Download pdf - Government of Ontario: Procurement Policies and …...Government of Ontario: Procurement Policies and Procedures Procurement Policy and IT Procurement Branch Office of the Corporate

Government of Ontario: Procurement Policies

and Procedures

Procurement Policy and IT Procurement BranchOffice of the Corporate Chief Information Officer

Management Board Secretariat

November 25, 2003

1

OPS ProcurementContext

• Local buying within a corporate procurement framework

• Numerous buying points, eg. ministries, often with the assistance of Shared Services Bureau (SSB)

• Buying occurs through specific procurement processes or ministry or corporate Vendor of Record (VOR) arrangements

2

OPS ProcurementContext

• Most of the mandatory requirements for Ontario Government procurements flow from Ontario’s internal trade agreements:

• The Agreement for the Opening of Public Procurement for Ontario and Quebec - signed by Ontario and Quebec on May 3, 1994

• The Agreement on Internal Trade - signed by the Provinces, Territories and Federal Government on July 18, 1995

• Both of Ontario’s internal trade agreements contain similar procurement provisions

3

OPS Procurement Policies• Competitive procurement process used in order to

achieve value for money

• Competitive procurement process must be fair, open and advertised widely, using electronic tendering where possible, for:

• Goods acquisitions valued at $25,000 or more; and,

• Services and construction acquisitions valued at $100,000 or more

• Requirements must be described in a sound business case which demonstrates value for money

• Procurement must follow a disciplined and comprehensive process

New CompetitiveProcess

BidProcurement

• Solicitation• Receipt• Evaluation and

Selection

ContractAward

Implementation

Contract/Service

Management

OPS Procurement Process

Design

Market

Research/

Risk

Analysis

Renewal

5

OPS Procurement ProcessSolicitation of Bids

Process must be Open and Fair

• Release of procurement request document

• Clear statement of requirements and how vendors will be evaluated

• Opportunities must be posted for at least 15 calendar days (at least 30 days for Alternative Service Delivery procurements)

• Form of agreement included in Request for Proposal (RFP)

BidSolicitation

6

OPS Procurement ProcessSolicitation of BidsBuyers must disclose:

• All requirements in the evaluation process, including:

• all mandatory requirements and the weighting for each rated requirement

• Pricing methodologies

• Any oral interview requirements

• Overall methodologies – minimum scores

BidSolicitation

7

OPS Procurement ProcessSolicitation of BidsBidders must disclose:

• Ontario taxes are in good standing

• Any conflict of interest or unfair advantage

• Legal Status

• Financial Stability

8

OPS Procurement Process Solicitation of BidsCommunications• Potential vendors consulted during

business case development, usually through Request for Information (RFI)

• Once RFP is issued, strict rules apply to communications between vendors and buyers

• Official contact designated for all vendor inquiries

• All questions must be submitted in writing and all questions and answers are distributed to all potential bidders

BidSolicitation

9

OPS Procurement ProcessReceipt of Bids Bid

Receipt of Bids

• All bids must be sealed and delivered to the designated location on time

• Conditional proposals will be rejected

• Unsealed or late bids are returned to the bidder unopened

• Buyer’s RFP and vendor’s bid become binding contract (ie, “Contract A”)

10

OPS Procurement ProcessEvaluation and Selection• Evaluation team members must disclose any

conflict of interest

• Evaluation team members must follow all elements of the evaluation process set out in the RFP including compliance with mandatory criteria, scoring metrics, use of references and clarifications.

Bid

Evaluation & Selection

•Buyers may only evaluate the content of vendor submissions and requested clarifications - no assumptions made

•Evaluation process usually has 3 stages:•mandatory criteria

•rated requirements

•pricing

11

OPS Procurement ProcessEvaluation and SelectionMandatory Criteria• Mandatory criteria must be met or the

bid is disqualified

• Generally include:• Policy requirements

• Conflict of interest declaration• Tax compliance declaration

• Legal Status

• 3rd party insurance

• Capacity requirements (eg, financial stability)

• Procedural requirements (eg, all forms signed by authorized officer)

Bid


12

OPS Procurement ProcessEvaluation and SelectionRated Requirements• Rated requirements allow the vendor to

demonstrate their understanding of the requirements of the RFP and how their products/services will achieve a quality outcome

Cost/Pricing• Proposal pricing is evaluated last to avoid pricing information

affecting the evaluation of rated requirements

• In the overall evaluation, buyer organizations must apply the maximum justifiable weighting to cost/price

Bid


13

OPS Procurement ProcessContract Award

Bid

Contract Award &

Implementation

• Contract is awarded to the highest ranked proposal (ie, “Contract B”)

• Contract finalization (no material changes to pro-forma)

• Vendor debriefings on request –subject to confidentiality requirements of FIPPA

• Contact with contracting officer or service manager

14

Bid

OPS Procurement ProcessContract/Service Management• Ensure continual alignment with

business goals

• Service delivery and quality monitored based on established benchmarks and performance measurement processes

• Service Manager as broker betweenvendor and end-user

• Vendor cannot expand scope of work beyond bid specifications

• Buyer can terminate the contract if vendor fails to perform or honour terms and conditions

Contract/Service

Management

15

OPS Procurement ProcessVendor of Record ArrangementsDefinition Bid

Vendor of Record

Arrangements

• Fixed contractual arrangement with multiple vendors for the on-going acquisition of commonly purchased goods or services within a defined term

• Established through open, competitive procurement processes (ie, RFPs posted on MERX)

• Vendors agree to common terms and conditions, including pricing

• Buyers do not need to repeat full open, competitive process and get access to preferred pricing (ie, volume pricing)

• Based on the value of the assignment, VOR may require additional second stage selection process among approved vendors

16

Bid

Vendor of Record

Arrangements

OPS Procurement ProcessVendor of Record Arrangements Corporate VORs

• Corporate VORs open to all ministries may only be established by Management Board Secretariat (MBS):

• Procurement Policy & IT Procurement Branch (PPITPB) establishes and manages Corporate VORs for IT hardware, services and software

• Shared Services Bureau establishes and manages Corporate VORs for non-IT goods and services (eg, office supplies, clothing, corporate travel)

• Ministries may establish specialized VORs for their own use (eg,guns and bullets for the OPP), but cannot establish VORs open toother ministries

• Most corporate VORs are mandatory use and, as such, must be used by ministries to acquire the goods or services covered

17

OPS Procurement ProcessVendor of Record Arrangements Corporate VORs - PPITPB

Bid

Vendor of Record

Arrangements

Hardware:• Computer Equipment and Value Added Services

• Leasing Services for Desktop IT

• Cellular Airtime Services

• Photocopier & Fax Equipment and Services

Software:• Autodesk

• Corel

• Novell

• Oracle/IBM DB2

• Business Intelligence Tools

18

OPS Procurement ProcessVendor of Record Arrangements Corporate VORs - PPITPB

Bid

Vendor of Record

Arrangements

Software:• Enterprise Architecture Middleware

• Unified Modelling Language Software

• Application Knowledge Base Solution

• IDE Software Solution

• IT Security Products

• Remedy Services:

•IT & Management and Business Consulting Services

•ITSM Project Management/ITIL Training Consulting Services

•HR & Change Management Professional Services

•I&IT Learning and Development Services

•Electronic Service Delivery Consulting Services

19

Bid

Vendor of Record

Arrangements

OPS Procurement ProcessVendor of Record Arrangements Vendor Responsibilities• Establish and maintain relationships with ministry

clients through effective marketing

• Determine resource and time requirements for assignments in response to client requests

• Sign Service Level Agreement (if successful)

• Maintain and ensure the availability of qualified resources as proposed

• Transfer of knowledge to Ontario Public Sector staff during services assignments

20

Bid

Vendor of Record

Arrangements

OPS Procurement ProcessVendor of Record Arrangements Client Responsibilities• Select Vendor/Resources; may involve additional

second stage selection process

• Sign Service Level Agreement

• Approval / Acceptance of deliverables

• Approve and pay invoices

• Submit performance evaluation reports to MBS upon completion of assignments

21

Bid

Vendor of Record

Arrangements

OPS Procurement ProcessVendor of Record Arrangements MBS Corporate Responsibilities• Communicate corporate VOR guidelines and

policies to vendors and clients

• Make VOR User Guide available to clients

• Maintain vendor contact lists and profiles

• Monitor VOR usage and vendor performance

• Resolve issues not settled at client level and / or matters arising from Master Agreement

• Conduct any scheduled refresh processes described in the original RFP

• Extend Master Agreement, discontinue VOR or issue new RFP upon expiry

22

Procurement Directive ChangesTo Address Provincial Auditor

Recommendations

23

Procurement ChangesContext

On April 25, 2003 revised Procurement Directives were issued which deal with the acquisition of:

•Goods and Services;

•Consulting Services; and,

•Information Technology.

The new rules took effect immediately.

24

Procurement ChangesContext•The changes to the procurement directives were designed to:

•address the issues raised by the Provincial Auditor;

•to make the rules more stringent with respect to consulting services, particularly regarding non-competitive acquisitions;

•ensure the OPS conducts effective and efficient procurement initiatives;

•continue to ensure that ministries, through delegated authority to Deputy Ministers, are accountable for their procurement activities with the corporate procurement policy framework; and,

•avoid future criticisms regarding ministry implementation of theprocurement directives.

25

Previous Approach New Approach

IT Procurement

$1 million or more - Management Board ofCabinet approves IT procurements with anestimated value of $1 million or more.

Sub-division of Procurements

Direction related to sub-division of procurementsnot included in all directives

All Procurements (including IT Procurement)

$1 million or more – Unless otherwise previously approved by MBC, ManagementBoard of Cabinet would approve all procurements of an estimated $1 million ormore.

MBC would also be required to approve any change to the ceiling price of aconsulting services assignment bringing the total cost/price to $1 million or more.(Section 4.19 in the Procurement Directive for Goods and Services, 4.3.4 in theProcurement Directive for Consulting Services and 4.18.2 in the ProcurementDirective for Information Technology)

Sub-division of Procurements

Ministries must not sub-divide projects, procurements or contracts to avoid anyprocurement directive requirements related to competition, approvals orreporting.

Strategic Planning:Procurement Approvals Thresholds

26


Consulting Services

$100,000 - $499,999 - The DeputyMinister/delegate approves the initialassignment, vendor selection and contract, andchanges to ceiling price/follow on agreements.

$500,000 or more - The Deputy Minister andMinister approve the initial assignment, vendorselection and contract and changes toceiling price/follow-on agreements.

Follow-on agreements permitted up to twice theamount of the original ceiling price; no cap onoriginal ceiling price. Deputy Minister andMinister approval required over $500,000.

Consulting Services

Up to $749,999 – The Deputy Minister/delegate would approve the initialassignment, vendor selection and contract, and changes to ceilingprice/follow-on agreements. (Section 4.3.4, 4.11 and 5.1 in the Procurement Directive for Consulting Services)

$750,000 - $999,999 – The Deputy Minister and Minister would approve the initialassignment and changes to ceiling price. The Deputy Minister would approvevendor selection and contract. (Section 4.3.4, 4.11 and 5.1 in the ProcurementDirective for Consulting Services)

The use of the follow-on agreement process must receive prior Deputy Ministerapproval. Follow-on agreements are not permitted over $750,000 unlessallowed for under a particular VOR arrangement. (Section 4.8.5 in the ProcurementDirective for Consulting Services)

Strategic Planning: Procurement Approvals Thresholds

27


Direction related to determining theappropriate supply source did notreflect VOR arrangements.

Where internal ministry resources are not available, ministries mustsource the supply of goods and services in the following order:(Section 4.5.1 in the Procurement Directive for Goods & Services)

• Mandatory central common services• Mandatory corporate vendors of record arrangements (VOR)• Consider optional central common services• Consider optional corporate VOR• Use a ministry VOR• Use a separate competitive acquisition process

Strategic Planning: Procurement Options

28


Vendor of record (VOR) arrangementsare not included in the currentprocurement directives.

Not all VOR arrangements require Management Board approval.

VOR arrangements are establishedthrough an open, fair and transparent procurement process.

Limited requirements and guidelinesestablished for second stageselection.

Clearly state in the new procurement directives that VOR arrangements satisfy therequirements for open competition. (Section 4.5.3 in the Procurement Directive forGoods & Services)

All procurements to establish a VOR arrangement with an estimated value of $1 million ormore will require Management Board approval. (Section 4.19 in the Procurement Directive for Goods & Services)

No change

Mandatory requirements established for second stage selection process. (Section4.5.3.3 in the Procurement Directive for Goods & Services)

Strategic Planning: Vendor of Record (VOR) Arrangements

29


IT VOR Arrangements – secondstage selection:

0 - $100,000 - Select a vendor tocomplete assignment.$100,000 - $500,000 – Receive bidsfrom at least 3 vendors, ministries mustdocument process.

Over $500,000 – Ministries must proceed with full open competition.

Non-IT VOR Arrangements –second stage selection:

No second stage selection.

IT and Non-IT VOR Arrangements – second stage selection: (Section4.5.3.3 in the Procurement Directive for Goods and Services)

Under $25,000 - Select one or more vendors from VOR.

$25,000 - $249,999 – Ministries must consider, and invite (whereapplicable), at least 3 vendors to submit bids or proposals.

$250,000 - $749,999 – Ministries must consider, and invite (whereapplicable), at least 5 vendors to submit bids or proposals.

Over $750,000 - Ministries must proceed with full open competition,unless otherwise approved by MBC for a particular VOR arrangement.


30



Evaluation of Vendor Bids from Second Stage Selection Process:

Ministries must document process and rationale for selection. Limited requirements and guidelines established for second stage selection.

Evaluation of Vendor Bids from Second Stage Selection Process:

Given that an open competition has already occurred to establish all VOR arrangements, the second stage selection process shall be concerned only with the particular goods and services to be acquired, including the specific needs and issues for a particular assignment or project, such as:

• contract price for the assignment or project;• the resources to be assigned;• availability and timelines to complete the assignment or project; and,• would not need to evaluate general requirements of vendors already

determined through the initial competition to establish the VOR arrangement.

Where multiple bids or proposals are required under a VOR arrangement, the solicitation and evaluation procedure and criteria must be designedto achieve best value for money in the context of the specific goods and services being acquired.

31


Ministries must keep appropriate documentation to report to Management Board and for future reference.

Ministries must establish terms of reference for consultingassignments including objectives, background, scopetiming, progress reporting and approval requirements.

Ministries will be required to:

• fully document how they assessed available internal ministry resources before going to consulting services; (Section 4.3.2 in the Procurement Directive for Consulting Services)

• clearly define the requirements for the assignment; (Section 4.9 in the Procurement Directive for Goods and Services)

• follow enhanced requirements for evaluating bids and selecting vendors; (Section 4.10 in the Procurement Directive for Goods and Services)

• retain all documentation, including approvals; and, (Section 4.11 in the Procurement Directive for Goods and Services)

• set out contractual obligations to ensure there is a “transfer of knowledge”, where applicable, to OPS staff. (Section 4.2 in the Procurement Directive for Goods and Services)

Ministry of Finance will be required to verify accuracy of taxdeclarations submitted by vendors prior to contract awardand this information to be made available to the contractingministry. (Schedule C in the Procurement Directivefor Goods and Services)

Strategic Planning: Procurement Documentation

32


Consulting Services

Prior approval of the deputy head is required. The deputy head can delegatethe authority to an appropriate official of theministry.

Deputy and Minister approval required forall emergency situation single sourcecontracts of $25,000 or more.

Consulting Services

Deputy Minister to approve all single or sole source consulting contractsvalued at $25,000 or more. (Section 4.8.3 in the Procurement Directives forConsulting Services)

Management Board of Cabinet to approve all single or sole source consultingcontracts valued at $500,000 or more. (Section 4.8.3 in the Procurement Directivefor Consulting Services)

All Goods and Services

For cases where the contract is to respond to an urgent situation which preventsthe ministry from obtaining prior Management Board approval (i.e., $1 million ormore for goods and services and $500,000 or more for consulting services),the ministry must:

Inform the Secretary of Management Board of Cabinet as soon as possible about the situation and report back to Management Board on the circumstances and justification related to the situation. (Section 4.8 in the Procurement Directive for Goods and Services and 4.8.3 in the Procurement Directive for Consulting Services)

Additional mandatory requirements have been established to ensure full justification for non-competitive acquisitions where competitive and/or opentendering would be required. (Section 4.8 in the Procurement Directive for Goodsand Services)

Strategic Planning:Single/Sole Sourcing

33


Ministries must prepare a writtenagreement between the ministry andsupplier.

Ministries must ensure that:

• all payments are in accordance with contractual provisions;

• all payments for applicable expenses meet the Travel Management and General Expenses Directive;

• any overpayment for fees and expenses are recovered;• all assignments are properly documented;• vendor performance is managed and documented. Any

performance issues are resolved; and, • all required approvals are obtained for all changes in scope

and terms and conditions of agreements.

(Section 4.2 in the Procurement Directive for Goods and Services)

Enhanced Management:Responsible Management

34


Ministries must be prepared to provide areport to the MBS on their ability to effectivelymanage the process of planning, acquiringand managing consulting services.

Ministries must provide an annual report to the Management BoardSecretariat on their management and use of consulting servicesincluding VOR arrangements. The annual report is due each May 31.(Section 4.13.2 in the Procurement Directive for Consulting Services)

Information required will include:

• estimated ceiling prices of services, ceiling price increases and final ceiling prices;

• types of acquisition;• exceptions to competition; and,• confirmation of receipt of deliverables.

Better Reporting:Consulting Services

35

Additional Changes to the Directives

36

1. Agency definition reflecting the new Agency Establishment and Accountability Directive; (Section 2.0 in the Procurement Directive for Goods and Services)

2. Procurement Directives apply to acquisitions related to provision of central common services; updated list of providers; (Schedule A in the Procurement Directive for Goods and Services)

3. Exception for regional and economic development has been removed;

4. Ontarians with Disabilities Act legislative requirements added; (Section 4.6.2 in the Procurement Directive for Goods and Services)

5. Services acquisitions valued between $25,000 and $100,000 require three written bids/proposals; (Section 4.7 in the Procurement Directive for Goods and Services)

6. P-card per transaction limit increased from $1000 to $5000; (Section 4.13 in the Procurement Directive for Goods and Services)

7. Conflict of Interest requirements to be included in RFP’s/contracts; and, (Section 4.4 in the Procurement Directive for Goods and Services)

8. Enhanced direction provided for entering into contracts, including consultation with legal counsel. (Section 4.14 in the Procurement Directive for Goods and Services)


The following General Updates/Changes to the Procurement Directives have been made:

37

The following General Updates/Changes to the Procurement Directivefor Consulting Services have been made:

1. Delete roster/rotation process and grandfather existing process; and,

2. Delete ability for ministries to set up own consulting services directive.

The following General Updates/Changes to the Procurement Directivefor Information Technology have been made:

1. A mandatory requirement has been added requiring ministries to comply with all applicable enterprise-wide corporate information technology standards. (Section 4.8 in the Procurement Directive for Information Technology)

2. Reference to the software acquisition policy is now included in the directive. (Section 4.14 in the Procurement Directive for Information Technology)


38

Implementation and Next Steps

39

Implementation:•Information sessions outlining the changes are being held across the OPS to ensure that the revised directives are understood;

•Information resources have been established by the Procurement Policy and Information Technology Procurement Branch (PPITPB) and the Shared Services Bureau (SSB) to assist ministries in implementing the new directives;

•Procurement training will also be available to OPS staff on an on-going basis through SSB’s generic training curriculum;

•Provided template to ministry CAO’s to assist in preparation of annual consulting services report;

•Additional MBS guidance to be provided regarding new MBC procurement approval requirements; and,

•Continue to work with IT clusters to facilitate MBC procurement approvals through Common Infrastructure Procurement Plan (CIPP).

40

Procurement Policy & Information Technology Procurement Branch (PPITPB)

For:•Advice or clarification on any questions or issues related to the Procurement Directives•Assistance in developing complex IT procurement documents

(416) 327-3580 / (416) 327-3375

http://intra.ppitpb.gov.on.ca/mbs/psb/psb.nsf

For copies of:•Procurement Directives “Old vs. New” Chart•Procurement contract language related to Conflict of Interest•Revised Tax Compliance Declaration Form and Guidelines•IT Vendor of Record Arrangements, User Guides and/or related Vendor Information

41

Shared Services Bureau (SSB)

(416) 326-9300For:

•Operational procurement guidance and assistance

http://intra.ssb.gov.on.ca/myssb/published.nsf

For:•Non-IT Vendor of Record Arrangements, User Guides and/or related Vendor Information•Checklist for planning, acquisition, award and management of consulting services

42

Questions