Survey illustrates how public procurement views the state of the sector
[April 2014 print edition]
The Procurement Law Office recently circulated a procurement due diligence survey that helps public institutions assess how they measure up to legal due diligence standards and compare to other organizations. We received feedback from hundreds of respondents across Canada. This column highlights how public institutions assessed their practices in eight target areas, providing a statistical snapshot of the current state of procurement in the Canadian public sector.
While 83 percent of organizations responded “Strongly Agree” or “Agree” when asked if they comply with open competition duties, only 67 percent responded the same when measuring compliance with ethical standards during the bidding process. That dropped to 35 percent on whether their accountability controls measure up to due diligence standards, with 65 percent saying “Somewhat Agree”, “Disagree”, “Strongly Disagree” or “Don’t Know” regarding adequacy of their governance measures.
A majority reported “Strongly Agree” or “Agree” to creating clear requirements and formats. But they were less confident with project approval and review processes and with the proper definition of project roles and responsibilities. The numbers reflected a need to place greater emphasis on project governance and coordination.
Over 70 percent responded “Strongly Agree”, “Agree” or “Somewhat Agree” when asked if they promote awareness of format use, regularly update their templates and use flexible tendering formats. However, a minority (16-29 percent) responded “Somewhat Disagree” or worse when asked the same three questions about their tendering templates, showing that many institutions lag behind when it comes to mitigating tendering risks with overhauled formats.
While 89 percent of institutions responded positively when asked if their solicitation documents were easily readable, only 78 percent responded similarly when asked if their institutions clearly define drafting roles and responsibilities. That dropped to 72 percent on whether they properly defined their internal drafting process. These numbers underscored the need for better coordination across the purchasing process.
Over 60 percent said they “Strongly Agree” or “Agree” that they properly scope procurement documents and 75 percent responded the same on the transparency of evaluations. That number dropped to 46 percent when it came to meeting material disclosure duties. Since the failure to properly disclose material performance conditions in solicitations is a major cause of subsequent project delays and cost overruns, this reflected a significant risk factor in the procurement cycle.
Contract management contained the weakest confidence levels of any area, with a majority responding “Somewhat Agree” or worse to all questions. Only 48 percent said they “Strongly Agreed” or “Agreed” when asked if they had clear post-award scope management practices. That number dropped to 46 percent for clearly defined contract administration structures and sank to 29 percent for vendor performance tracking. The numbers show a clear need to improve contract management practices to improve transparency and achieve value for money.
For training, over 80 percent of procurement operations expressed overall confidence (“Strongly Agree”, “Agree” or “Somewhat Agree”) in their procurement hiring standards and training. That dropped to 73 percent, with 60 percent saying “Somewhat Agree” or worse, when asked whether there was broad awareness and proactive avoidance of procurement-related legal risks. This illustrates the need to implement broader procurement training programs across public institutions.
For innovation, 54 percent of organization’s responded very favourably (“Strongly Agree” or “Agree”) when asked if their procurement operations received sufficient attention from senior management. However, that confidence level dropped to 41 percent when it came to technological innovation and sank to 31 percent when it came to tracking market conditions and maintaining commercially reasonable procurement practices. The numbers underscored the need to raise long-term planning issues with senior management and to promote proactive change management strategies.
While institutions generally expressed confidence in complying with the “hard” due diligence benchmarks that can be implemented through top-down measures (like open competition policies, standard templates and formal evaluation protocols) they were less confident with some of the “soft” indicators that require a more integrated approach to governance (such as roles and responsibilities, approval and drafting processes and contract administration). To encourage compliance, procurement professionals should adopt a softer touch, promoting proactive awareness and implementing strategies that help integrate procurement standards across their organizations. B2B
Paul Emanuelli is the general counsel of the Procurement Law Office and can be reached at firstname.lastname@example.org.