To get the federal government’s procurement process on the fast track and unclog its multiple layers of red tape, the independent Office of the Procurement Ombud (OPO) is recommending an “overhaul” of the system.
“We can no longer sustain Band-Aid solutions. We have to address the foundational issue that our system is too complex and it’s not working for all participants,” said Procurement Ombud Alexander Jeglic in a news conference.
Jeglic says the immediate creation of a Chief Procurement Officer (CPO) tops the ombud’s list of solutions to modernize the process, increase accountability and provide taxpayers with better value for money.
Today, the OPO presented its top five “foundational changes” to modernize the process.
The blueprint recommends:
- Establish a Chief Procurement Officer (CPO);
- Create vendor performance tracking system;
- One universal set of procurement rules;
- Use of artificial intelligence;
- Increase transparency by creating a government wide portal to collect procurement data
The OPO recommendations come after the Auditor General revealed in June that most of the contracts awarded to GC Strategies did not have adequate records indicating who performed the work, what work was completed, and if the people doing the work had the necessary qualifications.
GC Strategies was awarded 106 contracts over nine years with 31 federal organizations.
GC Strategies was hired by the Canada Border Services Agency during the COVID-19 pandemic to create the ArriveCan app, which ballooned in cost from $80,000 to nearly $60 million.
Jeglic acknowledges there are poor performers that keep getting government contracts and that “there is a financial cost to that poor performance, but there aren’t the tools available yet to address that.”
After a study that involved interviews with 10 procurement experts from industry, legal and academic sectors, and 115 surveys from procurement officers working within the federal public service, the OPO report ranked the establishment of a CPO as the most critical change required to address some issues which have “spanned decades.”
Jeglic notes that a CPO would provide a single point of accountability.
The report found that the current system is “marked by silos” which can be redundant, and at other times, leave glaring gaps.
“When accountabilities and responsibilities in a procurement system are not exceptionally clear, it becomes very difficult to address the problems plaguing the system,” the OPO report found.
System to evaluate performance
The ombud is also recommending building a system to evaluate the performance of suppliers based on four criteria including the quality of the product delivered, the cost, whether the project was completed on time and how well the vendor managed subcontractors and communicated with the client
This type of vendor management system is used in Europe, functions in several provinces and is used by many local governments.
The OPO says a single set of procurement rules should also be laid out to provide public servants with clear guidelines to “untangle complex layers and streamline federal procurement.”
Streamlining the decision-making process can also be done through wider use of artificial intelligence, but the ombud cautions that AI presents a “myriad of opportunities, challenges and risk.”
Jeglic said that suppliers are already using AI in the bidding process and that the federal government needs to incorporate it as well or “risk being left behind.”
The OPO report says the procurement of AI must be ethical and procurement processes must ensure transparency in the tools that are bought,” and that regular audits need to be conducted to ensure adherence to ethical guidelines.
Rounding out the OPO’s fifth recommendation for foundational change, is the building of a centralized database for all federal procurements as a means to increase transparency. This database would hold guidelines, policies and procedures. This would allow departments to share information and compare progress.
Ensuring competition
Jeglic did not have estimates on how much money could be saved through the changes, but says one of the ways to increase value for taxpayers is to ensure competition. He says that the current federal procurement system is preventing some Canadian contractors from bidding and building up their experience to become viable suppliers globally.
“Ensuring we have a robust and diverse supply chain in Canada is all of our responsibilities - but ensuring they can grow by selling to the federal government is also part of that solution.”
Although improving Indigenous procurement was not in its top five, the OPO says many of the experts and public servants it surveyed highlighted a need for the federal government to do more to improve its relationship with Indigenous suppliers. Concerns were raised that the government’s approach was “paternalistic” and that there was no wording to assist procurement officers in making decisions that took into account reconciliation efforts.
Defence procurement
The OPO also noted that defence procurement was one of the most frequently raised topics, fuelled by media reports that highlighted long delays and cost overruns.
Jeglic says the experts his office interviewed suggested the creation of a chief procurement officer just for defence, while other proposed giving the Department of National Defence sole contracting authority in order to eliminate “difficulties in interdepartmental relationships” and streamline the process.
Defence contracts will be increasingly scrutinized as Canada is expected to spend an additional $9 billion to reach the 2 per cent NATO spending target this year, while committing to the new 5 per cent target by 2035.
“If we do not act now, I fear I will be here in two years time saying the same thing. It’s incumbent on everyone involved in federal procurement to address the issues.”
A spokesperson for the procurement minister said in an email that Public Services and Procurement Canada (PSPC) is “actively working to deliver a streamlined federal procurement process,” and that Minister Joel Lightbound had recently met with Ombud Jeglic.
Victor Kandasamy, director of regional affairs, says the ombud’s report aligns with initiatives that are already underway by PSPC and the Treasury Board Secretariat of Canada, which is conducting a separate study of the procurement system.
Kandasamy did not comment on which OPO measures the minister would support, but did say that the department was working on new measures, such as creating a new defence procurement agency to “support Canadian jobs, and build the equipment our troops need.”
