Request for Proposals for the Procurement of Program

Integration and Coordination Services for Phase 2 of the

Works Best Practices Program, and Award of Contract

The Works Committee recommends:

(1)the adoption of the joint report dated September 27, 1999, from the Commissioner of Works and Emergency Services and the Chief Financial Officer and Treasurer; and

(2)that under no circumstances are there to be reductions in water quality and that continued improvements of quality should be considered an ongoing objective.

The Works Committee reports, for the information of Council, having considered together the following reports related to the Works Best Practices Program:

(i)(September 27, 1999) from the Commissioner of Works and Emergency Services, headed "Request for Proposals for Selection of Vendors for Supply of Process Control Systems (SCADA) Software, Contract No. MWRFP199";

(ii)(September 22, 1999) from the Commissioner of Works and Emergency Services, headed

"Engagement of Professional Services to Undertake the Preliminary Design of Process Control Systems at the R.C. Harris, R.L. Clark, F.J. Horgan and Island Water Treatment Plants";

(iii)(September 22, 1999) from the Commissioner of Works and Emergency Services, headed"Engagement of Professional Services to Undertake the Preliminary Design of a ProcessControl System for the Water Transmission System";

(iv)(September 28, 1999) from the Commissioner of Works and Emergency Services and the Chief Financial Officer and Treasurer, headed "Results of the Request for Proposals for the Water Pollution Control Process Control System Detailed Design Project"; and

(v)(September 27, 1999) from the Commissioner of Works and Emergency Services and the Chief Financial Officer and Treasurer, headed "Request for Proposals for the Procurement of Program Integration and Coordination Services for Phase 2 of the Works Best Practices Program, and Award of Contract";

and having directed that:

(1)a meeting of the Works Best Practices Program Work Group be convened prior to the Council meeting scheduled for October 26, 27 and 28, 1999;

(2)Union representatives be formally invited to meetings respecting Best Practices when these involve Toronto Civic Employees' Union Local 416 members, and that confirmation that invitations were received be obtained; especially important will be Local 416 and Local 79 involvement in all Teams, particularly items (4) "Organizational Services" and (5) "Integrated Works Area Implementation" under the Program Integration and Coordination Services for Phase 2;

(3)a written statement, to Council, be requested from EMA Canada concerning the firm's position on water quality as a part of Works Best Practices development and Union involvement in best practices development and implementation;

(4)the City Auditor be requested to report directly to Council on the aforementioned report headed "Request for Proposals for the Procurement of Program Integration and Coordination Services for Phase 2 of the Works Best Practices Program, and Award of Contract", wherein seven expressions of interest were received, two firms were given the opportunity to bid and one of those withdrew; and

(5)the Commissioner of Works and Emergency Services be requested to submit a report directly to City Council on the aforementioned reports, which outlines in simple terms the number of persons that are being hired under these contracts, the number of hours and hourly rate of pay of those persons, and the type of performance analysis to be undertaken as this project proceeds.

The Works Committee submits the following joint report (September 27, 1999) from the Commissioner of Works and Emergency Services and the Chief Financial Officer and Treasurer:

Purpose:

The purpose of this report is to present to the Works Committee the results of the Request for Proposals for the procurement of Program Integration and Coordination Services as required for Phase 2, the major implementation phase, of the Works Best Practices Program, and to recommend award of the contract to EMA Canada Inc. of Toronto, lead firm in the consortium of firms referred to as TeamWORKS-2.

Funding Sources, Financial Implications and Impact Statement:

On March 2, 3, and 4, 1999, City of Toronto Council, by adoption of Clause No. 1 of Report No. 3 of The Strategic Policies and Priorities Committee, approved the 1999-2003 Capital Budget and Five-Year Capital Program, which contained funding for the Works Best Practices Program (WBPP), including funding for the acquisition of Program Integration and Coordination Services to assist in the implementation phase of WBPP. Accordingly, funds are available in the Water and Wastewater Services Division, Water Pollution Control Capital Account No. C-WP001 and Water Supply Capital Account No. C-WS026.

Recommendations:

It is recommended that:

(1)the contract for the supply of Program Integration and Coordination Services for Phase 2 of the Works Best Practices Program be awarded to EMA Canada Inc. of Toronto, lead firm in the consortium of firms referred to as TeamWORKS-2, with a maximum contract value of $14,501,000.00 including Goods and Services Tax;

(2)the appropriate City officials be authorized to take the necessary action to give effect thereto.

Council Reference/Background/History:

At its meeting of March 2, 3 and 4, 1999, City Council reaffirmed continuance of the Works Best Practices Program (WBPP) in the Water and Wastewater Services Division of Works and Emergency Services. As a result, the Division began preparing for full implementation, according to plan, across Water Supply and Water Pollution Control.

At its meeting of June 9, 10 and 11, 1999, City Council received for information Clause No. 5(g) of Report No. 9 of The Works and Utilities Committee, outlining the process for the procurement of professional and technical services to provide program integration and coordination to Phase 2, the major implementation phase, of the Works Best Practices Program, and providing advance notification that a resulting contract award would be brought forward to Committee for approval in the early fall.

Comments and/or Discussion and/or Justification:

In March of this year, the Water and Wastewater Services Division's Works Best Practices Program (WBPP) began focusing on initiation of Phase 2 activities. Phase 2 is the planned major implementation phase of the Program, wherein organization, jobs, work practices, and technologies designed in Phase 1 are rolled out across the Water Supply and Water Pollution Control sections in a systematic manner. The process will occur over approximately a three-year period, due primarily to the necessary timelines for detailed design, construction and commissioning of process control systems and related equipment. The organizational transformation will take place in two stages, the first stage involving optimization of work and management practices largely independent of plant automation and the second being enabled by plant automation as effected by process control systems commissioning. Both stages will produce substantial operating cost reductions. Implementation is designed to occur on an integrated "work area" by work area basis, a work area being essentially the planned "team" units of the future team-based organization. The current schedule calls for the implementation to be divided into 32 work areas across the Water Pollution Control and Water Supply Sections of the Water and Wastewater Services Division.

It is appropriate at this point to provide an overview of the overall WBPP financial status. The Approved Gross Estimated Cost of the Program, as indicated in the 1999-2003 Capital Program, is $110,192,000.00, net after Municipal Goods and Services Tax Rebate and inflated to year of expenditure. The committed operating cost reductions in the Water Pollution Control and Water Supply sections total $36 million per year upon full implementation of the Program. As reported in the WBPP Spring 1999 Status Report (Council meeting of May 11, 12 and 13 - Clause No. 14(f) of Report No. 5 of The Works and Utilities Committee), the Program is, as at the end of Phase 1, within budget and ahead of schedule with regard to achievement of planned operating cost reductions.

The estimated cost of the WBPP Phase 2 work components totals approximately $81 million, which breaks down by planned expenditure component as shown in Table 1 below (taken from the Business Case documentation, and shown in 1998 constant dollars, in thousands, exclusive of Goods and Services Tax).

Table 1: WBPP Phase 2 Budget

The Phase 2 Program elements will involve expenditures for a wide range of services and products. Computer hardware and software will be acquired, configured and installed to provide and support the use of process control systems, the Laboratory Information Management System, the Industrial Waste Management System, the Work Management System, and the Performance and Operations Management System, all in a highly integrated information environment designed to facilitate improved decision-making, more efficient management and operations, and better service to the customer. Instruments, field devices equipment and process control systems will be acquired and installed in the Water and Wastewater facilities to support reliable and efficient automated operations. Transformational change will occur in the workplace, resulting in better use of technologies, better work and management practices, and overall improvements in efficiency and service delivery.

All this change will take a great deal of work, to be performed by staff and contracted professionals. Phase 1 activities included the use of contracted professionals in a range of roles, including project managers and industry experts in the fields of information technology, human resources and organizational development, plant processes and operations, maintenance management and practices, process control systems design and development, performance management theory and practice, laboratory systems and operations, and so on. Phase 2 will take the design and field trial work performed and proven in Phase 1 and apply it to a complex integration of technologies, team-based organization, and performance-driven management and work practices across the entire Water Supply and Water Pollution Control Sections. As in Phase 1, it is necessary in Phase 2 to utilize externally provided management, professional, and technical resources to help the division effect this broad transformational change and realize the benefits upon which the WBPP Business Case is predicated. Services and professional skills required in Phase 2 will include many of those utilized in Phase 1, with a much greater emphasis on the implementation and support of technologies and of staff being introduced to new ways of working. Extensive training will occur. Process control systems and related equipment, devices and instrumentation require detailed design, construction, commissioning and training services.

External service providers must be contracted to perform a great deal of the work, because they have the skills and experience in a range of techniques and disciplines that the City either does not possess or does not possess in sufficient capacity to do all the work needed. At the same time, there will be a very large contribution to the implementation effort by staff. The current Phase 2 workplan, which has been reviewed extensively and endorsed by the staff in the WBPP Program Management Office, will see continual refinement throughout the Program implementation timeframe. In the end, there will be a far greater capacity for staff to effect continuous improvement largely independent of external assistance. Indeed, knowledge transfer and ultimate "self-sufficiency" are fundamental philosophies of WBPP.

In order to continue the Program on schedule, it is necessary to proceed with Phase 2 activities as soon as possible. Included in the WBPP approved budget are planned expenditures for the utilization of external project management and professional services to carry out defined integration and coordination activities required in the implementation phase of the Program. That is the purpose of the procurement exercise described in the above-referenced June report to Council.

The need for external resources in support of the implementation phase has been reviewed extensively by senior management of Water and Wastewater Services and the staff of the WBPP Program Management Office (PMO). The basis for staffing the Program (i.e., development and implementation) is a set of detailed "deliverables" covering all Phase 2 activities. Each deliverable describes the work to be performed and the expected outcomes. In addition, each deliverable identifies the corresponding job "roles", in terms of appropriate skills and qualifications, to perform the work. Those roles are then divided into "City Provided" and "Externally Provided" (i.e., procured professional and management services), where "City Provided" focuses on currently available skills and also on the need for continuity of the role beyond Program implementation. In modeling the balance between City Provided and Externally Provided, it was recognized that there could be a range between proposing the highest degree of City Provided and the lowest degree of City Provided (which would maximize the use of external resources, and hence the budgetary requirement). In order to keep the budget as low as possible without significantly jeopardizing the success of the Program's planned outcomes, it was decided to incorporate the highest degree of City Provided resourcing possible (the limitation was the skills and quantities of staff available to assume major responsibilities for Program work components). As such, the budgeted External Provided component for Phase 2, which effectively defines the scope of the Program Integration and Coordination Services procurement, should be viewed as the minimum possible to maintain an acceptable level of confidence that Program commitments will be achieved. This type of rationale underlies the overall WBPP budget and is the basis for the approved Business Case.

In April 1999, the Water and Wastewater Services Division established an internal Selection Committee to carry out the Program Integration and Coordination Services procurement. Included on the Selection Committee was a representative from the Purchasing and Materials Management Division of Finance (Finance PMMD).

The scope of the Program Integration and Coordination assignment, and hence that of the corresponding Request for Proposals, is designed to provide the essential linkage between Phase 1 planning/design and Phase 2 implementation, ensuring that program designs, methods, standards and goals are preserved throughout the implementation process. Program Integration and Coordination is structured to provide standardization, continuity and control of Phase 2 deliverables and also to support the Program Management Office in coordinating the work of various suppliers/contractors to be engaged in Phase 2 activities. Program Integration and Coordination is also responsible for the delivery of specified Phase 2 implementation components and implementation support services. The Program Integration and Coordination (PIC) service provider is required to provide services in the following five "deliverables" areas:

(1)Program Management:Working with the PMO, and supporting the contract administration function within Works and Emergency Services, PIC provides ongoing coordination and integration of all work assignments.

(2)Technology Integration:

This deliverable will support the implementation of work areas by ensuring that new process control systems and information technology components inter-operate and support the work practices as designed.

(3)Process Control System Design and Implementation Management:

This deliverable will provide quality control and integration to the facility upgrade/automation assignments and related implementation activities across all Water Supply and Water Pollution Control facilities.

(4)Organizational Services:

The purpose of this deliverable is to support City staff in managing the substantial change process embodied in WBPP. Some specific elements of this project package are:

-provide ongoing support to the division and to Human Resources function in developing new job compositions/compensation and staff training and development;

-provide organizational design and change management services; and

-provide work area implementation support.

(5)Integrated Work Area Implementation:

This deliverable is designed to fully implement in each of the 32 planned work areas an integrated set of practices, procedures, organization, systems and technologies that incorporate the following essential concepts (best practices) of WBPP:

-Total Productive Operations;

-Program-driven Maintenance;

-Automated Operations; and

-Flexible Workforce.

The specific areas of implementation are:

-Practices Implementation: team-oriented implementation of 'Total Productive Operations' practices and associated training;

-Work Management System configuration and roll-out: coordinated implementation across all work areas of the Marcam Avantis.Pro "Work Management System" (selected as the WBPP standard) using the standards and configuration parameters established for the division as well as its associated work practices; and

-Performance and Operations Management System configuration and roll-out: configuration and implementation of the Performance and Operations Management System, based on the Alacrity Results Management (ARM) framework, and its associated work practices.

On May 7, seven responses to the WBPP Phase 2 Program Integration and Coordination Services Request for Expressions of Interest were received. The Selection Committee applied the predefined criteria for advancement to the Request for Proposals (RFP) stage, and concluded that only two interested Proponents could be pre-qualified to receive the RFP.

The RFP was therefore issued to two firms on May 14, those firms being Anderson Technology Management and EMA Canada Inc. The Selection Committee proceeded to finalize the evaluation plan prior to receipt of proposals. On May 28, a Vendor Meeting was held, with the Selection Committee, including the representative from Finance PMMD, in attendance. The purpose was to provide further information on the RFP and to formally respond to any questions received in advance of or at the meeting. Key questions and answers were documented and forwarded to the participating firms.

The deadline for submission of proposals in response to the Program Integration and Coordination Services RFP was June 21. On June 11, a letter was sent by Anderson Technology Management to the Chief Financial Officer and Treasurer, providing formal and confidential notification of their intention to withdraw from the competition forthwith. Following consultation with senior representatives of Finance PMMD and Legal, it was concluded that the process should continue as planned.

On June 21, a proposal was received from the consortium referred to as "TeamWORKS-2", led by EMA Canada Inc. The other member firms of TeamWORKS-2 are Chartwell Inc., the Effectiveness Edge, the Convergent Engineering Institute, IBM Canada, and CO-EDIT Communications Inc. Three of those member firms, EMA, Chartwell, and the Effectiveness Edge, were members of the ten-firm consortium which provided services to Phase 1 of WBPP. The Selection Committee proceeded with the planned, next stage activities of Preliminary Review, Proponent Presentation, and Final Scoring. The TeamWORKS-2 proposal received a Final Score of 82 percent, which qualified the Proponent to proceed to the workplan development stage.

Because only one proposal was received, the Selection Committee expanded the process for developing a workplan, program organization (roles and responsibilities), overall cost and contract performance management process. Consultation occurred at various times during the process with senior representatives of Legal, Purchasing and Audit. This report represents the outcome of these activities, in the form of a recommended award of contract to the TeamWORKS-2 consortium, led by EMA Canada Inc. An outline of the proposed agreement terms, as they relate to scope of work, contract value, and supplier performance management, is provided here.

Scope of Work:

The RFP described the scope of work, summarized above, for the Program Integration and Coordination assignment as it is defined in the WBPP Business Case and in the many Phase 2 planning documents. The agreed workplan developed by the Selection Committee and the Proponent addresses that scope in its entirety and is considered appropriate to the requirement. The assignment is estimated to run for three years, and to be considered complete only when the Program is fully implemented and all committed benefits and operating cost reductions achieved and demonstrated.

Contract Value:

The recommended contract value for the requested scope of services is $14,501,000.00, including Goods and Services Tax, and is consistent with the WBPP Business Case and approved funding under the Approved 1999-2003 Capital Program. The "deliverables packages" which will comprise the detailed components of the Program Integration and Coordination Services contract, including respective ceiling costs, are shown in Appendix "A" to this report.

Contract Performance Management:

Managing the performance of the contracted services had been identified as a key requirement during consultations with representatives of the Audit Department; Water and Wastewater Services and the WBPP Project Management Office are in full agreement. Accordingly, the RFP requested that Proponents provide suggestions for sharing accountability for the outcomes of implementing the Works Best Practices Program. The essential elements of this process, as developed by the negotiating parties, approved by the Water and Wastewater Services Management Team and proposed to form part of the contractual agreement, include a structure of team accountabilities in delivering WBPP deliverables and business results. The Proponent has agreed that five percent of the overall contract value will be retained by the City in a "performance fund", to be paid out on the basis of achieved and demonstrated Program results according to a predefined schedule. Any larger "at risk" component of the fees would result in the Proponent seeking a higher overall fee for the assignment, which was not considered acceptable by the Selection Committee and the Water and Wastewater Services management team. A process will be developed by the City to administer performance disbursements and to address any disputes relating thereto. As well, the process for governing fees for services will be deliverables-based, in accordance with planned and measurable "review events", or milestones, and will incorporate rigorous management of progress and related payment of fees. It is proposed that a representative from the Audit Department review this project management methodology and participate in an agreed role in its application.

It is intended that the Phase 2 workplan will be presented to the Works Best Practices Working Group established by Council, which includes members from Council, C.U.P.E. Locals 416 and 79, and Works and Emergency Services management, and that agreement on the roles and involvement of union representatives to the WBPP Program Management Office be developed.

The Manager of the Fair Wage and Labour Trades Office has reported favourably on the firm recommended.

Conclusions:

In June of this year, Council received for information a report from the Works and Utilities Committee outlining the planned process for procurement of Program Integration and Coordination Services required for Phase 2, the major implementation phase, of the Works Best Practices Program. Those services were designed to provide the optimum degree of balance and support to the extensive staff involvement in the implementation of WBPP. The procurement process was carried out as planned, and this report recommends award of a contract to EMA Canada Inc., lead firm in a consortium of six firms referred to as TeamWORKS-2.

As discussed in this report, Phase 2 of the WBPP will involve a wide range of services and computer based equipment, instruments and processes, all of which have to be managed and implemented in a coordinated and highly integrated fashion. The contract value for Program Integration and Coordination services as recommended in this report covers the requirements for approved scope of the WBPP. Any further requirements for integration and coordination services relating to increased or new scope in the delivery of water and wastewater services, including the implementation of best practices in district operations, will be identified and reported as the need arises.

The Works Best Practices Program has proven its ability to produce results as described in the Status Report to Council in May of this year. Approval of the recommendations contained herein are in keeping with the overall Business Case and methodology for WBPP, and will help the Water and Wastewater Services Division continue to meet its Program objectives and deliver significant operating cost reductions and service delivery improvements to the citizens of Toronto.

Contact Name:

Jim CoeLou Pagano

Program Manager, Works Best PracticesDirector, Purchasing and Materials

Water and Wastewater Services DivisionManagement Division of Finance

Telephone No. (416) 392-3141Telephone No. (416) 392-7311

Appendix "A"

Program Integration and Coordination Deliverables

*Deliverable Package Costs include estimated expenses, which will be tracked and accounted separately

--------

The Works Committee reports, for the information of Council, having also had before it during consideration of the foregoing matter the following communications:

(1)(October 6, 1999) from Mr. Brian Cochrane, President, Toronto Civic Employees' Union, Local 416, expressing concerns with respect to the Works Best Practices Program, and the implications of the reports for approval of expenditures on Process Control Systems, in particular the quality of services being jeopardized as a potential outcome of downsizing; and

(ii)(October 6, 1999) from Mr. Brian Cochrane, President, Toronto Civic Employees' Union, Local 416, in opposition to the selection of EMA Canada Inc. to assist the City with the implementation of the Works Best Practices Program; recommending that if the City must continue with the Program, the changes be made using City employees on an "in-house" basis; and further recommending that if the Committee approves the recommendation to retain EMA Canada Inc., EMA be directed to proceed in a manner that recognizes Local 416 as having an integral role in any operational changes.

The following persons appeared before the Works Committee in connection with the foregoing matter:

-Mr. Peter Leiss, Executive Vice-President, and Ms. Gina Gignac, National Representative, Toronto Civic Employees' Union, Local 416; and

-Ms. Karen Buck, Toronto, Ontario.