That's not fair! Or is
by Catherine Morrison
It appears that the fairness business is not about to go into eclipse anytime in the near future, particularly with intense competition shaping up for a piece of the Government On-Line (GOL) pie. Suppliers may need those government contracts, but to make good on its promise to deliver GOL on time, the government equally needs those suppliers. It doesn't need a raft of appeals holding up the 2004 delivery date.
"Fairness," says Gerald Smeltzer, "is core to the process. Yes, it's a legal obligation, but it's a business obligation too. You need the good will of your suppliers. The ultimate fairness monitors in contracting are the courts and the Canadian International Trade Tribunal [CITT]."
Smeltzer, a lawyer by training, has been senior partner in National Education Consulting Inc. (NECI) for the past 10 years. Victoria-based NECI specializes in contract management training and a big part of its business is providing fairness monitoring and advice to public sector procurement agencies.
According to Smeltzer, the CITT has played a big role in the emergence of fairness as a contracting issue to be reckoned with. The CITT, established in 1988, replaced the Canadian Import Tribunal, the Tariff Board and the Textile and Clothing Board. The tribunal acts as the bid challenge authority under NAFTA, the Agreement on Internal Trade and the World Trade Organization Agreement on Government Procurement. Following implementation of NAFTA in 1994, the tribunal also became Canada's bid challenge authority with respect to federal government procurement, replacing the Procurement Review Board of Canada.
"It has taken a while for suppliers to understand the CITT's domestic role - to see that it has real teeth and is prepared to use them," says Smeltzer. "These days, 80 percent of the disputes the CITT sees come from Canadian-based procurement." And the CITT will render a decision within 90 days - compared to the courts, which can take as long as two years.
The other factor contributing to the current fairness-sensitive environment is that public sector institutions, particularly at the federal level, are increasingly contracting out vast numbers of services previously done in-house. The stakes are high; competition for these lucrative contracts is fierce and the bidding process is complex.
Contracting can be a major driver of the nation's economy. As the recent downturn in the technology sector reverberates throughout the economy, technology suppliers are turning to the multi-billion-dollar possibilities offered by the federal GOL agenda. According to the Ottawa Citizen (April 20, 2001), nearly 300 technology companies committed money and human resources to prepare and submit bids to get onto the supplier list for GOL services.
According to Jean Lacelle, director of Professional Services Procurement for Public Works and Government Services Canada (PWGSC), 20 to 30 percent of major contracts are challenged in the courts or the CITT. Projects then are delayed, as in the case of the switch to privately supplied services to the Canadian Forces Base at Goose Bay, Labrador in 1997 - held up for 135 days by a challenge lodged with CITT. Lacelle feels that use of a fairness monitor in this case, contributed to the CITT finding in favour of the government.
Potential delays and additional costs, not to mention the ill-will in the supplier community resulting from the challenges, are causing governments and other public sector institutions to turn to fairness advisors and fairness monitors to help them make the bidding process as transparent, objective and impartial as possible.
Steve Whitlaw is a forensic accountant with Kroll, Lindquist, Avey, a company that specializes in sensitive government investigative work. He has been the fairness monitor on four multi-million-dollar federal contracts since 1996-97. He did his first stint on the qualification and proposal phases of the Real Property Management contract for over $200 million in government facilities management - the first federal contracting process to use a fairness monitor. According to Whitlaw, the contract manger was "a bit antsy about having me on board, but he became a convert and has hired me a couple of times since then." The project was cited by the Auditor General, says Whitlaw, as a model for fairness in federal contracting.
So what, exactly, is fairness monitoring? While a relatively recent phenomenon in Canada, it goes back somewhat further in Britain and Australia. In 1996, the federal government used the Australian model, says Whitlaw, for the Real Property Management bidding process. At the front end of the process, fairness advisors, and sometimes even the fairness monitor hired for the bidding process, will provide input during the drafting phase of the RFP so that fairness principles and checks can be built in from the get-go.
Late in 2000, a Request for Proposal (RFP) was tendered for fairness monitoring on the evaluation of bids related to the Supply Chain Management contract for non-core services to the Department of National Defense (DND). The RFP described the fairness monitor's role:
According to Lacelle, supply chain management for DND is the largest alternate service delivery project ever to be outsourced by the federal government. It is complex and sensitive not only because of its size - billions of dollars over the years - but also because of its human resources aspect. According to the terms of the RFP, 70 percent of the 6,500 people currently supplying these services internally must receive offers of employment.
The need for transparency is enormous, and it should be a key part of any RFP written by government departments, says Lacelle. The use of a fairness monitor, he says, "serves to add a layer of comfort, both to the procurement agency and to the supplier."
Gerald Smeltzer's approach to fairness goes beyond simply monitoring it once the bid review is underway. His company of fairness advisors may be called in to educate an organization's suppliers on the intricacies of the bidding process, for example, ensuring a level playing field in terms of understanding the rules of the game. When the Hamilton Regional Health Sciences Centre implemented a new RFP process recently, the director of Materials Management, Jacques Arvisais, hired NECI to give a workshop to suppliers on the new process.
Once a contract is awarded, NECI may be brought in to deliver a debriefing on the process to unsuccessful bidders, so as to head off potential challenges. "For the contracting agency, a debriefing is preferable to litigation any day," says Smeltzer.
BC Transit delivers fairness
Recently Maureen Sullivan, a partner at National Education Consulting Inc. (NECI), acted as fairness monitor for BC Transit on a series of highly competitive Request for Proposals (RFPs). Her deliverables are summarized here.
Reprinted from The Legal Edge
Catherine Morrison is a writer based in Chelsea, Quebec. Her work is also published in the Ottawa Citizen and the Globe and Mail's print and online editions, as well as in Canadian Consumer, Asia Pacific Magazine, the Edmonton Journal and C.A.R.P. Magazine. She was a full-time writer/broadcaster for CBC Network Television and CBC TV and Radio, Winnipeg and a contributing editor and columnist for Winnipeg Magazine.