Why are these changes to the Purchasing By-law and Procurement Processes Policy being made?
The changes are being implemented in order for the City of Toronto to:
- prepare for upcoming trade agreements legislated by the provincial and federal governments
- improve clarity in reading and understanding the Purchasing By-law
- align with provincial procurement directives that ensure procurement processes within the public sector are consistent, fair and transparent
- reinforce an ethical procurement process with suppliers who do business with the City
When do the changes take effect?
January 1, 2017
What new trade agreements is the City preparing for by introducing these changes?
There are two new trade agreements legislated by the federal and provincial governments that may impact the way City staff procure goods and services: the Comprehensive Economic and Trade Agreement (CETA), and the Trade and Cooperation Agreement between Ontario and Quebec (TCAOQ).
How may CETA and TCAOQ affect the City’s procurement process?
CETA only applies to goods and services above $340,600 and construction services above $8.5 million. Any City procurement below these thresholds is fully exempt. For projects that fall within the CETA thresholds, new timelines will apply. In these circumstances, the final date for bid submissions cannot not be less than 40 days from the date on which either (1) the Notice of Intended Procurement is published; or (2) PMMD notifies suppliers that they will be invited to submit bids. Please note these new timelines will apply only if CETA is ratified and comes into effect.
TCAOQ applies to all procurement above $100,000, and requires that all City procurements at or above this amount be advertised through a Notice of Intended Procurement. This trade agreement also sets out non-discriminatory requirements which the City’s current procurement processes already include.
What is a Notice of Intended Procurement (NOI)?
A NOI is a detailed description of an intended procurement project and its planned date of publication. In general, the NOI will contain the following:
- contact information for the respective City division and staff to obtain all relevant documents relating to the procurement, and their cost and terms of payment, if any;
- description of the procurement, including the nature and the actual or estimated quantity of the goods or services to be procured
- for recurring contracts, an estimate, if possible, of the timing of subsequent notices of intended procurement;
- description of any options;
- timeframe for delivery of goods or services or the duration of the contract;
- address and any final date for bid submission for participation in the procurement;
- list and brief description of any conditions for participation of suppliers, including any requirements for specific documents or certifications to be provided; and,
- where, in consultation with PMMD, a City division intends to select a limited number of qualified suppliers to be invited to submit bids, the criteria that will be used to select them and, where applicable, any limitation on the number of suppliers that will be permitted to submit bids.
How does the revised bylaw address the dispute process?
The revised Purchasing By-law and Procurement Processes Policy includes two sections related to disputes – Pre-Award Disputes and Post-Award Disputes.
Pre-Award Disputes, such as being declared non-compliant, require that suppliers communicate with the City’s Chief Purchasing Official in writing as soon as possible about a dispute, or within five (5) days of being declared non-compliant. The Chief Purchasing Official, in consultation with the City Solicitor, will review the dispute and determine the appropriate action.
Post-Award Disputes allow a supplier to submit a dispute in writing to the Chief Purchasing Official within 10 days of being notified of an award being made, or within five (5) days of a debriefing. If a resolution cannot be reached, disputes for awards over $100,000 in value can be submitted by the supplier to the Treasurer. The submission must include facts supporting the dispute and a proposed resolution. The Treasurer will review the material in consultation with the City Solicitor (or may set up an independent review team) and determine the appropriate action.
Procedures are being developed to explain how the dispute processes will work.
Will suppliers have the option to debrief with the City after an unsuccessful bid?
Yes. Under the revised Procurement Processes Policy, the City will inform all unsuccessful suppliers about their entitlement to a debriefing for competitive procurements valued at $100,000 or more. Suppliers will be given up to 60 calendar days following the date of the contract award notification to request a debriefing.
Why did the City introduce a Supplier Code of Conduct?
The City is committed to maintaining a fair and ethical relationship with all of its vendors. Implementing a Supplier Code of Conduct as part of the Purchasing By-law reinforces the importance of the relationship between the City and its suppliers, and formalizes the ethical standards expected of those who do business with the City. The addition of a Supplier Code of Conduct also partly addresses recommendations from both the Charbonneau Commission and Bellamy Inquiry.
What is the clause about disqualifying suppliers who are in litigation with the City?
As part of the Supplier Code of Conduct, the Treasurer will have the authority to disqualify a supplier who is in ongoing litigation with the City related to a contract awarded by the City. The focus of this clause is to address suppliers who have a history of bringing frivolous litigation or exaggerated claims against the City. The Treasurer will consult with the City Solicitor on exercising this authority, and would consider a list of non-exclusive factors in making a decision.
The City is working on developing the procedures around this clause, including how the Treasurer will make the decision to disqualify a supplier in litigation with the City. The clause will not be available to be used until the procedures are developed and have been reviewed by the construction industry.
Why did the City add this clause?
The City has been reviewing all of its procurement policies for the past few years, and the litigation clause is simply one of a number of items that was considered to form part of the Supplier Code of Conduct.
Does this clause apply to all suppliers who are in litigation with the City?
The focus of the clause is to address suppliers who have a history of bringing frivolous litigation or exaggerated claims against the City.
Is adding this clause a way to stop suppliers from pursuing claims against the City?
No. This is not intended to stop suppliers who have legitimate issues with the City to address them through the courts. It is also not intended to stop suppliers who are in debt or litigation with the City on matters unrelated to the procurement process from doing business with the City. The focus of the clause is to address suppliers who have a history of bringing frivolous litigation or exaggerated claims against the City. The clause will not be available to be used until the procedures are developed and have been reviewed by the construction industry.
Who decides what matters are frivolous and what should go to court? How will that be decided?
The Treasurer, in consultation with the City Solicitor, will determine whether to exercise the clause based on a list of non-exclusive factors and on procedures that City staff are currently developing. One factor that will be considered is whether the supplier won the litigation – that would not be grounds to disqualify a supplier when the courts agreed with their arguments. This clause does not determine what should and should not go to court.
The exercise of this authority will be made transparently and in good faith by the City.
What impacts could this potentially have on the Construction Lien Act?
This should not impact the Construction Lien Act. One of the factors will be to consider whether the litigation is directly from a supplier, or indirectly through the normal course of construction such as a lien.
Was there consultation done with suppliers, in particular the construction industry, about this?
The City informed members of its Broader Construction and Design Consultation Group about this clause in May 2016. The City also met with members of the construction industry in August 2016 to discuss the clause and gather input on the development of the procedures around it.
The City is open to receiving feedback from suppliers to identify additional ways to improve the procurement process in the future.
What has changed with Public Openings?
The Procurement Processes Policy has been revised to permit both physical and online public openings. While the City does not yet have a means to conduct online public openings, it will be addressed in the Supply Chain Management Transformation Project which may take effect as early as 2018. As that date becomes clearer, more information about closing down the public openings will be available.