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Loosening the noose of procurement policy
Canada Customs and Revenue Agency has been busy 
changing procurement policy to suit itself.

by Gord McIntosh

The creation of the Canada Customs and Revenue Agency (CCRA) in 1999 from the former government department, Revenue Canada, meant profound changes for government suppliers and vendors. As an agency, CCRA became free of the rules and obligations governing the central contracting services of Public Works and Government Services Canada (PWGSC) under guidelines issued by the Treasury Board Secretariat (TBS). And, as the biggest buyer of IT in the federal bureaucracy, how CCRA uses its emancipation is of more than passing interest.

Like all federal departments and most Crown corporations and agencies, CCRA procurement policies still remain under the jurisdiction of the North American Free Trade Agreement (NAFTA) and the federal-provincial Agreement on Internal Trade (AIT). Thus the Canadian International Trade Tribunal (CITT) continues to have the power to review CCRA procurement.

In procurement circles, the former government department of Revenue Canada was known for its inclination to do its own thing, causing some legendary disputes with PWGSC. Revenue Canada's feistiness and spirit of independence hit the wall in 1998 when the CITT rebuked it for the way it had treated Corel Corp. In unusually frank language, the CITT concluded the department had deliberately stacked the deck against Corel in a major IT procurement and attempted to "prejudice the procurement system."

In the end, Revenue Canada's conduct in the Corel case cost the taxpayers a $10-million settlement and, having been publicly rebuked by the procurement system's chief referee, a lot of credibility. As a result, CCRA is being closed watched.

Deirdre Kerr-Perrott, director general of materiel management, says CCRA turned over a new leaf and wants to be on friendlier terms with vendors and suppliers.

A cornerstone of the new supplier-friendly environment will be consultation in advance about the contents of formal Requests for Proposals (RFPs), either in the form of extra transparency in letters of interest or actual draft RFPs, she says. "We like to have their involvement, seeing the RFPs and telling us where we can improve them. I see trying to work with them. We've had vendor-briefing sessions, depending on the size of the contract and the importance of it," says Kerr-Perrott. "Do the planning up front to have the best possible potential for getting the right product. We often have vendors coming to us and saying they have better solutions than what we are proposing."

CCRA is trying to put the Corel case behind it in another way. Kerr-Perrott says there are internal deliberations about dispute resolution and development of alternatives so that a supplier may not need to haul the agency before the CITT. Says Kerr-Perrott, "A big focus of that is, how do you prevent problems from starting and how do you remedy problems when they do start? How do you develop better relationships?"

The agency has issued an RFP for new training manuals. They will become the curriculum for eight courses to train managers and staff in procurement practices. Whichever supplier gets to produce these manuals will have some challenging and character-building days ahead because procurement procedures at CCRA are very much a work in progress. Kerr-Perrott acknowledges her agency is still using many TBS guidelines while it continues to develop its own. "We certainly haven't gone off and totally rewritten everything."

Procurement practice at the new agency will need constant watching and careful strategic planning for years to come before it is clear just what sort of creature will evolve. There is already some confusion over who is doing what. CCRA briefly flirted with the idea of separating general corporate procurement from informatics. Until last June, the IT branch was doing its own procurement while a corporate procurement wing was doing the rest.

Things may have been progressing with the assumption that CCRA would be free to follow the degree of independence that the Bank of Canada enjoys. But the reality is that there is really no one-size-fits-all transition model for federal agencies to follow.

"I don't think they have sorted it all out yet," says Ottawa procurement consultant David Swift of Cartier Consulting. "There are inconsistencies among the various policies. So it's very difficult to determine depending on the governing legislation who's affected by what and who isn't. It's not uniform. It really does depend on many things. It depends on the agreement or the specific policy you're talking about. It depends on the language used to draft the governing legislation."

Kerr-Perrott says the CCRA currently has no exemptions from NAFTA or the AIT. But there are rumours that the agency will seek exemptions in much the way the Export Development Corporation has been able to win relief from most of NAFTA.

There has never really been a strategic procurement policy in Canada. Instead it has evolved in relation to other developments. A case in point is how Ottawa, under NAFTA, was forced to mandate the CITT as a sort of small claims court for government suppliers. The new CCRA is a reflection of that overall condition.

"Nobody really thought about this and said, 'Here's the strategic procurement framework for every federal agency under the sun,' " says Swift. "It's evolved over time; a treaty is negotiated; new policies, agencies are spun off."

Gord McIntosh is a freelance journalist based in Ottawa, Ontario. He worked for over 20 years with The Canadian Press specializing in trade and finance and has been published in The Economist and Canadian Business, among others.



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