive will be designed with input from departments. External Compliance Monitoring: guidelines for the assessment of compliance with contract specifications by businesses that sell to the Yukon government will be drafted in consultation with the Yukon business community. Bid-Challenge Review: the existing bid-challenge review process will be assessed and realigned with the approach outlined in the Contracting and Procurement Directive. Advanced Yukon-Specific Training: plans for course development and training in the next year include the development of in-house training on advanced procurement topics and training on the preparation of Requests for Analysis of Procurement. Conformity with Privacy Requirements: the PS Centre will continue to work closely with the Yukon Information and Privacy Commissioner to ensure that policy guidance contained in the Contracting and Procurement Directive is clear on matters related to confidential bidder information and the public disclosure of procurement-related information. Interpretive Guide: a plain language explanation of YG procurement requirements and best practices will be developed for the use of YG departments. Standard Contract templates: more contract templates developed using the same process as the fixed price construction contract. In addition to the planned activities above, the PS Centre will continue to scan the horizon for advancements in procurement processes and tools. In the future, we will consider functionality enhancements such as e-bidding (electronic submission of bids and proposals) and tools such as Master Framework Agreements. In addition, we will continue to have a section in the Annual Report for A look ahead so that our clients have advance notice of possible changes. 25

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