Canadian Government Procurement Framework and Environment Briefing to Public Procurement Service of South Korea December 4, 2007

2 Presentation Outline Objectives and Contracting Principles of Canadian Government Procurement Procurement Key Players Legislative/Regulatory Framework PWGSC’s Statutory Authorities Procurement Trade Agreements

3 Presentation Outline (cont’d) Competitive/Non-competitive Federal Accountability Act & Action Plan Integrity Clauses Procurement Ombudsman Code of Conduct

4 Presentation Outline (cont’d) PWGSC Business Volumes 1) By commodity 2) By Client department

5 Objectives and Contracting Principles of Canadian Government Procurement acquire goods and services and to carry out construction in a manner that enhances access, competition and fairness and results in best value or, if appropriate, the optimal balance of overall benefits to the Crown and the Canadian people.

6 Government contracting shall be conducted in a manner that will: Objectives and Contracting Principles of Canadian Government Procurement (cont’d) stand the test of public scrutiny in matters of prudence and probity, facilitate access, encourage competition, and reflect fairness in the spending of public funds; ensure the pre-eminence of operational requirements; support long-term industrial and regional development and other appropriate national objectives, including aboriginal economic development; comply with the government's obligations under the North American Free Trade Agreement, the World Trade Organization - Agreement on Government Procurement and the Agreement on Internal Trade. North American Free Trade AgreementWorld Trade Organization - Agreement on Government ProcurementAgreement on Internal Trade

7 Procurement: Key Players Treasury Board: develops and maintains government-wide procurement policies sets limits on the contract and project approval authorities of Ministers maintains government wide overview Operating Departments: develop operational requirements for goods and services contract for goods (when delegated) and for services, within ministerial limits use PWGSC services for procurements outside their limits

8 Justice: comprehensive legal advice on procurement transactions and issues PWGSC: carries out procurement for operating departments/agencies: mandatory for goods (unless delegated to client departments optional for services and construction develops government-wide methods of supply Procurement: Key Players (cont’d)

9 Program Departments: identify socio-economic programs/objectives that could be supported by procurement carry out program effectiveness evaluations Canadian International Trade Tribunal: reviews individual government procurements for compliance with requirements of the trade agreements issues findings, recommends remedial actions, may award costs ultimately, unsuccessful bidders have the right to bring action in Federal Court Procurement: Key Players (cont’d)

10 Auditor General: reviews government operations to ensure compliance with policy and value for money recommends remedial action to the government Foreign Affairs and International Trade (DFAIT) and Industry Canada negotiate government procurement provisions as part of trade agreements DFAIT: North American Free Trade Agreement (NAFTA) and World Trade Organization – Agreement on Government Procurement (WTO-AGP) Industry Canada: Agreement on Internal Trade (AIT) Procurement: Key Players (cont’d)

11 Legislative/Regulatory Policy Framework Policies: Government Contracting Policy Acquisition Cards Audit Investment Acquired Assets; Project Management Classification and coding of Financial Transactions Canadian Content (PWGSC only) Shipbuilding Decision Making in Limiting Contractor Liability in Crown Procurement Contracts Legislation: Financial Administration Act Government Contracts Regulations Access to Information Act Bankruptcy Act Bills of Exchange Act Canadian Charter of Rights and Freedoms Canadian International Trade Tribunal Act Competition Act Criminal Code Defence Production Act

12 Legislative/Regulatory Policy Framework (cont’d) Policies (cont’d): Title to Intellectual Property Arising Under Crown Procurement Contracts Procurement Strategy for Aboriginal Business..and others Legislation (cont’d): Department of Justice Act Department of PWGS Act Employment Equity Act Fair Wages and Hours of Labour Act Federal Real Property Act Official Languages Act Privacy Act Public Service Employment Act Trade agreements (NAFTA, WTO-AGP, AIT) Comprehensive Land Claims Agreements Federal Accountability Act

13 PWGSC’s Statutory Authorities: Procurement Department of Public Works and Government Services Act, article: 6. The powers, duties and functions of the Minister extend to and include all matters over which Parliament has jurisdiction, not by law assigned to any other department, board or agency of the Government of Canada, relating to (a) the acquisition and provision of articles, supplies, machinery, equipment and other materiel for departments; (b) the acquisition and provision of services for departments; (c) the planning and organizing of the provision of materiel and services required by departments; (d) the acquisition and provision of printing and publishing services for departments.

14 7. The Minister of PWGSC shall “investigate and develop services for increasing the efficiency and economy of the public service of Canada and for enhancing integrity and efficiency in the contracting process.” 8. The Minister may delegate any of the Minister's powers, duties or functions under this Act to an appropriate minister for any period and under any terms and conditions that the Minister considers suitable. 9. The Minister shall exercise the powers in relation to the acquisition and provision of materiel for the use of any department that are conferred on any minister or other authority under any Act of Parliament, except to the extent that those powers have been delegated by the Minister. PWGSC’s Statutory Authorities: Procurement (cont’d)

15 Delegations to other Ministers The Minister of PWGSC does delegate authority for goods procurement to other Ministers. There are currently 18 (of 108) departments which can acquire goods up to $25k. The remaining departments normally have a $5k delegation. In addition, a small number of departments have exceptional authorities for purchases of specified commodities related to their program mandates. Departments also generally have delegations which allow them to acquire goods from Standing Offers put in place by PWGSC according to the call-up limits in the Standing Off PWGSC is in the process of raising the general delegation to $25k for all departments.

16 Minister of PWGSC has exclusive authority for the acquisition of defence materiel Defence Production Act

17 Comprehensive Land Claims Agreements (CLCAs) modern day treaties which exchange undefined Aboriginal rights for defined rights with constitutional protection contain specific government obligations, including provisions related to contracting for goods, services or construction in areas subject to CLCAs

18 Trade Agreements NAFTA; WTO-AGP; AIT All slightly different Common elements: Competition is the norm Minimum bidding periods Non-restrictive criteria Must advertise Must disclose evaluation plan Recourse mechanism Prescribed coverage Some exceptions Openness & transparency

19 Trade Agreements: Determining Coverage 5 questions  Is it a procurement?  Is it above threshold?  Is it a covered product?  Is it for a covered entity?  Do any exceptions apply?

20 COMPETITIVE/NON-COMPETITIVE Government Contracts Regulations, section: 5. Before any contract is entered into, the contracting authority shall solicit bids therefore in the manner prescribed by section A contracting authority shall solicit bids by: (a) giving public notice, in a manner consistent with generally accepted practices, of a call for bids respecting a proposed contract; or (b) inviting bids on a proposed contract from suppliers on the suppliers' list.

21 COMPETITIVE/NON-COMPETITIVE (cont’d) 6. Notwithstanding section 5, a contracting authority may enter into a contract without soliciting bids where (a) the need is one of pressing emergency in which delay would be injurious to the public interest; (b) the estimated expenditure does not exceed (i) $25,000, (ii) $100,000, where the contract is for the acquisition of architectural, engineering and other services required in respect of the planning, design, preparation or supervision of the construction, repair, renovation or restoration of a work, or

22 (iii) $100,000, where the contract is to be entered into by the member of the Queen's Privy Council for Canada responsible for the Canadian International Development Agency and is for the acquisition of architectural, engineering or other services required in respect of the planning, design, preparation or supervision of an international development assistance program or project; (c) the nature of the work is such that it would not be in the public interest to solicit bids; or (d) only one person is capable of performing - recently modified to require that a series of questions be answered to justify using exception (d) COMPETITIVE/NON-COMPETITIVE (cont’d)

23 Federal Accountability Act Action Plan Overarching Statement of Procurement Principles “The Government of Canada is committed to taking appropriate measures to promote fairness, openness and transparency in the bidding process for contract with her Majesty for the performance of work, the supply of goods and the rendering of services.”

24 Federal Accountability Act Action Plan (cont’d) Integrity Provisions Solicitation and Contract Provisions Prohibit payment of contingency fees by any party to the contract to a person to whom the Lobbyist Registration Act applies. Prohibit corruption and collusion in the bidding process for contacts. Require that a bidder on a contract make a declaration that the bidder has not committed an offence under sections 121, 124 and 418 of the Criminal Code of Canada.

25 Federal Accountability Act Action Plan (cont’d) Procurement Ombudsman The Procurement Ombudsman will: review procurement practices across government to ensure fairness and transparency and make recommendations for improvement; review complaints from potential suppliers with respect to procurements of goods and services that are covered by the Agreement on Internal Trade, but which are below the monetary thresholds; review complaints concerning the administration of contracts; and

26 Federal Accountability Act Action Plan (cont’d) manage an alternative dispute resolution program for contracts. A Procurement Ombudsman designate was named by the Minister of PWGSC on September 19, He will not assume his full mandate until the Regulations are finalized prescribing the duties of the position.

27 Federal Accountability Act and Action Plan (cont’d) Code of Conduct for Procurement announced by the Minister on September 19, 2007 ensures that public servants and suppliers are working from the same concise statement of expectations and commitments that clearly outlines what is acceptable conduct when contracting with government.

28 PWGSC Business Volumes TOP 10 COMMODITIES, 2006/2007 TOTAL $3,462,552,127

29 Agriculture and Agri-Food Canada $110,574,739 Foreign Affairs and International Trade, $131,460,652 Canadian Commercial Corporation $636,550,285 Social Development Canada $127,229,418 Correctional Service of Canada $163,013,264 Fisheries and Oceans Canada $179,586,391 Royal Canadian Mounted Police $223,516,199 Human Resources and Skills Development Canada $311,200,027 Public Works and Government Services Canada $2,891,458,007 Department of National Defence $5,116,265,623 PWGSC Business Volumes TOP 10 DEPTS, 2006/2007 TOTAL $9,890,854,605