Procurement Management Manual
4.0 Procurement Process
The following provides details of the Activities, Inputs, Tools and Techniques and Outputs for each of the Processes of the Procurement Management.
The Processes are:
4.1 Overview Table
This table identifies the number of inputs, tools and techniques and outputs required within each procurement process.
|Process||Inputs||Tools and Techniques||Outputs|
- Requirements Definition
- Internal and external resources
- Procurement management plan
- Procurement management plan
- Bidder conferences
- Procurement documents
|Administer the Contract||
- Project Plan
- Contract change control system
- Procurement documentation /Correspondence
- Project Plan update
- Procurement audits
- Contract file
4.2 Plan Procurement
This is the process of identifying which project needs are best met by procuring services from the private sector. It is undertaken during the scope definition phase and involves consideration of whether or not to procure, how to procure, what to procure, how much to procure, and when to procure.
This process involves the preparation of the documents needed to support Invitations. PWGSC, as the primary owner of federal real properties, undertakes substantial amounts of procurement of real property services. As a result, it has developed standardized procurement documents in consultation with the Professional Associations of Architects and Engineers and also the Canadian Construction Association.
Bids and proposals are received from prospective proponents detailing how project needs can be met. Most of the actual effort in this process is expended by the proponents, normally at no cost to the project. The Project Management institute's Guide to Project management Body of Knowledge, now calls these Invitation to Sellers as generic nomenclature to simplify terminology and ensure it is understood in any language.
- When the client sends the requirements to the Project Manager, the contract requirements are defined at the same time; verify that the funds have been identified and signed by the client under Section 32 of the FAA;
- Review the estimates and determine the dollar value and the authority level required; contact the Contract Authority to inform them of the upcoming requirement;
- Discuss with Contract Authority the potential contracting process. Although still early in the process, it will provide an opportunity to include the timeframes in the project plan, assist in the preparation of the procurement plan for the project plan and for the documentation the contracting officer will have to prepare;
- The statement of requirements;
- Identify Security requirements with the Security Requirement Checklist;
- Develop the Risk Management plan or if already done, integrate contract risks, with mitigation strategy and potential costs; this will be used to determine the level of authority required for the Pre-Approved Amended Authorities, if required.
Scope statement: describes project needs, strategies and boundaries.
Project description: description of the project and technical issues/concerns must be included on, or in addition to, the Requisition for Goods and Services (9200).
Risk Management Plan: description of the various risks, prioritized, their associated potential costs, if the event occurs and their mitigation strategy and costs of mitigation. This plan and related checklist and establishment of pre-approved amounts for anticipated amendments (PAAA) based on the plan are essential.
Project security requirements: identification of security requirements for firms and individuals contracted for the project must be reviewed and identified on the Requisition for Goods and Services form, along with the applicable Security Requirements Checklist (350-103).
Market conditions: consideration as to what product/services are available, from whom, and under what terms and conditions.
Cost estimates and schedule: provide a preliminary cost estimate and schedule.
Project approval: For all PWGSC projects a Preliminary Project Approval (PPA) is required to contract with a consultant to further develop the design and provide more detailed cost estimates. These cost estimates will be the basis to seek Effective Project Approval (EPA) to proceed to the tendering process for construction. For low dollar value PWGSC projects, the approval will be within the organization based on the Specific Service Agreement (SSA) (5031). All government organizations projects approvals are based on similar funding approval documents and are expected to be standardized under the Policy on Project Management.
Project Funding approval: Confirmation of funding and cash flow projections is required. Funding must be provided by the client and the Project Manager must ensure that these funds have been signed off under Section 32 of the FAA by their client.
Organizational Process Assets: Processes and procedures for conducting work available to the project team within the organization in which the project is being conducted, such as standard processes, policies, product life cycle, quality, standardized guidelines, templates, performance measurement criteria.
Other planning outputs: quality management plans, work breakdown structure, human resource plan for staffing etc.
Constraints identification: i.e. funding availability, project location, site conditions and restrictions, weather, etc.
Assumptions: factors that, for planning purposes, are considered to be possible or certain.
4.2.3 Tools and Techniques
Planning and analysis: is undertaken on the initial scope definition process to determine the optimum procurement strategy. Various investment analyses, cost benefit analysis, make-or-buy analysis (i.e. build, buy or lease a building) are undertaken; resourcing strategies (i.e. utilize internal professional and technical resources or contract with the private sector). Analysis should include both direct and indirect costs and reflect the perspective of the performing organization, as well as the immediate needs of the project.
Resource expertise: identify professional and technical resource discipline expertise required on the project team, including their roles and responsibilities; identify procurement resources assigned from RPC (whether partially or fully dedicated basis).
The use of other methodologies such as design build or construction management requires senior management approval and custom tailored contract documentation and processes.
Procurement Plan: (also called Procurement Management Plan) this plan may be detailed or broadly framed based on the size and complexity of the project. It is an element of the Project Plan and describes how the remaining procurement processes (from solicitation planning through contract close-out) will be managed, i.e.
- Types of contracts to be utilized (typically require individual contracts for professional and technical services (P&T), architectural and engineering services (A&E), and construction services).
- where independent estimates are required as evaluation criteria, identification of who will prepare them and when these estimates would be available
- roles and responsibilities of RPC and RPB organizations in the procurement process; identification of the change management process, processes for joint approval and exceptions where independent approvals suffice, etc.
- procurement documents to be utilized such as the P&T services contracts (short form or long form), A&E contracts, open agreements, standing offers, construction, whether electronic or manual format and where they may be accessed, etc.
- forms to be utilized, i.e., tender and acceptance forms, specifications, change orders, work orders, amendments, etc.
- strategies for the management of consultants, contractors, sub-contractors/suppliers
- interface with clients, and professional and technical disciplines.
Statement of Work (SOW): (also called statement of requirements (SOR), scope of work, project brief, terms of reference (TOR)): description of the services required to be procured in sufficient detail to allow prospective consultants and contractors to determine if they are capable of providing the service. It will also include any services required after the initial delivery of the goods or services, such as post project operational support for the product, training on the use of equipment etc. 'Sufficient detail' varies based on the nature of the project/needs of the client, or the expected contract form. This is to be included with the Requisition for Goods and Services (9200) to the Contracting Authority. The statement of work forms part of either:
- a Request for Proposals (RFP) when inviting proposals from consultants or
- project drawings and specifications when inviting construction tenders.
4.3 Conduct Procurement
1) With the Contracting Authority, discuss how the contract is going to be issued. The Contracting Authority will provide direction in the following areas:
- Competitive or sole source;
- Justification for sole source;
- Justification for limited tendering, by invitation only;
- Open on MERX, RFQ or RFP or ITT;
- Use of SELECT;
- Use of Standing Offers;
- Use of Supply Arrangements.
2) Once the approach has been determined, the appropriate documentation must be developed:
- Statement of Requirements will be refined, determine methodology of evaluation; develop evaluation criteria and review with Contracting Authority;
- Seek Project Authority for sign-off on the commitment of the funds under section 32 of the FAA;
- Complete the Security Requirements Checklist;
- Provide information package to Contracting Authority, the Contracting Authority will seek the required authorities to proceed to the solicitation ;
- The Contracting Authority will review the requisition and documentation for the elements to ensure the integrity of the contracting process such as:
- Reasonable closing date of suppliers to submit bids or proposals;
- Completeness of documentation; no trademarks or unique designs, which are not justifiable;
- Raise any questions with the Technical Authority, which is either the Project Manager or experts in specific fields;
3) The Contracting Authority will confirm the methods of procurement and authorities required for contract approval with the PM and prepare the documentation appropriate to the procurement plan; such as the Instructions to Bidders; the General Conditions, any Supplementary Conditions which may be required;
4) Translation of package; the Statement of Requirements and Evaluation Criteria should be sent to translation as early as possible;
5) Package is posted on MERX or sent to limited suppliers when Sole Source is required;
6) Respond to questions from bidders through the Contracting Authority;
7) Create a team to evaluate the proposals individually, then bring the evaluation team together to reach consensus if possible, if not, use majority vote;
8) All members of the evaluation team shall sign a confidentiality agreement and/or a conflict of interest;
9) Prepare evaluation of the submissions:
- Administrative review by the contracting authority;
- Technical review by experts;
- Summary report of evaluation and results.
10) Report submitted to Contracting Authority for sign-off by the evaluation team members;
11) Contract Authority will put together the package for contract sign-off, through the Contract Review Committee;
12) Acquire any other approvals required to issue the contract;
13) Contracting Authority awards contract to successful bidder;
14) Advise supplier that they must provide:
- a Performance Bond and a Labour and Materials Bond, usually if the requirement is higher than $100,000;
- proof of insurance;
- Workers Compensation certificate and;
- any other issues which must be addressed;
15) Notify unsuccessful bidders or post on MERX; advising suppliers of their right to have a debriefing if they wish and the recourse mechanisms available to them.
Procurement Plan: Refer to section 4.2 for Plan Procurement
Statement of Work and Statement of Requirements: Refer to section 4.2 for Plan Procurement
Construction Document: These are the plans and specifications prepared by the A&E consultant (or in-house designer) based on the 'National Master Specifications'. Once design and construction documents and Substantive (Class 'A') estimate is accepted from the consultant by RPB, they form part of the tender documents utilized to solicit tenders for construction from contractors.
Request for Proposals (Invitation to Sellers): utilized to solicit proposals from consultants. It consists of the 'Project Brief' (technical requirements) prepared by project managers, and the legal and contractual documentation prepared by contracting officers. Evaluation criteria to rate/score proposals and criteria to evaluate performance of the successful proponent is also prepared by both of the above parties.
Select Systems: PWGSC maintains lists of qualified consultants and contractors on its SELECT system. The system contains data on qualifications, licensing, experience, discipline expertise, etc. of individual firms. It is intended for low dollar value procurement and can be utilized for both competitive and non competitive procurement up to a value of $75 K for A&E and $100K for Construction.
For larger projects, with higher dollar values and above the Trade Agreements $75K thresholds, all requirements must be posted on the Government Electronic Tendering Services (GETS) to maximize public access to procurement opportunities. The service is administrated on the Internet under the name MERX .
Procurement documents: these are utilized to solicit proposals from prospective consultants and contractors. The terms 'bid' and 'quotation' are generally used when source selection decisions will be based on price, while the term 'proposal' is generally used when other considerations, such as technical skills or technical approach, are paramount. Common terminology for various types of procurement documents include: Invitations to Tender (ITT), Request for Proposal (RFP), Request for Quotation (RFQ), Request for Standing Offer (RSO).
Stakeholders/Resources Commitment: Identify the resources required to be involved in the evaluation process once bids are received and any additional expertise required.
Evaluation criteria: description of the criteria requirements which will be used to rate or score bids and proposals. The following are most commonly used criteria, provided as examples.
This table identifies the evaluation criteria to be utilized to rate and score bids or proposals and to evaluate contractual performance within the two types of contracts (construction and architectural and engineering services).
|Rate/score bids and proposals||Performance|
- project management
- achievements of proponents
- design concept
The criteria as described in the RFP serve as the basis to rank Contractor / Consultant proposals. As well, presentations and samples of the proponent's previous projects/services may be used to evaluate their capabilities and quality of services. They also may include a review of the proponent's history and verification of references.
Organizational Process Assets (policies): PWGSC has established procedures for the evaluation of tenders and proposals. These evaluations provide technical approvals from project managers and contract approvals from contracting officers before contracts may be awarded. The use of a formal 'Consultant Evaluation Board' for the review of A&E proposals is standard practice in RPB. Meetings are chaired by RPB with RPC acting as Board Administrator while the rating of proposals is conducted by RPB professionals.
4.3.3 Tools and Techniques
Bidders' conference: On a required basis, Bidders' conference are held before bids or proposals are received to ensure that all prospective consultants and contractors have a clear, common understanding of the procurement requirements (technical, contractual, environmental, etc.). They can be specifically held for consultants or for contractors/suppliers.
Bidders are invited to attend an information session about the requirement and have an opportunity to ask questions. Usually held if the requirement is complex and the client wants to make sure that the potential bidders/proponents understand what is expected. Minutes are taken and posted on MERX, if the requirement was posted on MERX. Where the requirement was sent to specific invited bidders, then all bidders will receive the minutes, whether they attended the session or not. Bidders do not usually have to be present, teleconferencing is also available.
Job Showings: Invitation to invited bidders to visit the work site to allow them to physically observe the actual work environment. These are often held to obtain quotations from contractors for minor repairs and maintenance works.
Advertising: GETS is actually an electronic bulletin board which places a Notice of Proposed Procurement permitting eligible firms to submit a proposal. In remote areas where GETS is not available, PWGSC places advertisements in general circulation publications such as newspapers or in specialty publications such as professional journals.
Selection methodology: Identification of the contract methodology chosen for the project. The design-bid-build methodology is the norm. Project managers (PM) solicit tenders from contractors since they know 'what' they want done and 'how' they want it done. Technical capabilities are mandatory and cost is the main determining evaluation criterion, with the “Lowest Technical Responsive Bid” being awarded the contract. However, for architectural and engineering (A&E) consultants, (PM's use a Request for Proposals (RFP) to encourage both competition and creative input from proponents. They detail the 'what', 'when', and 'why' but not the 'how'. Request for Proposals are used when RPB is looking for the solution to a problem and the solutions are expected to be varied and more complex to evaluate. Mandatory criteria, rated criteria and cost will be evaluated. Cost is not the main evaluation criterion, and the final selection of the proponent is expected to be based on a more complex process using a mix of technical merit and price.
Standard forms and contract documents: Identification of primary standard forms/contracts to be utilized is made in consultation with a contracting officer. These are described in the specific sections for each type of contract requirement.
Contract negotiation: Standard contract clauses have been mutually developed with the Canadian Construction Association (CCA) and Professional Associations which include, but are not limited to, responsibilities and authorities, applicable terms and law, technical and business management approaches, contract financing, and price. Refer to Standard Acquisition Clauses and Conditions (SACC manual) on PWGSC Web site.
Weighting system: Is a method used to evaluate qualitative criteria to minimize the effect of personal subjectivity during source selection. The system involves assigning a numerical weight to each of the evaluation criterion, rating proponents on each criterion, multiplying the weight by the rating, and totalling the resultant products to compute an overall score.
Screening system: Involves establishing minimum requirements of performance for one or more of the evaluation criteria. For example, a proponent might be required to propose a project manager who has specific qualifications, i.e. a PMP®, before the remainder of the proposal would be considered for evaluation.
Independent estimates: For all procurement items, RPB prepares its own independent estimates as a verification of on proposed pricing. Significant variances from these estimates may be an indication that the project brief/statement of work was not adequate or that the proponent either misunderstood or failed to respond fully to the project brief.
Bids: are offers made by contractors to perform specified services for a certain price. On construction contracts over $100K, the bidder must provide a bid bond or other acceptable bid security with their offer. The contractor awarded the contract must then replace bid security with a labour and material payment bond and a performance bond or other acceptable contract security. There may be various other related requirements such as insurance, health and safety certification etc.
Proposals: are documents prepared by consultants that describe their firm's ability and willingness to provide the requested product at a proposed cost. Proposals are prepared in accordance with the requirements of the relevant procurement documents and may be supplemented with an oral presentation.
The real property methodologies are described in the individual section addressing the specific requirements.
Sole Source contracts may be utilized for any type of contract ONLY if it meets one or more of the exceptions established in Treasury Board Contracting Policy, Section 10.2.1 and Government Contract Regulations (GCR) , Part I, Section 6:
- the estimated expenditure does not exceed $25,000 or $100,000, where the contract is for the acquisition of A&E services.
- a pressing emergency in which delay in taking action would be injurious to the public interest (see RPB 'Emergency Contracting Process').
- the nature of the work is such that it would not be in the public interest to solicit bids i.e., security issues etc.
- only one person or firm is capable of performing the contract.
Note: project managers should read Section 6 of the GCR's for more detail.
Construction Contract / Consultant Agreement: These documents are signed by the authorized representative of the firm and the contracting officer delegated with contract approval authority. The signed contract is a legal obligation of the two parties, the consultant/contractor must provide the specified services and RPB may pay for these services. Since real property contracts are standard, the review, approval and execution of the documents is normally a routine process.
Note: With the exception of a pressing emergency, when only one proponent is invited to submit a proposal, it is usually required that an Advance Contract Award Notice (ACAN) be posted on GETS for a period of 15 calendar days. This informs other firms of the intent to award on a sole source basis and provides opportunities for other firms to advise the Contracting Authority that there are, potentially, other firms capable of meeting the requirement.
4.4 Administer the Contract
This is the process of ensuring that the contractor/consultant's performance meets the contractual requirements. On larger projects with multiple contracted parties and resource expertise, managing the interfaces among the various providers is paramount.
The legal nature of contractual relationships makes it imperative that the project team be acutely aware of the legal implications of actions taken when administering the contract. Where consultants are engaged to provide project management services, they may recommend actions for RPB approval, but cannot authorize contracts, commitments, amendments, change orders or payments since they are not an employee nor an 'agent' of PWGSC. Contract administration includes application of the appropriate project management processes to the contractual relationship(s) and integration of the outputs from these processes into the overall management of the project. This integration and coordination often occurs at multiple levels when there are multiple consultants/contractors and multiple services involved. RPB promotes open communication with consultants and contractors to explain these processes
The key processes are:
- Project plan execution: to authorize consultant/contractor's work at the appropriate time
- Performance reporting: to monitor consultant/contractor cost, schedule, and technical performance
- Quality control: to inspect and verify the adequacy of the consultant/contractor's services
- Change control: to ensure that changes are properly approved and that all those with a need to know are aware of such changes.
Payment terms are defined within the contract and involve a specific linkage between contractor/ consultant progress.
- Pre-planning meeting: contractor, CA and PM and client to establish roles and responsibilities and review the Statement of Requirements and ensure that the contract starts with everyone understanding their role in the process;
- Once contract is in place, the PM will manage the execution of the work;
- Monitor and document progress of the contract with all its elements;
- Resolve any difficulties as soon as they are encountered. Document the problem and its resolution and send one copy to the Contracting Authority. If the problem cannot be resolved, seek assistance from your Senior Project Manager or Regional Manager, then support from the Contracting Officer;
- Should problems persist, contact Contracting Officer and/ or Claims Management and Prevention Unit for advice before talking to the Contractor/Consultant;
- For any Change Orders processed within RPB authority, complete a change order log and submitted to the Contracting Authority ;
- For Change Orders processed through RPC, complete a change order log and submitted to the Contracting Officer for approval;
- Document the file for all change orders or issues which might surface later;
- Record action, telephone conversations, meetings,
- Ensure to exercise only your authorities as they were given to you through your supervisor;
- Work is progressing and invoices are received; assess that the work is progressing as it should be, in accordance with the schedule;
- Sign off on invoices, with financial coding, for the work completed as per the contract terms and conditions for payment;
- Work is completed, contractor to provide a list of deficiencies and a list of warranties.
Deliverables: these are the consultant/contractor's services; identification of which deliverables have been completed and which have not, to what extent quality standards are being met, what costs have been incurred or committed, etc. These were identified as part of the Statement of Work. (see Plan Procurement and Conduct Procurement) This information is monitored as part of project plan execution.
Change requests: may include modifications to the terms of conditions of the contract or to the description of the project to be provided. Where modifications are required to terms and conditions it is imperative that RPC approval be obtained. Since the contracts are standard as agreed with the industries, changes to terms and conditions should rarely occur. If the consultant /contractor's services are unsatisfactory, various alternatives are available to project managers (see appropriate clauses), dispute resolution, taking the work out of the contractor's hands, or termination of the contract. Contested changes, those where the consultant/contractor and the project management team cannot agree on compensation for the change, are called claims, disputes, or appeals.
Contractor/ Consultant invoices: invoices (also referred to as progress draws) are submitted monthly to request payment for services performed. Invoicing requirements, including necessary supporting documentation, are defined within the contract.
4.4.3 Tools and Techniques
Contract change control system: defines the process by which the contract may be modified. It includes the documentation, tracking systems, dispute resolution procedures, and approval levels necessary for authorizing changes. The contract change control system should be integrated with the project change control system. NCA have established a centralized Contract Change Management Unit that provides a quality assurance process.
Inspection and Audits: Each SOW and/or SOR should have inspection and acceptance criteria to determine the standards under which the product or service will be accepted. The audit requirement will be stated in each contract, that once the work has been delivered, the option of audit is available to the buyer for a specific period.
Performance reporting: provides management with information regarding how effectively the consultant/contractor is achieving the contractual objectives. Contract performance reporting should be integrated with project performance reporting. PWGSC in conjunction with the Canadian Construction Association and the Professional Associations of Architects and Engineers have established generic performance measurement criteria.
Payment system: payments to consultants/contractors are administered by the PWGSC accounts payable system. The payment system must include appropriate reviews and approvals by the project management team and must adhere to the departmental contracting and financial delegated authorities.
Contract documents: contract terms and conditions require written documentation related to various aspects of the contract, such as notices, warnings of unsatisfactory performance, contract changes, clarifications, etc. NCA has established a centralized Claims Prevention and Management Unit to assist Project Management with the analysis and resolution of claims.
Claims management: The Claims Prevention and Management Unit assist project managerwith the analysis and resolution of contractual claims.
Contract changes: (approved and not approved) are fed back through the appropriate project planning and procurement processes. All changes should be reflected in the Project Plan or any relevant documentation.
Payment requests: are submitted for the services performed. The amount of services or progress of the services to date are certified by the technical authority and recommended for payment. Actual payment is made by the financial authority and logged in the PWGSC's account payable. The payment sequence normally begins with several monthly progress draws, followed by a Certificate of Substantial Performance (Interim) and Certificate of Completion (final) following warranty periods, etc. The contract specifies the conditions to be met prior to the release of payments i.e., statutory declarations, clearance certificates, etc.
4.5 Contract Close-out
Contract close-out involves both product verification (ensuring all work was completed correctly and satisfactorily) and administrative close-out (updating the records to reflect final results and archiving the information for future use). The contract terms and conditions prescribe specific procedures for contract close-out and RPB has developed specific documentation requirements for use by its project managers.
- Evaluate contractor/consultant, and review performance and the capability of the contractor/consultant with Contracting Authority (Construction PWGSC-TPSGC CPERF 2913 PDF Version (190KB)
and Consultant PWGSC-TPSGC CPERF 2913-1. PDF Version (243KB)
Help with Alternative Formats
- Contract close-out. Ensure financial system is aligned with the project file, for documentation and audit trail.
- Prepare Lesson Learned.
Contract documentation: includes, but is not limited to, the contract itself along with all supporting schedules, requested and approved contract changes, any technical documentation developed by consultant/contractor, performance reports, financial documents such as invoices and payment records, and the results of any contract-related inspections.
4.5.3 Tools and Techniques
Procurement audits: are structured reviews of the procurement process from procurement planning through contract administration. The objective of a procurement audit is to identify successes, failures, lessons learned etc., that warrant consideration for other projects in PWGSC.
- Records Management and Contract file: a complete set of indexed records must be documented for inclusion with the final project records.
- Formal acceptance and closure: the organization responsible for contract administration should provide the consultant and contractor with formal written notice that the contract has been completed. Requirements for formal acceptance and closure are defined in the contract.
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