Why should mandatory requirements need to be defensible? In the Canadian public sector, there is an expectation that best value will be derived through competitive bidding. Competitive bids are enhanced when there are a good number of competent suppliers in any category. However, public buyers are aware that in many sectors, while there is competition, there is also a need to raise the performance bar. Not only in the pricing but in the service delivery criteria. If a public entity uses restrictive mandatory requirements, they will need to be able to justify why they selected the applicable criterion as being mandatory. Was it to favour or exclude a certain group of bidders? Do the mandatory requirements actually deter competition or increase the value proposition for the public entity? Those potential bidders and stakeholders should be satisfied that any set of mandatory criteria are objective in nature and not intended to harm the competitive field.
Contract A mandatory requirements:
These are the non-performance-based criteria, which is the basic information being solicited to ensure there is a Contract A being formed. Typically, these mandatories are meeting the closing date/time as stated; signed by an authorized representative of the bidding organization; the documents are received in the proper format; or other criteria which the entity deems necessary to be able to comply with a Contract A being formed. These criteria are relatively easy to check and allow the evaluation process to proceed to the next level. A simple yes or no assessment of the information supplied must be taken. In the case of non-mandatory requirements being scored, there could be a minimum score required – that means that the minimum score threshold becomes mandatory.
Any submission which fails to meet any of the mandatory criteria must be declared non-compliant. The Ron Engineering & Construction decision in 1981 is the seminal case which addressed this issue. Any public entity could rely on this ruling to defend a decision to not accept a non-compliant bid. This type of mandatory criteria is required at the bid closing.
Contract B mandatory requirements:
The mandatory criteria will consider such issues as past performance; number of years in business; the capacity of a potential bidder to service the required volume; have the proven technical expertise to meet the performance requirements of the contract. Performance requirements could be engineering-based; IT compatibility; hours of operation; contingency plans; ability to meet environmental standards; ability to provide bid and / or performance bonds; or commitments to social development strategies, for example.
Evaluators, again, should be able to review the information provided by the bidders and confirm a pass/fail assessment that a Contract B could be entered into. These types of defensible mandatory criteria can only be fully assessed after the closing period and before awarding the contract.
Trade agreements:
Each trade agreement will have specific clauses which expressly forbid public entities from giving stated preferences for suppliers or the use of technical requirements which eliminate other potential bidders. Generally, these would be not defensible. As international trade agreements are being negotiated and renewed, the use of mandatory requirements should align with the latest legislation to ensure that a public entity is not in breach of its own bidding requirements.
There are also specific clauses in trade agreements which do favour local suppliers or economic development. Public buyers need to be aware of the competitive tools which are available within the specific trade agreements which support competition.
Public stakeholders:
In urban municipalities, as well as provincial and federal procurement offices, there is a cadre of competent public procurement officials. Within smaller communities, procurement responsibilities are left to locally elected officials to conduct business on behalf of the community. While these individuals have the best of intentions, they are not current with public procurement obligations. Many times, public officials have been directly involved in developing bidding documents; drafting the evaluation criteria; scoring the bid criteria and mandatories; and with the contract award to a successful bidder. This is contrary to the best interests of the public. There is no objective way to measure the value proposition when bidding procedures are not followed, in accordance with legislation. Further, when determining the mandatory criteria, smaller communities have been found to have a thumb on the scale which favours local businesses. That is not defensible.
Performance bonds:
Performance bonds are a good way for public sector entities to have financial protection should a contractor fail to complete a contract. The bonding or surety company will bear the financial risk if a contractor fails to perform as per the contract, and therefore, they do their due diligence before issuing a bond on behalf of the contractor. If the public entity sets a performance bond threshold at $5,000,000, this could eliminate smaller and capable contractors from participating on contracts. If there is a policy mandating a much higher bond value, which reduces potential bidders unnecessarily, that would be difficult to defend. Any potential bidder who cannot meet the bonding requirements, regardless of their qualifications, would have to be considered non-compliant. There is little value for mandating a punitive amount, which would only favour larger contractors or suppliers. Another option to the performance bond, is the use of irrevocable letters of credit from a Canadian bank or financial institution. This option is defensible on the part of the public buying entity as it allows for businesses with lesser experience to participate in a bidding process, while addressing financial risks. A very useful tool for smaller communities.
Mandatory clause language:
Bidders need clarity in order to properly draft a competitive response. If a public entity said we would “like to have a project completed by a specific date”, that is inadequate to hold any contractor liable. Mandatory terms should be prefaced by “must,” “shall,” “will”, or “is required to”. Terms cannot be ambiguous or conditional. Ambiguity is subjective and is not defensible.
Public Procurement In Canada:
Procurement professionals play a pivotal role in the public procurement world. These experts are well-equipped with the knowledge and skills needed to navigate the intricacies of procurement processes. Whether you’re looking to enhance your procurement acumen through procurement management courses or seeking valuable insights through procurement webinars, the landscape for public procurement offers many opportunities to explore.
The Procurement School encompasses a wide range of activities aimed at achieving the best value for taxpayer money. Procurement service providers work closely with public sector procurement consultants to streamline processes, maintain transparency, and uphold ethical standards. This collaborative effort ensures that the procurement landscape remains fair, competitive, and cost-effective.
Obtaining a procurement certification or a purchasing certificate can be a wise decision for those aspiring to excel in public procurement. These certifications validate your expertise and demonstrate your commitment to professionalism in the procurement arena. Procurement professionals are highly regarded for their ability to make informed decisions that benefit both the public and the government agencies they serve.
Public procurement is not just about acquiring goods and services; it’s about contributing to the well-being of communities and the country. The individuals in this field understand the significance of their roles and strive to uphold the highest standards of ethics and accountability.
Whether you’re a seasoned procurement professional or just starting your journey, the public procurement landscape offers a wealth of opportunities for growth and development. From procurement management courses to ongoing procurement webinars, resources are available to help you stay informed and up-to-date with the ever-evolving world of procurement.
Written by: Larry Berglund