Procurement Ombudsman
Nov 29, 2017

Oversight without Authority

Back in December 2015, when the federal government’s first Procurement Ombudsman, Frank Brunetta, retired from public service at the end of his term, the former Assistant Deputy Minister at then Public Works and Government Services Canada, had some candid words – not only for the private sector but also his political overlords.

​Brunetta recounted in that “perhaps” one of the most difficult questions he faced during his early meetings with suppliers, was whether the government’s procurement machinery had broken down. Uneasy with what he felt was such a loaded question, he tended to reply that while he didn’t believe the machinery was broken, “some things needed attention.”

As ADM at PWGSC (now rebranded as Public Services and Procurement Canada – PSPC), Brunetta, a Harvard University alumnus with a master’s degree in public administration, ran the department’s oversight branch. He should have known what a hornet’s nest he was moving into at the Office of the Procurement Ombudsman (OPO) but as a career public servant, was confident he could promote “fairness, openness and transparency” in the process.

Successive governments had dealt with a seemingly endless litany of complaints about procurement. It didn’t seem to matter whether the contract was worth billions or a couple of hundred thousand; the process was too often seen as unwieldy and even impracticable. 

So, in addition to reviewing and recommending ways to make the process fairer and more transparent, the OPO was mandated to review complaints from suppliers about contracts for goods valued below $25,000 and services below $100,000 – which comprise the vast majority of the government’s hundreds of thousands of procurements annually from small and medium-sized enterprises.

When the Conservative government created the office in 2007 as part of its omnibus Federal Accountability Act, it said that by operating at arm’s length from the government, the OPO would not only strengthen Canadians’ confidence in the system but also ensure it remained “fair, open and transparent.” 

After five years on the job, Brunetta acknowledged in a public statement that elements of the process still needed “attention” but, given the fact that problems had been highlighted by both sides of the process throughout his tenure, that statement was no surprise.

“The sad reality, however, is that despite representing the collective voice of many, little, if anything, has been done,” he continued. “Reports are issued, recommendations made, and nothing much else happens.”

Reality at the OPO, unfortunately, is that federal departments and agencies are not obliged to accept a recommendation. They can even ignore it without having to explain. Nor does the OPO have the authority to stop a procurement, cancel a contract or even place it elsewhere – even if the federal entity involved has made significant errors in how the procurement is handled. 

Since his retirement, Brunetta’s deputy, Lorenzo Ieraci, has been dealing with the procurement pickle. He has a master’s degree in Public Policy and Public Administration, from Concordia University, and an Executive Certificate in Conflict Management from the University of Windsor’s law school. Prior to joining the OPO in 2012, he managed a national team of criminal forensic accountants at PWGSC.

Clearly qualified for the job, he has been effectively in a holding pattern as interim ombudsman since succeeding Brunetta. However, the Privy Council Office is expected to announce its decision on the position in January. 

In the OPO’s 2016-2017 annual report, tabled in the House of Commons in October, Ieraci noted that “a number of initiatives” are at play in the bureaucracy “to modernize and simplify” procurement. “The challenge, however, is to develop procurement documents that are clear and simple enough for suppliers to respond to, while ensuring they are sufficiently detailed to lay out what is expected by federal organizations.”

The following week, when he and OPO staff held a “town hall” with Ottawa-area suppliers in an industrial park warehouse space in the city’s west end, it was obvious that whomever is appointed still have their hands full, and that includes fulfilling the dispute resolution element of their mandate. 

Stressing his neutrality, Ieraci noted during his presentation that the OPO is “neither a lobbyist for suppliers nor an apologist for government.” He explained that conflict can often be resolved by simply bringing the two parties together. “In a lot of instances, cases arise because people don’t necessarily understand the operating reality of the other side,” he said, citing the case of an established supplier being told after a years-long relationship that the contract was being retendered.

The supplier’s perception was that the department did not want to continue the procurement. Ieraci said this is a common misconception. When the OPO’s in-house legal counsel interceded, the department explained that while it might prefer to continue doing business with a particular supplier “for the next 20 or 30 years,” it is obliged “by and large” to give all potential suppliers a chance to bid while ensuring the cost to the public purse remains fair.

“The reverse is also true, though,” he said. “Sometimes federal departments and agencies don’t necessarily appreciate or even understand the impact on their decisions.” And even in today’s increasingly digital environment, the amount of paperwork associated with even the smallest contract can deter individual or corporate suppliers from bidding at all because of the time and expense require to respond to a Request for Proposals.

Ieraci pointed out a potential irony for the department in that “if you don’t get any bids, it’s not helping you.” His office has had some success with challenging the need for the often voluminous information it requests up-front and getting it to adjust its requirements, but this remains a work in progress.

A long-standing flaw in the government’s approach to doing business with the private sector – acknowledged by Rona Ambrose when she was the minister responsible for procurement from 2010 to 2013 – is a lack of procurement expertise and the delays it causes in too many procurement plans. She was talking specifically about procurement by the Department of National Defence but it remains, anecdotally, a concern for suppliers across much of the government spectrum.

Ieraci highlighted this in his latest report, saying that both sides had come to appreciate the pitfalls caused by the lack of “procurement capacity” within government. Even so, “it has become apparent […] that many (if not most) federal organizations do not have sufficient procurement staff or have staff that do not have the experience or knowledge needed to tackle the volume and complexity of federal procurement in a way that is fair, open and transparent,” noted the report.

Lorenzo Leraci speaks to a town hall audience about defence procurement.

“The impacts include delays during various stages of the procurement process, and concerns of an increasing reliance on non-specialists to undertake some procurements given the limited number of procurement specialists. In addition, suppliers invest time asking questions or obtaining clarifications as they are dealing with procurement staff who are not always fully knowledgeable about their given industry.”

The shortfall means that experienced and knowledgeable specialists are highly sought after. Departments and agencies are “routinely cannibalizing staff from one another. “The situation may get worse,” Ieraci said. “Data indicate that the procurement community has one of the highest percentages of staff eligible to retire in the next five years. Without a concerted effort on the part of all federal organizations, and more importantly a coordinated approach to recruitment and development of procurement specialists across organizations, capacity problems and associated impacts will continue to grow.”

That conceivably means more business for the OPO but with its limited resources and despite a talented and capable staff, that could be more of a curse than a blessing. 

Ken Pole is FrontLine’s Contributing Editor.