BPS Procurement Direc/ve Refresher December 4, 2013

Transcription

1 BPS Procurement Direc/ve Refresher December 4, 2013

2 Agenda 1:00 2:30 Context and Overview Procurement Processes 2:30 2:45 / Break 2:45 4:00 Procurement Processes

3 Context and Overview

4 Current Environment Canadian healthcare market forecast at >$200 B in 2013 Increased scru/ny regarding how public funds are spent and growing public expecta/ons for accountability and transparency, especially in Ontario Broader Public Sector Accountability Act, 2010: authority to issue direc/ves governing procurement of goods and services = the BPS Procurement Direc/ve Healthcare organiza/ons are being challenged to operate more efficiently and in a fair, open and transparent manner Hospital Presidents/CEO s and Boards of Directors are required to prepare aresta/ons with respect to compliance with the requirements of the Broader Public Sector Accountability Act, including: the comple/on and accuracy of reports on the use of consultants compliance with procurement direc/ves issued by the government Sector is fundamentally risk averse

5 Objec/ves Value for Money Efficiency Compliance Risk Mitigation

6 Leading Prac/ce Principles of the BPS Procurement Direc/ve Accountability Transparency Value- for- Money Quality Service Delivery Process StandardizaJon Organiza/ons must be accountable for the results of their procurement decisions and the appropriateness of the processes. Organiza/ons must be transparent to all stakeholders. Wherever possible, stakeholders must have equal access to informa/on on procurement opportuni/es, processes and results. Organiza/ons must maximize the value they receive from the use of public funds. A value- for- money approach aims to deliver goods and services at the op/mum total lifecycle cost. Front- line services provided by Organiza/ons, such as teaching and pa/ent care, must receive the right product, at the right /me, in the right place. Standardized processes remove inefficiencies and create a level playing field.

7 Founda/onal Principles Principles which assist organiza/ons in managing supply chain ac/vi/es and protec/ng their good reputa/on include: Supply Chain Code of Ethics Procurement Policies and Procedures Benefits of implemen/ng these principles include: Suppor/ng high quality service delivery Promo/ng process efficiency and driving cost savings Assistance in mee/ng accountability obliga/ons E.g., aresta/ons in Ontario

8 Code of Ethics A Code of Ethics is a set of common values guiding business conduct Promotes a professional and ethical approach Reflects goals and values of the organiza/on Aligns with exis/ng codes of ethics and conduct, with supply chain specific standards of prac/ce The Code of Ethics applies to everyone who is involved in supply chain ac/vi/es, whether internal or external It must be Supported by Senior Management Formally approved per the organiza/on s governance structure Communicated widely to all relevant stakeholders

9 Conflict of Interest and Non Disclosure Non Disclosure Agreements (NDA) and Conflict of Interest (COI) Statements are reflec/ons of the Code of Ethics The COI and NDA must be signed either prior to the start of each procurement ini/a/ve or on an annual basis Non Disclosure Agreement Confiden/ality or non disclosure applies to all informa/on relevant to the RFP, including hospital informa/on and confiden/al informa/on received from the bidders Confiden/ality about an RFP process does not preclude regular, day to day contact between a supplier rep and a clinician

10 Conflict of Interest Everyone involved in a competitive procurement process must declare actual or potential conflicts of interest Conflicts of interest apply to all employees, advisors, external consultants or suppliers who participate in, or have knowledge of, a procurement initiative Examples of conflict of interest include: } } } } } Having relationships that may affect or be perceived to affect objectivity Providing assistance to a supplier participating in a competitive process Having an ownership, investment interest or compensation arrangement with any entity participating in a competitive initiative Having access to confidential information that may affect or may be perceived as affecting objectivity Providing consulting advice regarding the development of competitive documents and responding as part of the competitive process

11 Blackout Period The blackout period typically begins when the RFP is in its planning phase and lasts through to contract award During the blackout period, the RFP Coordinator is the only person who should communicate about the process to poten/al bidders During this period, ques/ons addressed to the RFP Coordinator will be answered through an addendum to ensure all poten/al bidders have equal access to all informa/on provided When it is necessary for supplier technical reps and end users to communicate about day to day requirements, all par/es must respect confiden/ality and limit discussion to immediate issues During the RFP process, employees who are involved in the RFP should not arend func/ons sponsored by suppliers who are responding to the RFP

12 25 Mandatory Requirements Approval Authority Levels 1. Segregation of Duties 2. Approval Authority Procurement Thresholds 3. Competitive Procurement Thresholds Competitive Procurement 4. Information Gathering 5. Supplier Pre-Qualification Purchasing 6. Posting Competitive Procurement Documents 7. Timeline for Posting Competitive Procurements Evaluation 8. Bid Receipt 9. Evaluation Criteria 10. Evaluation Process Disclosure 11. Evaluation Team 12. Evaluation Matrix 13. Winning Bid 14. Non Discrimination Contract Award 15. Executing the Contract 16. Establishing the Contract 17. Termination Clauses 18. Term of Agreement Modifications 19. Contract Award Notification 20. Vendor Debriefing Non-Competitive Procurement 21. Non-Competitive Procurement Procurement Documents and Records Retention 22. Contract Management 23. Procurement Records Retention Conflict of Interest 24. Conflict of Interest Dispute Resolution Process 25. Bid Dispute Resolution

13 Procurement Policies and Procedures Procurement Policies and Procedures (PPP) are the guide an organiza/on uses to ensure compliance with the 25 mandatory requirements PPP create consistency across the organiza/on resul/ng in efficiency which allows the organiza/on to do more, such as redeploying scare resources into more value added ac/vi/es Having consistent PPP, based on leading prac/ces, also results in Less confusion for end users Less confusion for suppliers BPS organiza/ons were required to develop, implement and broadly communicate the Supply Chain Code of Ethics and PPP by April 2011 This is a process of con/nuous improvement!!

14 Procurement Processes

15 The goal of a supply chain is to get the right materials to the right people at the right /me at the right price Key func/ons of a supply chain include: Plan requirements Procure goods, services, capital, construc/on Sourcing: processes that manage sourcing and contrac/ng with exis/ng and poten/al suppliers Purchasing: processes used to execute actual purchase transac/ons Manage the contract and supplier rela/onship Deliver or warehousing the goods; managing the logis/cs Pay the invoices The Supply Chain

16 Segrega/on of Du/es Roles ExplanaJon Who RequisiJon Authorize the supply chain department to place an order End User reques/ng the product or service Budget Authorize that funding is available to cover the cost of the order Departmental budget holder Commitment Authorize release of the order to the supplier under agreed- upon contract terms Purchasing role in the supply chain department Receipt Authorize that the order was physically received, correct and complete Individual receiving the goods Payment Authorize release of payment to the supplier Accounts Payable

17 Procurement Workflow Blackout Period Iden/fy purchase requirements and secure approval Develop and approve specifica/ons Develop and issue the compe//ve document (RFP/RFQ) Receive bids and evaluate responses Award business and finalize agreement No/fy unsuccessful suppliers of award Par/cipate in supplier debriefing Manage contract and maintain document file Ethical Framework Procurement Policies and Procedures Checklists and Templates

18 Procurement Fundamentals All procurement ini/a/ves should meet the following criteria: Align with code of ethics, policies and procedures Ensure open, fair and transparent sourcing events Mi/gate risk on behalf of the organiza/ons Meet the requirements of the Agreement on Internal Trade Focus on delivering the clinical and business requirements Generate compe//on and result in a strong value proposi/on Ensure that the award goes to the supplier that is best suited to provide the stated requirements

19 Procurement Processes Informal Invita/onal Compe//ve Open Compe//ve Non Compe//ve Procurement card Per hospital policy May not be used for medical devices 1 quote acceptable up to but not including $25,000 May never be used to procure consul/ng services Minimum 3 invited bids $25,000 - $99,999 Applies to goods, services and construc/on Minimum requirement for consul/ng services Open, public pos/ng (minimum 15 days) $100,000 Applies to goods, services, consul/ng services, construc/on This is the only threshold set in the Procurement Direc/ve based on Agreement on Internal Trade Single sourcing Sole sourcing Non applica/ons of the Agreement on Internal Trade Not required when procurement meets Informal condi/ons Thresholds are for example only

20 Procurement Thresholds (example) Bid solicita/on thresholds will be set in the organiza/on s procurement or spending policies. An example would be as follows: Spend/Buy (excluding taxes) Procurement Process $0 4,999 Procurement Card $5,000 - $24,999 Informal 1 quote $25,000 - $99,999 Invita/onal 3 quotes invited $100,000 Open Compe//ve

21 Calcula/ng Total Procurement Value You must always aggregate to the highest level when planning procurements to avoid mul/ple one off purchases In some circumstances, you will buy the same item(s) for different projects and this would be considered a new procurement activity Spend/Buy (excluding taxes) Base Term Extension OpJon Total Value (base term + extensions) Procurement Type $5,000/yr One off none $5,000 Informal $5,000/mo 3 years 1 year $240,000 Open $20,000/yr 3 years none $60,000 Invita/onal $40,000/yr 3 years 1 year $160,000 Open

22 Non Compe//ve Procurement Organiza/ons may conduct non- compe//ve procurement ini/a/ves provided they do not do so for the purposes of avoiding compe//on between suppliers or in order to discriminate against suppliers They must: Determine whether it is a single/sole source purchase per the AIT Provide a sound ra/onale to support the decision Secure approval per Approval Authority Schedule This is the accepted process to use when a contract has expired and it is necessary to bridge un/l the RFP process is completed Organiza/ons are strongly encouraged to use this non compe//ve procurement on a true excepjon basis

23 Single Source Excep/ons Acquisi/on from a specific supplier even though there may be more than one supplier capable of delivering the goods or services Where an unforeseeable situa/on of urgency exists and the goods or services cannot be obtained in /me by means of open procurement procedures Failure to plan does not consjtute an unforeseeable situajon of urgency Where goods or services regarding marers of a confiden/al or privileged nature are to be purchased and the disclosure of those marers through an open tendering process could reasonably be expected to compromise government confiden/ality, cause economic disrup/on or otherwise be contrary to the public interest Where compliance with the open tendering provisions set out in the Direc/ve would interfere with the en//es ability to maintain security or order or to protect human, animal or plant life or health In the absence of a receipt of any bids in response to a call for proposals or tenders made in accordance with the Direc/ve

24 Sole Source Excep/ons When there is only one available supplier of a good or service To ensure compa/bility with exis/ng products, to recognize exclusive rights, such as exclusive licences, copyright and patent rights, or to maintain specialized products that must be maintained by the manufacturer or its representa/ve For work to be performed on or about a leased building or por/ons thereof that may be performed only by the lessor For the procurement of a prototype of a first good or service to be developed in the course of and for a par/cular contract for research, experiment, study or original development, but not for any subsequent purchases

25 Non Applica/on of the AIT Circumstances where the AIT does not apply (per Appendix C of Annex 502.4) Contracts with a public body or a non- profit organiza/on; Procurement of goods, services and construc/on that is financed primarily from dona/ons that are subject to condi/ons inconsistent with the PPP; Procurement from philanthropic ins/tu/ons, prison labour or persons with disabili/es; Procurement of services, by legisla/on or regula/on, be provided only by any of the following licensed professionals: medical doctors, den/sts, nurses, pharmacists, engineers, land surveyors, architects, accountants, lawyers and notaries; and Health services and social services

26 Non- Compe//ve Scenarios SituaJon Allowed? RaJonale The C- arm breaks down and certain surgeries can t be done. Pa/ents are at risk. You need a replacement immediately, so you purchase the same equipment from the previous supplier. A manufacturer is the first to develop a unique upgrade for a piece of OEM equipment. You are expanding the maternal and newborn program and received funding to build a new facility. You plan to engage an architect to design the building and manage construc/on.

27 ConsulJng Services Defined

28 Consul/ng Services Prior to commencement, any procurement of consul/ng services must be approved in accordance with the Approval Authority Schedule Approval Authority Schedule (AAS) for Consulting Services Procurement Method Invitational Competitive Procurement Value $0 up to but not including $100,000 Approval Authority Organization s AAS for goods and non-consulting services Open Competitive Any value Organization s AAS for goods and non-consulting services Non-competitive* $0 up to but not including $1,000,000 President, CEO or equivalent $1,000,000 or more Board of Directors or equivalent *Exemption-based only

29 Consul/ng Services Defini/ons ConsulJng Service Provider "Consultant" means a person or en/ty that under an agreement, other than an employment agreement, provides expert or strategic advice and related services for considera/on and decision- making. Non- consuljng Service Provider A Non- consul/ng Service Provider is an individual/company who contracts to provide services to another individual or business for non- consul/ng services. Examples may include consultants such as property brokers, head hunters or trainers. If you answer yes to any of these ques/ons, you are hiring a consultant: Is the focus of the service strategic advice and guidance? Is the service assessment without implementa@on? Is the result to provide informa/on for decision making?

30 Services Exercise

31 Preparing the CompeJJve Document

32 Roles RFP Coordinator (Bid Administrator) The RFP Coordinator is responsible for coordina/ng the evalua/on process and providing process oversight The RFP Coordinator is the process subject marer expert Typically this will be someone from Procurement Team Leader The Team Leader will be a subject marer expert, and should lead the evalua/ons of the rated criteria, technical specifica/ons, and trials or demonstra/ons (if applicable) Evalua/on Team The Evalua/on Team rates the weighted criteria and par/cipates in trials and presenta/ons It is important to establish the Evalua/on Team before crea/ng the compe//ve document as this allows the team to play a role in the development of the specifica/ons, evalua/on criteria and weigh/ngs

33 Approval Authority Schedule Per the Direc/ve, organiza/ons must establish an approval authority schedule (AAS) for procurement of all goods and services which iden/fies who is authorized to approve procurements for different dollar thresholds The AAS must be approved by the board of directors of the organiza/on Prior to commencement, any procurement must be approved in accordance with the AAS Non- compe//ve procurement ini/a/ves must be approved one level higher than the AAS requirements for compe//ve procurement

34 Approval Authority Schedule (example) Spend (excluding taxes) Contract Term Authority < $14,999 1 year Manager $15,000 49, years Director $50,000 99, years Vice President $100, ,999 5 years CEO > $1,000,000 5 years Board of Directors

35 Specifica/ons Whether securing verbal or wriren quotes, specifica/ons should be provided to the bidders in wriren form The specs should be: detailed but not brand- specific logical and easy to read Drawings or other documents may be provided to ensure the specifica/ons are clearly understood Suppliers who consult on the development of specifica/ons may not submit proposals to fulfill those specifica/ons The Evalua/on Team should be involved in the development and/or approval of specifica/ons before the document is issued

36 Compe//ve Procurement Documents RFP RFQ RFI RFSQ Invita/on to propose solu/ons for the delivery of complex products or services Open or invita/onal Price is not the primary factor Requests quota/ons for products or services based on stated specifica/ons Open or invita/onal Primary evalua/on criterion is price Gathers informa/on on a product or service to berer define a need or to explore solu/ons May not ask for pricing informa/on Must not pre- qualify suppliers Gathers informa/on on supplier capabili/es and qualifica/ons in order to create a list of pre- qualified suppliers

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38 The RFP Must Include: Contract terms & condi/ons, contract base term & extension, date when contract extension needs to be invoked A drav copy of the contract to be signed in the event of an award of the procurement Condi/ons that must be met, including mandatory requirements and technical standards Full disclosure of the evalua/on criteria, process and methodology to be used in assessing submissions Expense claims and reimbursement rules (per provincial legisla/on or internal policy) Opportunity for supplier debriefing ( $100,000) A bid dispute process A no/ce that any confiden/al informa/on supplied to the organiza/on may be disclosed by the organiza/on where it is obliged to do so under FIPPA, by an order of a court or tribunal or otherwise required at law

39 Establishing the Evalua/on Criteria Establishing the evalua/on criteria, their weigh/ngs and the scoring methodology will result in best value for because this process will determine which bid will be selected Evalua/on criteria must be included in the compe//ve document and cannot be changed once the compe//ve process has begun The document must state: All weights, including sub- weights, for rated requirements Descrip/ons of any short- lis/ng processes The role and weigh/ng of reference checks, interviews, demonstra/ons Descrip/ons of the price/cost evalua/on methodology The method to resolve a /e score Do not request informa/on from suppliers that will not be evaluated

40 Evalua/on Criteria Summary Mandatory Rated Presenta/on, Trial, Demo Financial Keep to a minimum Must be scored on a pass/fail basis Examples include: Bid received on /me Bid received in the correct format Proof provided of necessary licenses Submissions which fail the mandatory requirements must be disqualified Take into account a number of different evalua/on criteria Combina/on will be unique for every compe//ve document Examples include: Experience and qualifica/ons Ability to meet technical/func/onal requirements Service levels and quality assurance Delivery requirements Other criteria directly related to the procurement Presenta/ons Use if you will learn something new Invite shortlisted proponents only Focus on the cri/cal issues Request presenta/on by people who will deliver work Trials Typically clinical evalua/ons Follow hospital process Demonstra/ons May be at a supplier s facility or on site Apply the maximum jus/fiable weigh/ng Typically between 20% and 40% The percentage will be unique to each sourcing ini/a/ve Highly complex products must ensure they sufficiently weight all of the requirements Consequently, price may take on a lower weigh/ng For highly commodi/zed products or services, price may become a much more significant factor

41 Bid Response Time - Examples Goods Category Deliverable Phone a distributor for a one off product for a unique pa/ent (low dollar value) Bid Response Time 1 day Services Issue an RFQ for an electrician < 5 days Goods Services Issue an RFP for pacemakers for 5 hospitals Issue an RFP to determine the appropriate distribu/on strategy for mul/ple sites in an SSO days days

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44 Bid Receipt Bid submission date and closing /me must be clearly stated in compe//ve procurement documents Submissions that are delivered aver the closing /me must be returned unopened even if late by one minute The bid opening process must be applied consistently to each bid received to ensure the evalua/on process is objec/ve and fair for all respondents The process should include these steps: Stamp each bid as it arrives with date, /me, loca/on and contact informa/on Bids may only be opened aver the compe//ve process has closed Any processes detailed in the procurement documents must be followed

45 Scoring the Rated Criteria Evaluators should conduct assessments individually and independently from other team members, using a common evalua/on matrix Each Evaluator must clearly document all comments/findings on an evalua/on matrix to ensure integrity of the procurement process This documenta/on may be used to debrief proponents, so comments should include strengths and weaknesses of the submission Records of evalua/on scores must be auditable and everything said or documented must be fair, factual, fully defensible, and may be subject to public scru/ny Final conclusions and award recommenda/ons should be arrived at by averaging the team scores Selec/on of the winning bid must be based on the highest ranked submission(s) mee/ng all mandatory requirements

46 Selec/on of Successful Proponent The next step in the evalua/on process is making the final selec/on Using the evalua/on scores, the Team must select only the highest rated submission(s) In some cases evalua/ons may result in a /e score, which must be resolved as specified in the original RFx document An example of a /e break methodology is to use the highest weighted rated criterion to compare scores and the supplier with the highest score is declared the successful proponent The RFP Coordinator will no/fy the successful proponent

47 Non Discrimina/on It is crucial that organiza/ons ensure the evalua/on process has been conducted in a manner which avoids any prac/ces which are, or could appear to be, discriminatory Unsuccessful proponents who deem the process unfair or biased may file bid protests or disputes which can lead to costly delays in finalizing contract awards It is most cri/cal that evalua/on criteria are created and measured in a non- discriminatory way The Agreement on Internal Trade includes informa/on about what is deemed discriminatory and offers specific guidelines for demonstra/ng non- discrimina/on

48 Examples of Non Discrimina/on Discrimina/on Based on Geography The AIT specifically outlines that discrimina/on on the basis of the geographical loca/on of a supplier must not influence the evalua/on or award of a contract. For example, preference for Canadian value- add may not exceed 10% of the total value of the contract and it must be disclosed in the RFx document, including how it will be measured. Discrimina/on Based on Technical Specifica/ons The evalua/on process may not consider technical specifica/ons which favour or which discriminate against any par/cular supplier

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50 The Contract Award Once the evalua/on process is complete and the supplier selected, the organiza/on awards the contract A formal contract award lerer should be sent to the successful proponent(s) to ini/ate the process In some cases the organiza/on may elect not to award the contract to any bidder and cancel the RFx These circumstances are rare, as leading prac/ce dictates you don t go to market unless you intend and are able to award

51 Execu/ng the Contract The next step is for the RFP Coordinator to prepare the contract, incorpora/ng the details of the specific procurement ini/a/ve The finalized contract must be in the same Form of Agreement that was released with the RFx documents. This allows for a fair comparison of submissions based on common terms and condi/ons suppliers to consider the terms and condi/ons when pricing the submission Terms that are essen/al or mandatory to the agreement should not be subject to nego/a/on Delivery of products/services may not start un/l the agreement is signed In cases where the contract cannot be finalized in a /mely manner or where urgency exists, an interim purchase order may be used In the past it was common to use a LeRer of Intent to bridge the period before the contract was executed This is no longer accepted prac/ce as a LeRer of Intent is not legally binding

52 Contract Terms and Condi/ons Each document contains clauses to cover basic terms and condi/ons as well as clauses to mi/gate risk on behalf of the hospital, including: Cancella/on or termina/on clauses* The term of the agreement and any op/ons to extend* A detailed descrip/on of the products or services to be supplied Pricing and payment terms Performance commitments Representa/ons, warran/es and indemni/es Confiden/ality/FIPPA requirements (obliga/ons on both sides) Insurance provisions No/fica/ons such as medical alerts or regulatory ac/ons Agreement on any Intellectual Property There may also be separate service level and maintenance agreements which form part of the master agreement * Clauses highlighted in red are mandatory under the Procurement Direc/ve

53 Award No/fica/on Once the contract is executed with the successful proponent, organiza/ons must no/fy all unsuccessful bidders that a contract has been signed and that the compe//ve process is complete It is good prac/ce to provide unsuccessful bidders with the name of the successful supplier, agreement start and end dates and any extension op/ons A organiza/on may also write lerers directly to the unsuccessful bidders communica/ng the decision and thanking them for par/cipa/ng in the compe//ve process This would also include providing wriren no/fica/on if any submissions were rejected during evalua/on (e.g., failed mandatories)

54 Supplier Debriefing The opportunity for a debriefing must be included in all open compe//ve procurements (i.e., $100,000) It is good prac/ce to also offer debriefings in invita/onal RFP s A few cri/cal points to remember: Allow unsuccessful suppliers 60 calendar days following the date of the contract award no/fica/on to request a debriefing Conduct separate debriefings with each supplier Confirm details of the debriefings in wri/ng, as correspondence and documenta/on relevant to the debriefing session will become part of the procurement documenta/on Keep the feedback high level but informa/ve Under no circumstances should informa/on be provided to the supplier about other proponents proposals or scores

55 Bid Disputes It is a mandatory requirement in the Direc/ve to include bid dispute resolu/on procedures in every compe//ve procurement document The intent is to ensure that any dispute is handled in an ethical, fair, reasonable and /mely fashion Bid dispute resolu/on procedures must comply with bid protest or dispute resolu/on procedures set out in applicable trade agreements It is important to involve legal counsel in developing your organiza/on s policy and procedures for managing disputes You will need to establish with your legal counsel when to Make them aware of wriren disputes or protests Ask them to par/cipate in the process Ask them to provide advice on alternate dispute resolu/on processes Determine whether li/ga/on is required

56 Document Reten/on There is a requirement to maintain a comprehensive file for all procurement ini/a/ves which will include a subset of: Procurement business case Evidence of approvals Non- Compe//ve documenta/on Compe//ve document (RFP/Q) All RFP/Q submissions Modifica/ons/Clarifica/ons (Addenda and Q&A) Evalua/on records (includes individual evalua/on matrix & notes AND summary matrix & notes) Award no/ce Agreement (agreement originally signed and any changes) All vendor debriefing documents Bid dispute and resolu/on Supplier performance informa/on

57 Contract Management Organiza/ons frequently overlook Contract Management A recent survey of global companies found that the average company loses or wastes over 7.5% of the value of contracts due to poor supplier and contract management processes Best in class organiza/ons achieve up to 80% more savings than others through a clearly defined contract compliance process (Source: Aberdeen Research). Effec/ve contract management includes: Managing the delivery of the products or services as originally agreed Measuring the effec/veness of the contract in mee/ng requirements Capturing observa/ons and results from procurement ini/a/ves in order to improve future sourcing ac/vi/es It is important to iden/fy the individual who will manage the contract and ensure the supplier meets expecta/ons/deliverables

58 QuesJons and Discussion