- General
- Complete Documentation
- Estimated Value
- Splitting or Underestimating Requirements
- Planning Tools
- Selection of Procurement Strategy
- Timing of Procurement
- Conflict of Interest
- Single Point of Contact
1. General
Procurement planning is the first and most integral step in the acquisition process. Proper planning will help ensure an effective and efficient process with greater surety of a successful acquisition. A well planned procurement benefits all stakeholders including the end-user, procurement official and supplier. Good planning will allow public bodies to determine the goods, services, public works or lease of space requirements necessary to meet business requirements; provide opportunities to aggregate spend in order to create process efficiencies and maximize value for money; and, identify potential sources of supply. Additionally, proper planning will identify a legitimate estimate for the procurement; determine the appropriate procurement tool to utilize to obtain best value; and, determine the overall time frame necessary to complete the procurement process.
The initial step in planning rests with the end-users and it is incumbent upon them to ensure that they allow sufficient lead time for the procurement officials to conduct an effective process. The Act requires that the head of the public body ensure that its purchasing activities are managed in accordance with the framework. The Regulations provide additional detail indicating the preparation of purchasing documentation, estimating the value of the procurement, determining the appropriate tool and time management.
Public bodies are strongly encouraged to consider engaging legal counsel at the onset of any large procurement project to ensure that solicitation documents meet all legal requirements. Additionally, for large projects any subject matter expert that would assist in the preparation of solicitation documents and become part of the acquisition team should be identified at the initial stage of the procurement.
2. Complete Documentation
The first step in the process is identifying the good, service, lease or public work required to meet business requirements. This involves early identification of needs through needs recognition and justification, contract renewal planning, the review of contracts close to expiration, and verifying past usage and quantities to be ordered. Identifying the needs and carefully developing the requirements can minimize the necessity for changes later.
Next, it is important to determine whether the commodity is already available from an existing procurement such as a Standing Offer Agreement (SOA). An SOA is usually arranged by the Agency and is an established contract with a supplier for the purchase of pre-determined commodities for a set period of time. In order to participate in an SOA, the public body must have been identified as a participant prior to the close of the bidding process. If your public body is not a participant in an SOA, you should still review the commodities that are available through the agreement to identify whether they could better meet your needs in the future. Taking advantage of economies of scale to achieve better pricing and creating process efficiencies facilitates the achievement of value for money. More information on SOA’s is provided in Section 3.6.7.
If you are not purchasing from an SOA, the next step is to determine which approvals are required and when they will be required to ensure the procurement process can be carried out in a timely manner using the appropriate procurement method. All approvals should be granted prior to proceeding with a procurement to ensure the necessary support for the procurement exists.
Determine specifications for the commodity. Detailed generic specifications identifying performance and functional requirements should be developed to encourage competition and ensure best value is achieved. Brand names or equivalencies may be suggested in conjunction with the specification under certain circumstances, however, it is important to ensure that equivalencies of brand names are considered and accepted in the evaluation process. The specifications shall be clear and concise to ensure the commodity meets the actual needs of the public body and personal preference shall not be considered in the process. If necessary, consider using a Request for Information to assist in this process.
The terms and conditions of the solicitation as well as the selection and evaluation criteria should clearly reflect what is expected of suppliers and how they will be evaluated. For clarity, evaluation criteria must include the methods of weighting, unless price is the sole criterion. The terms and conditions shall specify the deliverables such as contract period, delivery requirements, and maintenance and storage requirements, etc. When estimating the delivery requirements for a procurement, consideration should be given to the following factors: the complexity of the procurement, the nature of the commodity – whether it is available locally or does it have to be manufactured; the method of transportation used to obtain the product, etc. Use clear, concise and plain language in the documents to ensure clarity and avoid disputes. This eliminates any misinterpretations of the solicitation.
3. Estimated Value
The estimated value shall be based on current market information. Procurement officials may utilize any available means to determine a legitimate estimate including research on the internet; current pricing in the marketplace; or a recent purchase, preferably from a competitive situation, conducted by the public body or another public body. An estimated value for complex procurements may also be determined through a Request for Information or through professional consultation. In calculating the estimated value, the public body shall take into account all forms of remuneration including premiums, fees, commissions and interest and delivery.
- Estimated values will be exclusive of HST.
- An estimated value shall be based on the entire length of the contract, including renewal options.
- When total cost of ownership or life cycle costing will be utilized in the evaluation process, this shall be considered in the estimated value.
- If a legitimate estimate cannot be determined for a procurement, then an open call for bids shall be issued.
- If a legitimate estimate is close to the threshold values consider an open call for bids.
- If a single procurement includes a combination of goods and services, the public body shall determine the estimated value for each component of the procurement (ie. goods ($10,000) + services ($2,000) = $12,000). In determining whether an open call for bids is required, the threshold for the component which represents the larger portion of the cost of the procurement will govern. For the example given above, an open call for bids would be issued as the threshold for goods, which represents the larger portion of the procurement, is $10,000 even though the open call for bids threshold for services is $50,000.
- If the procurement is for a public work, the public body shall include the value of all goods and services to be supplied by the supplier in the estimated value. The procurement of goods or services outside the scope of a public works contract is not considered to be procurement for construction, and is subject to the thresholds applicable to goods or services.
- If a public body is uncertain as to whether a procurement is a good, service, or public work, the Agency may be contacted for an opinion.
4. Splitting or Underestimating Requirements
A public body shall not split or underestimate requirements in order to avoid issuing an open call for bids. Once a legitimate estimate has been determined for a requirement officials shall not divide quantities into smaller portions. If a procurement official identifies multiple requests for the same commodity, the requirements should be combined to take advantage of volume purchasing and achieve better value and ensure the appropriate process is followed.
5. Planning Tools
1. Request for Information
A Request for Information (RFI) is a research and information gathering tool used to learn about the options available for addressing a particular need or want. It assists with obtaining information to help create viable requirements for a particular solicitation. An RFI can be used to determine if there is sufficient supplier interest to justify proceeding with a competitive procurement process and/or to gain additional information about a particular good or service, as well as the availability and performance of the good or service. The RFI process is designed to gather information that can aid in the development of a future solicitation. It is not designed to solicit bids or proposals; therefore it is not intended to nor does it lead directly to a contract. A response to an RFI does not pre-qualify a potential contractor on any subsequent opportunity and shall not be used to shortlist suppliers. The information requested shall be deemed to be non-proprietary as the intention may be to utilize this information in a future solicitation.
The information gathered will help plan a fair and cost-effective solicitation process, define the requirements for the solicitation documents, or identify whether there are interested suppliers. RFI documents need to be customized to the unique need of each procurement opportunity.
An RFI should at least include the following:
- A description of the RFI process that suppliers will be engaging in, including any terms and conditions;
- An explanation of why the requested information is of interest to the public body;
- A statement that the public body will not be under any obligation to advise any respondent to the RFI of the issuance of any subsequent bidding documents and that it is incumbent on all suppliers to monitor the electronic notification system to find out about the posting of any subsequent bidding documents;
- A description of the anticipated project scope if departments are seeking specific interests; and
- The type of procurement process that may follow, if possible.
The public body may request the following type of information through an RFI:
- A company profile, including business capabilities and capacities, technical and project management capabilities and staff qualifications;
- Information on the types of goods or services available that may meet the public body’s requirements;
- General pricing information that may be used in determining an estimated value. It is important not to request firm prices at this stage of the process; and
- Other information as the public body, in consultation with the CPO, may request.
An RFI should be advertised on the electronic notification system. This will ensure that all potential suppliers are aware of the opportunity to submit a response. The PPA can provide a sample RFI template upon request. Email PPAReporting@gov.nl.ca to request a copy of the template. A copy of the template is also available internally on the Government Intranet.
2. Request for Expressions of Interest
A Request for Expressions of Interest (RFEI) allows a public body to gather information about supplier interest in an opportunity or information about supplier capabilities and qualifications. An RFEI may be used to clarify the ability of the supplier community to provide the necessary services or solutions. An RFEI is normally the first, preliminary stage in a multi-stage competitive process. The RFEI process is designed to gather information that can aid in the development of a future solicitation. It is not designed to solicit bids or proposals; therefore, it is not intended to nor does it lead directly to a contract. A response to an RFEI does not pre-qualify a potential contractor on any subsequent opportunity. The information requested shall be deemed to be non-proprietary as the intention may be to utilize this information in a future solicitation.
RFEI documents need to be customized to the unique need of each procurement opportunity. An RFEI should at least include the following:
- A description of the RFEI process that suppliers will be engaging in, including any terms and conditions;
- An explanation of why the requested information is of interest to the public body;
- A statement that the public body will not be under any obligation to advise any respondent to the RFEI of the issuance if any subsequent bidding documents, and that it is incumbent on all suppliers to monitor the electronic notification system to find out about the posting of any subsequent bidding documents;
- A description of the anticipated project scope if public bodies are seeking specific interests; and
- The type of procurement process that may follow, if possible, such as an Invitation to Tender or a Request for Proposals.
The public body may request the following type of information through an RFEI:
- A company profile, including business capabilities and capacities, technical and project management capabilities and staff qualifications;
- Information on the types of goods or services available that may meet your requirements; and
- Other information as the public body, in consultation with the CPO, may request.
An RFEI should be advertised on the electronic notification system.
3. Advance Contract Award Notice
An Advance Contract Award Notice (ACAN) is a public notice indicating to the supplier community that a department or agency intends to award a good, service or construction contract to a pre-identified supplier.
ACANs are designed to enhance transparency in potential sole source and direct award procurement situations and to identify other possible sources of supply of the goods and/or services. It identifies the rationale for the proposed sole source, but also invites the supplier community to provide alternatives, or for previously unknown sources of supply, to respond to the procurement opportunity.
An ACAN cannot be used as a tool to avoid conducting a competition. ACANs cannot be used in place of traditional bidding procedures when it is clear that more than one supplier exists that can provide the commodity proposed.
When public bodies suspect that they are in a sole source or direct purchase position above open call thresholds, an ACAN may be used before the direct award is made.
The ACAN is not a competitive process, and does not constitute a competitive process. The ACAN operates as a notice identifying that a direct award is expected to be undertaken, but also invites suppliers to reply indicating their ability to meet the requirements as set out in the ACAN.
The ACAN typically includes the following information:
- The name of the public body initiating the ACAN and summary of the requirement;
- The name of the potential supplier, including address;
- Delivery date(s) and/or the period of the proposed contract, including extension options;
- Rationale for the ACAN, demonstrating why the selected supplier has been identified as the only supplier capable of meeting the requirements;
- A full description of the problem to be addressed and the commodity to be provided. This may include tasks to be performed, objectives, expected results, performance standards, constraints and deliverables. For example:
- For goods, a full description of the relevant physical, functional, or other mandatory technical requirements including performance requirements.
- For services and construction, a full description of the services to be provided, objectives, expected results, mandatory technical requirements, performance standards and deliverables.
- An explanation on how suppliers can challenge an ACAN;
- Closing date for accepting statements of capabilities including the time of day;
- An explanation on how the procurement process will proceed with and without ACAN responses;
- Notification indicating that any responses received after the closing date and time will not be considered; and
- Contact details for inquiries and where responses can be submitted.
The ACAN shall be made public by posting on the electronic notification system. The ACAN must be posted for 10 business days.
If during the posting period, a supplier(s) submits a statement of capabilities that does not meet the requirements set out in the ACAN, suppliers should be advised in writing of the decision to reject the statement of capabilities. Debriefings must be offered to these suppliers.
If during the posting period, a supplier(s) submits a statement of capabilities demonstrating that it meets the requirements set out in the ACAN, public bodies must prepare the appropriate procurement documents and publicly advertise the procurement opportunity.
If, during the posting period, no supplier submits a statement of capabilities demonstrating that it meets the requirements set out in the ACAN, the public body may proceed to sole-source the commodity to the identified supplier.
The PPA can provide a sample ACAN template upon request. Email PPAReporting@gov.nl.ca to request a copy of the template. A copy of the template is also available internally on the Government Intranet.
6. Selection of Procurement Strategy
1. General
Determining an appropriate method for acquiring a commodity is an integral part of the planning process and is based on a number of key factors such as: the type of commodity being acquired; the estimated cost; risks associated with the acquisition; and marketplace considerations. The Regulations provide guidance on the tools available for various acquisitions. These are provided below.
2. Invitation to Tender (ITT)
The Invitation to Tender is a common format used by public bodies when acquiring goods and services. The ITT is a legally binding document in which the rules for bidding are clearly defined. It establishes requirements including a description of the commodity required, evaluation criteria, closing times and dates for submissions to be received, delivery conditions, bonding requirements, etc. The ITT establishes rules to which both the supplier and the public body shall adhere.
- The ITT focuses the evaluation predominantly on price, specifications, terms and conditions and delivery requirements.
- The successful bidder is normally the one who submits the lowest cost bid meeting all terms, conditions, specifications, and delivery requirements.
- The ITT does not contemplate any negotiations. The PPA can provide a sample ITT template upon request. Email PPAReporting@gov.nl.ca to request a copy of the template. A copy of the template is also available internally on the Government Intranet.
3. Request for Proposals (RFP)
A Request for Proposals is used to invite submissions when the requirement is of a complex or unique nature and all or part of the requirements cannot be precisely defined. A RFP may also be used when requirements are fully known however the evaluation is comprised of a number of factors in addition to price to ensure best value is obtained.
The RFP document provides suppliers with an overview of the perceived or expected requirements. It also provides general public body information and the scope of work that is being contemplated. The evaluation criteria are also disclosed in the RFP and provide suppliers with detailed information on how their submissions will be evaluated and scored. The evaluation criteria, which must include the methods of weighting, are also disclosed in the RFP and provide suppliers with detailed information on how their submissions will be evaluated and scored. In accordance with the Act the highest ranking proposal will be deemed to be the preferred supplier.
RFP’s may take many forms, from a mainstream RFP with no negotiation to RFP’s which permit various forms of negotiation. These range from concurrent negotiations to consecutive negotiations. Under concurrent negotiations more than one supplier is engaged at a time and suppliers are encouraged to present a best and final offer after discussions with the public body officials. The consecutive negotiation process involves a public body negotiating with the highest ranking proponent first to determine if a contract can be established. If a contract cannot be formed then the public body may negotiate with the second ranked proponent and so on in order of ranking.
It is important to note that all information regarding the type of RFP that will be utilized is to be clearly articulated and disclosed in the documents such that all suppliers are fully aware of the rules that apply. Public bodies should consult with their legal counsel on any questions or concerns on the drafting of a RFP. The PPA can provide a sample RFP template upon request. Email PPAReporting@gov.nl.ca to request a copy of the template. A copy of the template is also available internally on the Government Intranet.
4. Request for Quotations (RFQ)
A Request for Quotations is a document used for the solicitation of price and delivery information for a specified commodity. The RFQ is normally used for low dollar acquisitions below the established open call thresholds for standard commodities that have minimum specifications and for off-the-shelf items. The document does not contain elaborate terms and conditions and should be awarded to the lowest price bid for the commodity that was requested. The PPA can provide a sample RFQ template upon request. Email PPAReporting@gov.nl.ca to request a copy of the template. A copy of the template is also available internally on the Government Intranet.
5. Direct Awards
A direct award is a contract that is awarded directly to a supplier without a competitive procurement. This type of award is normally made in the case of a sole source procurement. However, other situations such as an emergency may dictate the need for a direct award to a single supplier. In instances where the direct award procedure is utilized, a public body may negotiate a detailed contract with the supplier to ensure best value is obtained. Public bodies, through a detailed planning process, should ensure that the sole source supplier chosen for a direct award is the only supplier reasonably available to supply the required commodity. The rationale and justification for acquisitions made through a direct award process shall be clearly documented and such documentation shall be maintained in the procurement file. See section 7.2 for situations that constitute a sole source acquisition.
6. Request for Supplier Qualifications (RFSQs)
A Request for Supplier Qualifications is an open call to pre-qualify suppliers for an upcoming procurement or to establish a pre-qualified supplier list for undetermined future procurements. The RFSQs identifies the qualifications that the public body has identified as necessary for suppliers to be considered for future procurements. Suppliers who meet all the requirements of the RFSQs as well as all the qualifications, will be considered for future procurements. The utilization of RFSQs reduces the effort required in the evaluation of future opportunities and provides an efficient methodology for determining successful suppliers.
The method of selection from the pre-qualified supplier list for future procurements shall be identified in the RFSQs. See section 6.2 below for further information on pre-qualified supplier lists. The PPA can provide a sample RFSQ template upon request. Email PPAReporting@gov.nl.ca to request a copy of the template. A copy of the template is also available internally on the Government Intranet.
7. Standing Offer Agreement (SOA)
An SOA is a supply agreement that enables a public official to order directly from suppliers over a specific period of time at prescribed prices and terms and conditions. Quantities are approximate, for estimation only and shall be requested on an “as and when required” basis for a specified period. Multiple acquisitions can be made through a SOA; however, there is no guarantee that any minimum purchase volumes will be reached through a SOA. This type of agreement normally follows the open call for bids process and is usually set up for frequently used items. More than one SOA may be established to ensure continuity of supply and solicitation documents should identity if more than one award will be made. There may be situations where the SOA is sole source due to the nature of the commodity and the requirement. In such cases public bodies shall abide by the established rules for sole source acquisitions.
SOAs often provide better prices due to bulk purchases and provide for a more efficient provision of the commodity. They also reduce administration costs by eliminating the requirement for the user to go through the procurement cycle each time a need is recognized. SOAs also decrease overall inventory costs.
7. Timing of Procurement
Early and efficient planning shall ensure the procurement is made in sufficient time to ensure a competitive process in accordance with the framework. Public bodies shall keep in mind that a specific amount of time is required to complete the procurement process. Planning shall not be left to the last minute thereby resulting in the acquisition of a commodity without benefit of a competitive process due to poor planning. Poor planning is not a legitimate reason for awarding a contract without an open competition. Enough time shall be allotted to prepare documents, issue call for bids, evaluate bids and award the contract, while permitting time for delivery.
The estimated value of the procurement will have an impact on the timing of the procurement since generally commodities below the thresholds would require less time to process than commodities above the thresholds. Higher valued acquisitions normally require more detailed specifications and evaluation processes and would require additional time for all involved in the process.
A public body may, before issuing an open or limited call for bids, issue an RFI to determine what commodities are available in the marketplace or to obtain information required for the effective design and conduct of a proposed procurement. It may also issue an RFEI to determine the level of supplier interest or availability for a proposed procurement. The information gathered will help plan a fair and cost-effective solicitation process, define the requirements for the solicitation documents, or identify whether there are interested suppliers. These processes should also be factored into any decisions regarding the length of time for a procurement process.
8. Conflict of Interest
All solicitation documents should identify to suppliers that Conflict of Interest rules apply and where suppliers may access any legislation, policies or rules that may apply.
Additionally, all employees of public bodies shall be fully aware of all conflict of interest legislation, policies or rules that may apply if they are involved in any part of a procurement process.
9. Single Point of Contact
All solicitation documents shall clearly identify a single source of contact for each procurement. Suppliers shall be advised that all communication regarding a specific procurement shall be through the individual identified on the document and any other communication or information received from any other individual shall not be considered binding on the public body. When communicating with suppliers, public bodies shall ensure that identical information is provided to all suppliers.