Canada

#11 - Abby Semple (procurement consultant, postgraduate student)

What will public procurement look like in 2025?

Interview with Abby Semple, a Procurement Consultant and postgraduate student at the University of London Birkbeck College, who runs the blog Public Procurement Analysis. She’s also an expert in sustainability in procurement. Earlier this year Abby was one of the first authors out of the gate with A Practical Guide to Public Procurement, a book about the new public procurement directives. There were many topics we could have chosen for our talk today but we settled on one slightly different from usual. Today’s talk is focused on the future of public procurement, more specifically how procurement may look in 2025.

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Transcript

Hello Abby, thank you for coming to the show.

Thank you. Nice to be here.

We were discussing when we were setting up the interview what topics we could cover and what questions we should go for. One of the first ones you suggested I think is very, very good, if you look ahead for the next ten years or so what would we perceive is going to be the changes to the market in public procurement in Europe? Will there be more or fewer contracts advertised and more or less competition?

Well it’s maybe a bit of a risky topic for me to have proposed because I think most people throughout history who have tried to predict the future have been proven wrong! It’s often interesting to see in which ways they were proven wrong so it’s maybe a little bit dangerous to talk about this but never mind, you know, it’s a Monday morning so may as well get stuck in. In terms of that question of more or fewer contracts, for me the big question is at what level are contracts being advertised? Are we just talking about OJEU advertisements or are we talking about national databases, national websites? And my guess would be that you’re going to have about the same number of contracts advertised in the OJEU but a lot more contracts being advertised on national websites at national level and a lot more potential at least for cross-border competition via those national portals as they sort of gear up. And I don’t know whether they’ll all be following similar standards but at least they’ll become more intelligible, more accessible to bidders outside of the Member States where they’re being advertised.

So you reckon that it’s not going to be a big change above the thresholds and if there’s to be any change at all it’s going to be below thresholds?

Yes, that would be my best guess. Because if you look at what’s advertised in the OJEU at present you see some really interesting trends in terms of which countries are advertising the most contracts and it tends to be the newer accession states who are advertising a lot of contracts and many of those are below threshold contracts. So I think in some cases there’s a little bit of over-anxiety about advertising. In some cases those advertisements might be required because they’re receiving EU funding for a specific project or contract but if you look at some of the older Member States, like Germany for example, Germany advertises a very low number of contracts, and that’s partly because they have a very decentralised procurement system, but I do think you find that as time goes on countries get used to the idea of they don’t actually need to advertise every contract in the OJEU and as procurement potentially becomes a bit more competitive below threshold within a Member State, you see “okay, we’re actually getting adequate competition by advertising at national level”.

In terms of the national advertising of contracts, do you reckon that just by the fact that those contracts are going to be advertised, albeit in a national portal, those contracts will more likely be subject to cross-border interest and more likely may attract actual interest from cross-border economic operators?

Yes I think the potential is there. And again if we’re going to get our crystal balls out we need to think about what are governments going to be buying in 2025? And we’ve certainly seen a move over time, governments to some extent are still buying hard supplies but there’s been a general move towards buying services over the past fifteen, twenty years. And that partly reflects the fact that certain functions of government have been privatised or they’ve been partially privatised or that things are being outsourced through service contacts, whereas previously it might have been a supply contract with the service element being provided in-house by a public authority. So that’s been a trend in quite a few European countries and I think you need look at the nature of the services being advertised.

We sometimes talk about cross-border procurement as if it’s just a question of access, that companies can know about contracting opportunities and then they’ll bid for them but of course they also have to actually be able to deliver those contracts. So if it’s a type of contract like a social care contract where you very much need to have a strong presence on the ground, you need to be able to work with employees in the location where the contract is going to be delivered then I kind of doubt we’re going to see huge amounts of direct cross-border procurement for those type of contracts. On the other hand we see a move towards things like printing, digital services, data services, all of those obviously have huge potential to be outsourced on a cross-border basis so I think we will see more in that sector. So the question of the overall amount of cross-border procurement that we’re going to see depends first of all on what type of contracts are being advertised and then, secondarily I think, on how accessible are those contracts to bidders in other Member States.

I think you’ve touched on a point that is very important which is the one about the kinds of services that are being procured right now or are going to be procured in the future. I mean if you look at the development of digital services in general we see that their importance has been increasing in terms of GDP, in terms of percentage of GDP as time goes on and it’s not going to stop there, so it’s just a question of time to that kind of influence to start to be seen as well in public procurement. So one of the things I think will happen in the near future is that we’re going to have a lot more digital services being acquired and being procured, and by definition those digital services by and large come in at values well below the current threshold levels, so that’s one of the discussions that I’ve been pushing forward over the last couple of years now which is what should we do to the thresholds going forward?

I’ve read some of your work on that and I think it is quite a big point to raise: what is going to happen with digital services and should we be looking at lower thresholds, should we be getting rid of the idea of thresholds? I think again being realistic about what’s going to happen over the next ten years it’s probably unlikely that the thresholds are going to go way down, partly because they’re linked to international agreements that are in place, whether it’s the WTO Government Procurement Agreement or these bilateral trade agreements which are potentially going to come into effect over the next few years, and I think there would probably be a reluctance to lower the thresholds if that’s going to be then passed on to third countries as well. So whether we start to look at a sort of two-tier threshold system where one threshold applies in the European Union and another in respect of third countries, I don’t know whether that’s realistic. But I think beyond the issue of “okay, are these contracts subject to the EU rules? Are they advertised at EU level?” I think there is a more fundamental issue in terms of digital services and in general ICT contracts, are they appropriate for the way public procurement runs, this idea that you can sort of have a competition and define outputs and award a contract and then sort of stick to those outputs. And I think for some of the more straightforward contracts that’s fine but increasingly we find there’s a long list of failed digital services or failed ICT procurements, not only in the UK and Ireland but elsewhere, so I think that is a real challenge for the rules and how we apply the rules to those type of contracts.

I remember having a conversation a few months ago or last year with Frank Brunetta  the Canadian Procurement Ombudsman and he was making a suggestion that actually makes a lot of sense, which is if you think about it the way that procurement is run today it’s based on premises and ideas which were designed to allow for the procurement of goods and works. And that is a very different kind of exercise that perhaps the procurement of services would require?

I think that’s absolutely right and you still see that. Maybe a little bit less so in the 2014 directives compared to their 2004 predecessors but it’s quite clear that they’re written from that point of view, of being able to define an output, of having a pretty good idea of what it is. That said, we have seen the introduction of the Competitive Dialogue and more recently the Competitive Procedure with Negotiation. Competitive Dialogue in particular, as you well know, is designed in particular to be appropriate for those type of contracts but unfortunately we’ve seen a bit of a backlash against it in the UK. There are a lot of countries where it’s never been used at all or used only very rarely which I think is a real shame because it does have the potential, for ICT contracts or complex services, to be the right procedure.

I agree with you. Moving onto the second topic, what kinds of award criteria and procedures do you think will be the most common?

One of the things that I have as a big question mark in my mind, because it’s an area where I’ve done a bit of work recently, is this idea of life-cycle costing. It has always been possible, if you’re using most economically advantageous tender as your award criteria, to apply a life-cycle costing approach. What we see in the most recent European directives is that there’s been an attempt to set more detailed rules around how you do life-cycle costing, what information you can ask for and there’s this concept of data that can be provided “with reasonable effort by a normally diligent operator”, which I think will be an interesting one if it gets litigated, which it probably will at some point in the next ten years. So that’s one question in my mind, are people actually going to use life-cycle costing or are they going to be scared of it by the fact that there are more detailed rules around it and that there is a potential for an operator to challenge the use of life-cycle costing if they don’t like the outcome. I think what we’re seeing across industries is that supply chains are getting more complex, that the level of data that people are looking for is really unprecedented, so it is a challenge and it’s a challenge which some companies are very well aware of and are working hard to address but obviously not all of them.

Do you think that lifecycle costing is going to be used a lot over the next decade?

I think there will be a desire to use it. I think it’s something that people are aware of. I think it makes economic sense as well as environmental sense. So as procurement becomes more professionalised, as it becomes a bit more sophisticated definitely the idea of awarding a contract based on purchase price alone is going to become a bit of anachronism except for maybe some very basic types of supplies or commodities. So I think in general we’ll see more of it but there’s this question of are people going to call it life-cycle costing? Are they just going to say “look, here’s our form of tender and we want you to cost the following eight things” and not refer to it under this idea of life-cycle costing?

In terms of procedures, which ones do you think are going to be the most common?

The open procedure I think will continue to be used. There are people who say the open procedure is too basic, it doesn’t make sense but I think, the open procedure is always going to work well for certain types of requirement. And we know that at the moment it accounts for about three quarters or at least two thirds of procedures advertised in the OJEU.

Except in the UK?

Except in the UK. So the UK and Ireland have always been a bit of an exception to that, there’s been a preference for the restricted procedure. It’s interesting because some of the figures I’ve seen suggest that one of the reasons for that is that, particularly in Ireland,  is that procurement tends to be more competitive, if you’re running an open procedure even for a relatively low value contract you could be getting thirty or forty tenders and some of those will be cross-border tenders because of the fact that we’re running procedures in English and quite a few Europeans now have English as a very strong second language. So there is an experience of receiving more tenders. I think for that reason local authorities, local authority procurement tends to be a bit more competitive than central government procurement, they have said “right well we’re going to use the restricted procedure because we just don’t have the resources to deal with assessing thirty or forty tenders every time we procure a relatively small value requirement”.

I think that that tendency will continue to exist but the thing that’s changed under the new directives is that for the restricted procedure, you have these more extensive publication requirements at the beginning of a restricted procedure. So if you look at Article 53 of the Public Sector Directive it says that you have to have the procurement documents “fully and freely available online from the date of a contract notice”, and it’s a little bit ambiguous as to whether that includes your invitation to tender which formerly would have been a second stage publication, but now it looks like you have to publish it at the outset unless you have a reason for not doing that. So I think perversely that might actually encourage people to go for the open procedure because they’re going to say “well we’re going to have to publish everything at the outset anyway so we may as well just go open procedure”.

I’ve got a comment about Ireland, I understand what you say in terms of the language and it makes a little bit of sense, however I mean tenders here in UK are also in English and the UK is probably one of the member states with the lowest levels of cross-border procurement, are foreign economic operators actually winning tenders in UK?

I think we do have to take the figures on that with a grain of salt.

I know.

I cite them and you and everyone else cites them but I think in general we’re talking about that one study that was published in 2011 on cross-border procurement and while I think it’s very valuable to have that study, even within that we saw there are issues with methodology in terms of sampling, there are issues in terms of the quality of information we’re able to get from OJEU award notices. So I think it’s probably accurate to say there are not huge amounts of direct cross-border procurement happening. When you get into the more complex questions like “What about indirect cross-border procurement? What about use of subcontracting?” I think we definitely do have to take those findings with a grain of salt. That said, it probably is true that in the larger Member States like the United Kingdom you’re always going to have lower levels of cross-border procurement because you simply have a bigger domestic economy and you have a greater chance that economic operators will see it as being worth their while, if they’re serious about tendering for government business, to set up an office in that Member State.

And also it’s more likely that you’re going to have a supplier inside a country that’s going to be competitive enough to win the contract?

Exactly. So it is interesting again, while accepting that we can’t take them as gospel, to look at the findings from that study that you do see patterns. Ireland has pretty high rates of cross-border procurement, partly because there are two countries on the one island, so obviously there are Northern Irish companies bidding for contracts in the Republic and vice versa, that automatically puts the numbers up. But then you see countries that share a language, in Germany and Austria you see slightly higher levels of cross-border procurement between them. So there are all kinds of interesting patterns that give you an insight into where this is happening and perhaps why it’s happening.

Okay. Let’s go on to the third topic, will procurement challenges be more or less frequent?

I think this is one that obviously is of interest to the lawyers but also of interest to contracting authorities because there is at the moment a big discrepancy in the frequency of challenges between Member States. It’s an issue I looked at a little bit in my book, I focused particularly on the UK and Ireland and I think the major thing we have to take into account is the cost of bringing those challenges. And for as long as you have a system which requires bidders to bring a challenge in one of the higher courts that’s going to be extremely expensive, and even though the threat of procurement challenges might always be there, the actual number of challenges which make it through to Court is going to be reasonably low in those jurisdictions. In a way that’s kind of beside the point because the thing about procurement challenges is that a lot of it is hidden, we don’t see the letters that contracting authorities receive, we don’t see how they react to those letters for anything that falls short of court proceedings usually in the United Kingdom and Ireland. Then in other Member States such as for example Sweden where they have a relatively accessible means of challenging contracts, you obviously see much higher numbers, but at the same time I don’t know whether the threat of challenge is really taken as seriously by contacting authorities. That’s maybe something you could talk to Andrea Sundstrand or someone else about, although I think you’ve already interviewed her haven’t you?

Yes.

Because my feeling is when I’m working with a client in the UK or Ireland and they are potentially on the receiving end of a procurement challenge, that’s something they take extremely seriously and often they’ll decide to cancel a procedure and start again simply to avoid having to go through that lengthy process of challenge. And I don’t know whether that really applies to contracting authorities in countries where the remedy system is not as expensive, perhaps not as big of a deal essentially to undergo a procurement challenge.

And to my mind that’s actually a bit of a healthier system to have, to have a system whereby it’s relatively easy for economic operators to bring a challenge but it doesn’t have the huge cost and time implications that a procurement challenge does in the UK or Ireland because, let’s face it people do get things wrong, the remedy system is there to ensure that there is an avenue of redress when things do go wrong so you just want to make sure it’s not abused and that it’s not used as this sort of nuclear threat which I think it is in the UK and Ireland.

Yeah, I think that’s a very good point because I’ve got experience in other jurisdictions namely in Portugal and Spain and the normal thing is for every single tender procedure to actually be challenged.

Right, okay.

So you just take it for granted and if you don’t get a challenge, well that was a good day for you. Whereas here in UK the perception, it’s more a cultural issue as well, which is if you get a challenge that is perceived as being a black mark, you made a mistake as a procurement officer that’s why you got the challenge, whereas in other countries it’s just the normal way of doing things. As for Sweden and Denmark to a certain extent they have remedy systems which allow other avenues for bidders to actually try to interfere with the process in a sense that if they think that something is going wrong or went wrong, so I think it is actually the Swedish Competition Authority who has the power to actually intervene during the procurement procedure. So that changes the dynamic a lot and the fact that you can have different kinds of systems remedy procedures which are different from just going to the course actually probably allows those systems and those procurement frameworks to work better. Another good example is Spain, Spain a few years ago they introduced a new review system or review mechanism whereby you could have access to administrative tribunals, literally independent tribunals are not dependent as they were in the past many, many years ago, the fact that you can have a quick decision taken in a few months with a price that is reasonable actually has improved the way that the procurement market works overall.

That’s interesting. A quick decision and also potentially one by someone who understands procurement…

Exactly.

…because they’re dealing with it every day and, with all due respect to judges in the UK and Ireland most of them are not dealing with procurement challenges with any type of regularity. I mean we see now with the Technology and Construction Court in the UK that there are a couple of judges who have developed that expertise but it is a difficult area I think. And judges are quite upfront about that sometimes, they say “I’ve had to go away and read hundreds of pages about public procurement and I’m still not sure I’m applying the right approach here” and that I think is not an outcome that’s in anyone’s interest. It’s a huge use of resources in order to resolve what sometimes look like pretty stupid claims to be honest, or very minor points about “did this person score this correctly?”. And there’s no implication sometimes that anyone has acted corruptly or that they’ve even really committed a serious breach of the rules, just that there was some kind of basic error that happened but it takes so long and it takes so many resources to resolve that error, and then what is the outcome of that challenge? It doesn’t necessarily mean that the challenger gets the contract, they might get damages if they’re lucky and the authority might have to re-run the procedure. So I think the ratio of costs and resources going into procurement challenges versus what they’re doing to improve outcomes or to remedy problems that have occurred in procedures is the balance, we’ve got it wrong at the moment in the UK and Ireland and I think we would be well advised to look at systems that are in place in other countries. Even potentially the Procurement Ombudsman system that they have in Canada and other countries.

I’m a huge fan of the Procurement Ombudsman system and I think that is one of the best. Unfortunately I don’t see the UK adopting it anytime soon but that’s my take. One final question, Procurement of Innovation, is it the idea of the future and will it always be an idea of the future?

It’s got a bit of both attached to it. I think for good reasons because particularly coming out of the financial crisis in the European Union, there was a need to do more with less, government went through a bit of an existential crisis in a lot of countries, what is our role? Innovation that really works is something that everybody wants and everyone can agree on. What it actually means in practice I think is a bit more difficult and I have been through a couple of innovation procurements recently where it’s extremely different, it’s 180 degrees away from normal procurement where you know what the outcome is. People talk about using functional or performance-based specifications, I mean that’s fine but you still need to be able to evaluate what bidders are proposing to you, you need to be able to structure your contract in a way that creates the right incentives on both sides. So yes, I think there is a capacity being built up to do it but I don’t think you could say anyone is really in the business in Europe of innovation procurement on a regular basis or at least I’m not aware of it. And people often cite examples from the US about the work that NASA or the Department of Defence has done that led to the development of the internet or that the health research networks have done, and it’s interesting on an anecdotal basis but I’m not sure it really translates as a model that can be adopted on a mass scale. So it will be interesting to see what comes out of all the sort of Horizon 2020 funding because there’s a lot of that going round at the moment but I guess I’m a little bit of a sceptic about the ability of the EU funding programmes to create a culture, cultural change. I think they can certainly be influential at the level where people are able to do things they wouldn’t otherwise have been able to do. But if you’re trying to push people into what is quite a profound cultural change, which I think innovation procurement is compared to normal everyday procurement, that takes a lot of time and ongoing incentives rather than just having a one-time access to a European funding stream. There needs to be support at local level, at national level, and there needs to be an understanding of, “What is this? Is it valuable? Is it something that’s going to get us towards our long-term objectives?”

I think we still have time for one quick final question. What would you like to see changing between today and 2025?

Well a lot! But since we only have…

Just one idea?

One idea? I’d like people to be less afraid of the procurement rules. I think there has been an over-legalisation of procurement rules. I think it’s become way too complex. I’d like people to be comfortable that they can procure something, they can get the right results without breaking any laws and if that puts a few of us who are procurement lawyers out of work then so be it. I think it’s more important that when public money is being spent people have the confidence that they can do the right thing and that they’re not going to wind up in court or hurt.

Brilliant. I think that’s a great way to finish the programme, thank you.

Thank you Pedro.

You can find me at my blog Telles.eu or on Twitter where I use two handles, @Detig for general discussion and @publicprocure for public procurement related topics. As ever I am grateful for the support of the British Academy Rising Star Engagement Awards. 

#3 - Frank Brunetta (Canadian Procurement Ombudsman)

What can we learn from Canada's experience with a Procurement Ombudsman?

Interview with Frank Brunetta, Procurement Ombudsman for Canada. The remit of the Ombudsman is to promote fairness, openness and transparency in federal public procurement. Before joining the office of the procurement ombudsman Frank was Assistant Deputy Minister of the departmental oversight branch, public works and government services in Canada, where his responsibilities included provided independent assurance and oversight on the prudent, probity and transparency of departmental operations.

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Transcript

I would like to start our interview by discussing the role of the office, namely how it came about and what are the powers that are contained in the Office of the Procurement Ombudsman.

The creation of the office primarily came through a procurement scandal that we’ve referred to as the sponsorship scandal, and this is a procurement issue that was conducted under the former government, the Liberal government where procurement rules were severely breached. The Conservatives seized on that opportunity, the Liberal government fell, the Conservatives came into power with part of their platform being to clean up public procurement, they passed, one of their first tasks after being in power was to pass the Federal Accountability Act, within the Federal Accountability Act there was a provision for the creation of a procurement ombudsman who would in some form oversee public procurement.

As I understand it the original concept was for a procurement auditor and as the bill passed through the two houses of parliament the decision was made to make the office not a procurement auditor but a procurement ombudsman. So primary impetus for creating the office really was a very severe scandal where public funds were misdirected, if you do any research on it you’ll see that there were charges laid, people went to jail for it, etc, so the Conservative government created the office and it was through an amendment to the Department of Public Works and Services Act, so they amended the Act to make provisions for this office and then regulations were generated which essentially give the office four primary mandates, one is to review complaints with respect to the award of a contract for the acquisition of goods below 25,000 Canadian dollars, and services below 100,000 Canadian dollars including taxes.

The second is to review complaints with respect to the administration of a contract, regardless of dollar value, the third element of our mandate is to review the practices of departments for acquiring goods or services to assess their fairness, openness and transparency and make necessary recommendations to improve those practices. This element is a bit of a holdover from the procurement auditor role that I alluded to earlier and then finally the fourth element of our mandate is to ensure that an alternative dispute resolution process is provided if requested and agreed to by both parties to a federal contract. There is a fifth that is contained but has yet to be invoked with the minister or the governing council can ask the Procurement Ombudsman to undertake a review as they see fit, so for example if there’s another procurement scandal I am, or this office is one of the options for them to review how that procurement was conducted. So those are the five elements, but the four primary ones are the ones that I referred to, if you have complaints for the award of a contract between certain dollar thresholds or under certain dollar thresholds, review of complaints on the administration of a contract and that has no dollar thresholds, the procurement practice of departments and I can get into that a little bit, how that’s done, and then ensure the ADR, Alternative Dispute Resolution process is in place. So in terms of the review of government procurement practices, we do a couple of things to determine what areas we might want to review there Pedro, our office operates very much like a complaints office that you’d have in any major corporation, so we have a 1-800 line, we have a website, where suppliers can contact us to tell us about issues that they may be having regarding a department, a particular process or a procurement vehicle. We track those calls and the nature of the calls, we do different types of analysis, we try to determine whether a particular department is a constant source of irritation for suppliers, whether a particular process has been a particular problem, or whether there’s some sort of a pattern that can be established with a particular procurement vehicle. We do that because the regulations require me to have reasonable grounds to undertake a procurement practice review, if I can establish reasonable grounds then I can go into a department or to several departments to review that practice, to see whether there is in fact compliance with the appropriate rules and regulations and to ensure that whatever is being done in terms of procurement is fair, open and transparent. That’s essentially my mandate.

Could you describe a little bit more what economic operators that take part on the contracts that are covered by your mandate, what can they expect from your intervention for a contract that has been awarded.

That’s the first element of my mandate which is reviewing the award of a contract below 25,000 Canadian dollars for goods, and below 100,000 dollars including taxes for services, so if I can give you an example, a supplier may be responding to a request for a proposal by a department, he or she submits a proposal and sometime after that submission is notified by the department that the proposal has not been accepted, typically in Canada departments provide a reason for the proposal not to be accepted. If the supplier is unclear or does not agree with that reason or alternatively if he feels that there’s been some sort of inappropriate approach used to award the contract to the winning bidder, or to exclude his or her bid, they can call my office and the first thing we do, because we are after all an ombudsman’s office, we try to understand the issue, get some sense as to what happened, how it happened and then to be quite honest with you Pedro, and I would say 90% of the times when we explain the process to the supplier the supplier has a better understanding of why the department did what they did, and we were able to... we call it dispose of the matter, what we find Pedro, since the office opened is in the vast majority of cases a supplier will call our office with the intent of complaining but the issue is based on a misunderstanding of how the federal procurement process works. A lot of suppliers believe that doing business with the Canadian government is like doing business amongst themselves, they don’t understand it, certain rules that have to be followed, doing business with the Canadian government isn’t as simple as my father used to when he was a contractor, it was a handshake, some suppliers still believe that’s the case, so when we explain the process a lot of these complaints are dealt with through information exchange.

One thing that I pointed out in one of my annual reports to parliament, I think it was last years was that what I found is that it’s often not the information in itself that is satisfying the supplier, it’s who it is coming from, because in a lot of cases the supplier will have called the department and received a very reasonable explanation from the department, but they don’t accept it, the supplier does not accept it. On the other hand they call our office, we give them essentially the same information but because it’s coming from an independent neutral third party, an office that has no vested interest in the procurement process, they seem to accept it much more openly, and that’s perhaps a point I should have made when it came to my mandate, my office is an independent office, we’re not beholden to any government department, any agency, while I report to the Minister of Public Works, the Minister has no influence and no say in the work that I do, the areas that I review, or how I review them, so we really are independent and arm’s length from the government operation. That seems to be a big bonus and attraction for suppliers, to know that they’re coming to an office that isn’t attached to any government operation.

Do you have any idea about the figures of complaints you get every year or have you gotten since the start of the office?

I'm in the process of preparing my annual report to parliament, so those numbers are pretty fresh. Last year we received 577 contacts, now I have to stress the word contact, because we often get calls that have nothing to do with procurement, so we track every call that we receive, any contact that we receive, last year was 577, and since my appointment four years ago that number has steadily increased, I believe it’s roughly 70% higher, 577 is 70% higher than it was the first year I took office, and a large reason for that is one of my primary objectives when I took office was to ensure that the suppliers knew this office existed, keep in mind that we’ve only been operational since 2008, so one of the big challenges for the office was to promote our services, so the increase, the 70% increase in the four years isn’t because procurement is somehow getting worse, it’s because more suppliers know we exist. Now of the 577 if I can boil it down to how many we actually investigated, so reviewing of complaints as per the first element of our mandate, reviewing complaints for the award of a contract below 25,000 for goods and 100,000 for services, last year we investigated three and that’s a startling contrast given the number of contacts we have, but let me explain to you that we are after all an ombudsman office and our primary objective is to de-escalate issues, I once said to a parliamentary committee that my objective is to do no investigations. I mean that’s ludicrous, but really our objective is to try to deal with things informally, that’s the role of an ombudsman’s office, so when you look at the contrasting numbers of 577 and three investigations, while a lot of those numbers, a lot of the 577 have to do with suppliers simply calling us to find out how things are supposed to work and whether in their particular circumstances it worked the way it should have. I believe that the number is about 170 of the 577 were suppliers calling with what they felt should be a complaint and that was through the process of information exchange, facilitation that my office provides between the supplier and the department, that we were able to de-escalate those numbers and only have to deal with three actual reviews or investigations, so while the mandate sounds like I have pretty strong powers to investigate, I keep in mind that the role of an ombudsman is to deal with things informally, and try to facilitate informal resolution issues and that’s really the principle that dictates our approach as an office.

And regarding any disputes on the administration or performance of the contracts, what is your role on those, what can you provide to the parties?

Well again there are two elements to that nature of complaint, if there is a complaint with respect to the administration of a contract, as I said initially there is no dollar value on the administration, the truth of the matter is most complaints with regards to the administration of a contract are because the holder of the contracts, or supplier who is engaged in a contractual arrangement with a department is having some sort of a disagreement with the department, so in the vast majority of cases we do not investigate that complaint, what we offer is alternative dispute resolution which is the fourth element of my mandate, so a supplier will come in and say, “Well I don’t agree with the way the department is administering this contract, or their interpretation of the terms and conditions of this contract, can you help?” once that request is made the regulations require me, I have no discretion, the regulations require me if that request is made to approach the other party to the contract which is the department, and offer alternative dispute resolution and in these cases we would essentially mediate the dispute. And on that business line or that element of our mandate the office has a sparkling record of 100% of the cases being resolved, what we find and it’s not any different than any other type of alternative dispute resolution, by the time one of the parties of the contract contacts our office, the lines of communications have broken down to the point where the two parties aren’t talking, so our task is, I hate to minimise it, but it’s fairly easy. We get the parties to sit across from a table again, and try to reinvigorate that dialogue, that should never have broken down, once they start talking and they start understanding each other’s position and we orchestrate the session so that it allows both sides to outline their views and their position, what we find without exception of people start to understand the other party’s perspective, and inevitably must be human nature, they try to find a mutually acceptable solution, and once that happens that agreement they arrive at becomes legally binding, so we have them sign a legally binding agreement and that’s how that issue is resolved.

How many ADR cases have you had since 2008?

Well that’s... I mentioned earlier one of the challenges was to ensure that suppliers knew we existed, that seems to be working with an increase of 74%, the ADR continues to be a challenge, we have had 13 cases since 2008 and we have done a considerable amount of outreach advertising, I can’t conclude on why the uptake on that service isn’t what we expected it to be but it could be that a lot of these disputes are being resolved through dialogue without our assistance, we know that in some cases some departments have their own ADR processes, we know that in some cases some departments include litigation clauses in the contracts that preclude a supplier from coming to see us.

Is that legal?

Yeah, the contract... every department has the discretion to include what they feel is appropriate for their operational requirements and their contracts. Now we were successful last year in having the vast majority of departments include clauses in the contracts that make suppliers aware that if there’s a dispute they can come to our office and we have started to see this year a number of suppliers that have contacted us who have become aware of the office through that clause, when I started in the office in 2008 I realised one of the biggest challenges was letting the suppliers know we existed and one of the things that I did last year was to ask department so put that clause in contracts, and in tracking the calls that we get from suppliers, one of the questions that asked is how did you hear about us and we’re starting to see a number of suppliers saying they heard about us through the clause in the contract.

That’s very interesting. Could you give us an idea about what is the cost of running an office like the Procurement Ombudsman?

Okay, depending on our workload and the typical transition that you have with staff, it fluctuates between 25 and 30 staff and we run on a budget of 2.8 million Canadian dollars, so it’s a fairly lean operation, now the Treasury Board submission that created our office has a provision that allows the ombudsman to return to the Treasury for additional resources if the original forecasted number of complaints increases, that threshold hasn’t been crossed yet so we haven’t gone back to the Treasury for additional resources, 2.5 to 2.8 seems to be a good number given the volume that we currently have.

Is that a yearly figure or a monthly figure?

No, that’s an annual.

I have a couple of questions to finish the interview. In the EU last year we introduced new substantive regulations, so the new substantive directives, and I think the process has now started for the review of the remedies directives which will deal with issues such as access to justice, access to the Courts for aggrieved bidders, what could we learn from the Canadian experience?

That’s a very good question Pedro, let me say that, I’m speculating a little bit here but putting it in the Canadian context, I would say that last year alone based on the numbers of contacts that we’ve had at our office, there could have been, and this is a worst case scenario obviously, there could have been 200 additional cases clogging up the Court system, roughly 200 additional procurement cases clogging up the Court system had our office not been there, again worst case scenario, I’m assuming that every complainant that called our office, had it not been for our office the only recourse they would have had is to take the department to Court. Now the reality of it is based on my discussions with suppliers, a lot of them because of our thresholds, or financial thresholds of being 25,000 dollars for goods and 100,000 for services, because those thresholds are where they are a lot of the contacts that we get are from small and medium enterprise, so the reality is a lot of these small businessmen and women could not afford to take the government to Court, so they would have simply walked away from the complaint or the issue and while some people may say, well that’s all well and good, what they don’t realise is with every small and medium enterprise that walks away from a government contract or doing business with the government contract, we contract or shrink the pool of available suppliers, which means less suppliers, you’re running a risk of lower quality and higher prices.

It is in the public interest to ensure that there are as many suppliers bidding on government contracts as possible, the more suppliers, it’s a first year university economics, the bigger the pool of supplier, the better the competition, the lower the price. So I feel our office contributes to that because it keeps... as I said earlier, it keeps small and medium enterprise engaged in public procurement through a redress avenue that explains why things didn’t materialise the way they expected it to, why departments may have done what they did or in some of the cases allows them to have us investigate on their behalf why their bid was rejected, and in some cases at least two of the three that I referred to earlier, investigations I did last year, the supplier was absolutely right that their bid was mishandled and there’s a provision in my regulations that allows me to recommend compensation to that supplier. So what can the UK learn, I think it’s that an office such as mine is a good mechanism for keeping cases out of the Courts, from a political perspective it’s a great way to show that the politicians are listening and providing a venue and avenue for small and medium enterprise to be heard and to allow them to voice complaints and have their issues investigated and ultimately it provides an environment where suppliers, a) aren’t afraid to make a complaint, b) have some incentive to stay in the federal procurement world because they know that if an issue does come up there’s an independent office that they can turn to, and c) as I said earlier, that broader pool really of suppliers, really is a benefit to the public taxpayer.

Very well, thank you very much, just to cap off the interview, looking forwards, your time as Procurement Ombudsman is reaching its end and as far as I know it’s not renewable, so how do you see the role of the procurement ombudsman evolving over the next let’s say five to ten years.

That’s a very good question Pedro, I’m currently in the process of writing a report that I plan on submitting before my departure, there are a few areas I think the office could, I can’t say improve, but where we could have more of an impact for suppliers, there are areas in the regulations for example, whether it’s through design or oversight, there’s an area in the regulation that allows me to request documents from departments, so when I lodge an investigation or a review the regulations allow me to request documents, it has no teeth, there’s no provision for the department to supply those, it’s not mandatory, I can request but the regulations don’t say it’s mandatory, so there are regulatory changes that I think I have a responsibility to highlight for the next ombudsman and the government. In terms of where the office needs to evolve, I think the ADR aspect of our mandate is grossly underutilised and as I said earlier it’s a mystery to me why that is, it’s a free service and from the numbers we have, the track record we have it makes a world of difference in resolving disputes that in some cases have been going on for months, so if the office needs to evolve to really embrace the ombudsman, the role, I think it’s through the ADR process, so I think those are the two areas that I think some evolution is required.

Thank you very much for this half an hour.

You’re very welcome Pedro.

You can find me at my blog telles.eu or on Twitter where I use two handles, @Detig for general discussion and also @publicprocure for public procurement related topics. I will see you soon, thank you.

 

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Office of the Procurement Ombudsman