Use of a Fairness Commissioner in Government Procurement 2013 Alga Conference Nashville, Tennessee

York Region The Regional Municipality of York or York Region was created in 1971 as one of six regional governments York Region is an upper Tier Government for 9 local Municipalities Over 1,000,000 residents 2013 Budget is $2.9 Billion 2

York Region Area: 1,756 km2 Borders: Simcoe Peel Durham Toronto Access to Lake Simcoe, but not to Lake Ontario 3

Terminology Fairness Commissioners are also referred to as “Fairness Advisors”, “Fairness Monitors” and “Fairness Auditors” Each term has a slightly different meaning which relates to the extent of the Fairness Commissioner’s role in the procurement process, including the stage at which they are engaged 4

York Region Experience Fairness Commissioners have been used at York for over 10 years. Under our Audit Charter, we can audit any project at the Region and fund the audit costs from the project Large dollar/high political risk projects were initial projects where Fairness Commissioners were used 5

York Region Experience In the second year of using a fairness Commissioner, the unsuccessful proponent threatened litigation against the Region The law suit disappeared after being provided the normal information and the fairness Commissioner’s report 6

Public Procurement The purposes, goals, and objectives of the Region’s Purchasing by-law are: ▫a) to encourage competition among contractors; ▫b) to obtain the highest quality goods, services or construction at the least possible cost; and ▫c) to ensure fairness, objectivity, accountability and transparency in the procurement process. Use of a Fairness Commissioners helps substantiate the objectives above are met. 7

What is Fairness Monitoring Fairness Monitoring is used to support the credibility of procurement procedures for public sector procurement of goods or services. Independent of the contracting body, Fairness Commissioners are appointed to: ▫Provide the contracting authority or sponsoring organization with assurance that procurement management practices and processes are of the highest standards; and ▫Communicate to external observers that fairness, objectivity, impartiality, clarity, openness & transparency has been maintained. Fairness Commissioners review the process through three perspectives: Does the process align with applicable legislation, trade agreements, policy and practices? From a compliance perspective: From a proponents’ perspective: Are the requirements clear, unambiguous and free of bias and favouritism? Are the evaluation criteria and the evaluation and selection process clear, fair and transparent, unambiguous and free of bias and favouritism? Were the disclosed criteria and processes followed? From the client’s perspective: Are the client’s business goals, objectives and requirements clear? Is the procurement process designed in a manner that will enable clients to achieve their business outcome? 8

Why Involve a Fairness Commissioner To meet the objectives of government contracting which is to acquire goods, services and construction in a manner that: ▫Facilitates access ▫Encourages competition ▫Treats suppliers fairly ▫Results in the best value. To be in compliance with procurement by-laws, directives, policies and procedures, such as: ▫The Municipal Act, 2001, S.O ▫Municipality Procurement By-laws ▫Municipality Procurement Policies and Procedures ▫Management Board of Cabinet Procurement Directive, April 2011 ▫Agreement on Internal Trade (Ontario is a party to this agreement) ▫Agreement with NAFTA ▫Other legislation as appropriate to the Municipality 9

When is a Fairness Commissioner Involved? Governments often choose to involve a Fairness Commissioner in cases where there is: 1.Complexity 2.The need for transparency 3.Political sensitivity 4.High dollar value of purchase Fairness Commissioners should be engaged from the on start of the engagement when planning has begun so that they are engaged throughout the procurement lifecycle. Fairness Monitoring is most effective when the individual procurement follows an established and tested process. Prior to engaging a Fairness Commissioner, organizations should consider their risk appetite which will govern how they proceed within the procurement process. 10

Role of Fairness Commissioner Fairness Commissioners: ▫Review the procurement process and provide advice on its structure; ▫Monitor the process’ implementation by attending evaluation meetings; and ▫Provide a final report indicating whether the process was properly managed and fairly implemented. Fairness Commissioners do not: ▫Design the procurement ▫Offer legal advise or legal opinions ▫Comment on the final outcome, or discuss whether the evaluation team reached the ‘right’ decision 11

The Fairness Commissioner in the Procurement Process An open competitive procurement process must be conducted for the procurement of goods or services valued at $100,000 or more. Calls for open competitive procurements must be made through an electronic tendering system, accessible by all suppliers. A minimum response time of 15 calendar days must be provided for the procurement of goods and services valued at $100,000 or more. Competitive procurement documents to disclose the evaluation process and methodology and the method of resolving tie scores. RFP IssuanceScoring and Award RFP Planning On-going dialogue with the Fairness Commissioner An approval authority schedule for procurement of goods and services should be established. Client provides procurement department with specific procurement needs. RFP is developed with client to include all specifications, including mandatory and rated requirements. Evaluation criteria must be developed, reviewed and approved prior to commencement of the competitive procurement process. All team members of the evaluation team must sign a conflict-of-interest declaration and non-disclosure of confidential information agreement. The submission that receives the highest evaluation score and meets all mandatory requirements set out must be declared the winning bid Organizations must not be seen to discriminate or exercise preferential treatment in awarding a contract to a supplier The agreement must be formally defined in a signed written contract and be formalized using the form of agreement that was released with the procurement documents The Procurement Process and the requirements of the Ontario Broader Public Sector Procurement Directive: 12

The Fairness Commissioner in the Procurement Process cont’d Each stage in the procurement process involves risks, which if not accounted for could result in litigation. A Fairness Commissioner would mitigate these risks. ( A Guide to Developing Procurement Bylaws: Meeting the requirements of the Municipal Act, The Ministry of Municipal Affairs and Housing.) StageRisks GenerallyRisks to Fairness If persons who have recently left the employ of the municipality/local board are involved in the development of a proposal/bid to the municipality/local board, then there is risk to the perceived fairness of the procurement process. If it is unclear how the municipality/local board intends to promote competition for low value, infrequent procurement, there are risks to the fairness of the process. Risks to Openness and Transparency If it is unclear how potential bidders can access information about the municipality’s/local board’s procurement process, bid opportunities and how to effectively participate in the procurement process, then there can be risks to the openness and transparency of the process. When preparing the bid documents Risk to Fairness If it is unclear what the required format is for submitting bids, then fairness concerns can arise in the way the bids are evaluated. Risks to Openness and Transparency If the method of notifying potential suppliers of procurement opportunities is unclear, then openness (and fairness) is put at risk. 13

On a larger scale, the Fairness Commissioner adds value to the procurement process at three different levels 1.To the vendor community 2.To the tax payers, ensuring they are getting fair value for money in terms of how the project is run 3.To the buyer, in terms of whether or not the project is likely to achieve the originating business outcomes StageRisks When evaluating bids Risks to Effectiveness If a bid does not show total costs, including taxes, there is a risk that the evaluation of comparable bids can be invalid. Risk to Fairness If there are no clear policies in place about what to do in the event that two equal bids are received, then there is a risk that proceeding in the absence of such policies could be viewed as unfair. Risks to Openness and Transparency If there is a reasonable likelihood that on completion of a contract, a follow-up contract will be necessary and this is not made clear at the outset, there is a risk to the transparency of the procurement process. When monitoring performance Risk to Fairness If there are no policies in place on how disputes over performance are to be resolved, then there is a risk that whatever mechanism is used will be perceived as arbitrary. 14

The Fairness Commissioner in the Procurement Process The benefits of engaging a Fairness Commissioner include: ▫The development of “best practices” in line with public stewardship and modern comptrollership objectives; ▫Support to the Procurement Management Team in assessing and managing risks throughout the procurement process; ▫Continuous alignment of project objectives and outcomes; ▫Assurance to senior management and political leaders that the process can withstand public scrutiny; ▫Building confidence and trust with the supplier community  In the assessment and selection process;  The completion of the procurement process without disruption; and ▫Supporting public accountability. 15

The Municipality’s Role and Responsibilities Within the procurement process, the Municipality is responsible for: 1) Adequate procurement planning a)Specifying the Municipalities needs b)Identifying mandatory or preferred requirements c)Specifications for the goods or services d)Preparation of and maintaining the RFP documents e)All criteria for qualification and evaluation have been disclosed 2) Procurement Management a)Responding to questions and clarifications asked by proponents by issuing Addendum so that all bidders receive the same information b)At bid closing ensuring that no late bids are accepted, no non-compliant bids are accepted 3) Appropriate Evaluation and Award a)Evaluation will be made following the methodology and scoring/ratings outlined in the RFP b)No award be made to a non-compliant Bidder c)Any award will be substantially similar to what was originally sought in the RFP d)Any award made will be made based upon the disclosed criteria 16

Fairness Commissioner’s Approach Reviewing and understanding the applicable procurement policies, procedures and by-laws Communicating with client representatives and the evaluation team to discuss the procurement process Reviewing various procurement documents, files and information, such as the RFP, evaluation scoring templates and correspondence with proponents Attending proponent information meetings Attending various meetings and key presentations Monitoring and supporting evaluation team during the evaluation process Providing advice and assistance when requested 17

Fairness Commissioner’s Approach cont’d Fairness Monitoring principles 1.Proponents have the same opportunity made available to them to access information. 2.The information made available to proponents is sufficient to ensure that each proponent has full information of the nature of the goods or services sought under the RFP process. 3.All potential proponents have reasonable access to the opportunity. 4.The criteria established in the RFP documents truly reflect the needs and objectives in respect of the goods or services to be rendered. 5.The evaluation criteria and evaluation process are established prior to the evaluation of submissions. 6.The evaluation criteria, RFP and evaluation process are internally consistent. 7.The pre-established evaluation criteria and evaluation process are followed. 8.The evaluation criteria and evaluation process are consistently applied to all proposals. 18

York Region’s Next Steps Development of a Fairness Monitoring policy. ▫Currently it is up to either the project manager to request use of a fairness Commissioner on a project, or for audit to insist there is a fairness Commissioner involved in a project. ▫In many cases now, I am informed by the Fairness Commissioner that they have been retained. ▫Reporting is currently through Audit Services 19

Fairness Policy Sets out the criteria for when a Fairness Commissioner should be retained including the type of procurement model, project size, complexity and risk Provides an explanation of the roles and responsibilities of the Fairness Commissioner and Regional staff Establishes terms of reference for retaining Fairness Commissioners including minimum qualifications Clarifies who the Fairness Commissioner reports to, and to whom their final report should be submitted 20

Fairness Policy Cont’d Provides a mechanism by which Project Managers may request a formal determination as to whether a Fairness Commissioner should be retained Allows Regional Auditor to retain Fairness Commissioners as required Requires Mandatory Training 21

Fairness Commissioner’s Report While each concultant has a somewhat different writing style, they all contain: Fairness Principles Scope of Review Fairness Approach Fairness Opinion 22

Additional Information Sample of Fairness Monitoring report is included in the material posted on the AGLA website, if you want to take a look at what a report looks like. 23

Contact Information Paul Duggan Director, Audit Services York Region X

Questions 25