October 23, 2012

Procurement Perspectives | Stephen Bauld

Procurement rules can be confusing

Government procurement can be confusing unless you are up to date on all the specific rules of each municipality.

Section 270 of the Municipal Act, 2001 requires Ontario municipalities to adopt “policies” in relation to procurement. It does not specifically require that such policies be embodied in a by-law, but in fact for most municipalities this is in fact the case.

For those few municipalities that do not have a formal purchasing bylaw, but which have adopted “policies” in lieu thereof, the distinction between bylaws and policies is probably of little importance. Most municipalities adopt a “confirmatory resolution” at each council meeting, in which all proceedings conducted at the meeting are declared to be confirmed by by-law. Thus, any policy approved at a council meeting in effect becomes a bylaw of the municipality.

Of importance is the distinction that many municipalities draw between purchasing policies and procedures. In the norm, “policies” constitute the general requirements to which staffs are expected to adhere in carrying out the purchasing function. In contrast, “procedures” constitute the rules of application which prescribe the exact method of carrying policies into effect.

Both the policies and procedures should encourage purchasing and other staff engaged in the procurement process to operate as a team of resourceful skilled professionals working to produce the best combination of goods, work and services in the most effective manner, having a balanced regard to price, quality, reliability, security and integrity of supply, timeliness of delivery and risk.

For most municipalities, the procedures are prescribed by the senior municipal management, rather than by the council. Thus the procedures do not constitute a municipal bylaw, but where they are enforced by senior staff. The policies should also be directed to ensure that all procurement activities of the municipality serve its current and future needs, provide an economical service, and that the purchasing section is considered a value-added partner in the procurement of goods, construction, and services for the municipality.

The policies should establish clear areas of responsibilities and lines of accountability for each step in the procurement process. Whether or not these are set out in the policies themselves, there should be clear consequences for non-compliance understood by staff.

I have represented contractors on government tender issues at council meetings and have seen some very odd interpretations of the rules by council voting on staff reports. While there is general consensus that a municipal council should not interfere improperly in the procurement process, it is difficult to accept the wisdom of them being completely separated from the process for which they are ultimately responsible.

As long as public accountability and democratic oversight remain a concern of government, it is not only appropriate but necessary for council members to inquire into the process of any anticipated expenditure, particularly those of a significant nature, to review the specifications of a proposed facility or other acquisition to confirm that they are not “gold plated” or otherwise unrealistic, to confirm conformity to budget and that proposed schedules are consistent with overall municipal needs.

Similarly, the criteria for the evaluations of proposals are a proper concern of councilors. However, some councillors step too far into this area, when they seek to influence the outcome of a contract competition in favor of or against a particular supplier, when they seek to impose a product choice when they lack the relevant training or experience to evaluate competing offerings properly, or otherwise seek to take over proper responsibilities of municipal staff. In this regard, it is worth noting that relations between staff and councillors should always be civil and premised on mutual respect.

Stephen Bauld, Canada’s leading expert on government procurement, is a member of the Daily Commercial News editorial advisory board. He can be reached at stephenbauld@bell.blackberry.net.

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