Procurement Management - Knowledge Area
National Project Management System
Procurement Management Knowledge Area
1. EFFECTIVE DATE:
This policy-related document is issued under the authority of the Deputy Minister, Public Services and Procurement Canada (PSPC).
This Knowledge Area is to be implemented in conjunction with the PSPC National Project Management System (NPMS) Policy.
To describe the components and requirements of National Project Management System (NPMS) as applied to the management of project procurement.
The purpose of project procurement is to acquire the goods and services necessary to achieve the project scope.
The purpose of the project procurement management plan is to define the methodology that will be used by the project to manage project procurement. The plan describes how the procurement processes will be managed from contract initiation through contract closure.
Guiding Principles from the PSPC Supply Manual
The procurement process is guided by the following five principles from the PSPC Supply Manual:
- Client Service
PSPC will make every reasonable effort to satisfy the operational requirements of its clients, while obtaining best value in each procurement process.
- National Objectives
PSPC supply activities will advance established federal socio-economic policies, within the limits imposed by international trade obligations.
PSPC procurement will be competitive, with specific exceptions.
- Equal Treatment
PSPC will ensure that all potential suppliers of a particular requirement are subject to the same conditions.
PSPC is accountable for the integrity of the contracting process. Clients are responsible to ensure that all information provided to PSPC is complete and accurate.
The objective of a Procurement Management Plan is to describe the end-to-end procurement process that the project will use to acquire its goods and services. The plan will be completed in the Project Management Plan document.
The key objectives of this document are to describe:
- the procurement planning process;
- the key procurement activities;
- the procurement constraints and assumptions;
- the departmental procurement organizations;
- the bid evaluation process; and
- to define the roles and responsibilities of those involved.
Procurement Management Process by NPMS Stage and Phase
Procurement requirements are not identified during this stage. An Office of Primary Interest (OPI) is named for the next stage.
During the Initiation Phase, the Project Leader produces high-level cost estimates for conducting the Identification Stage activities. These estimates are included in the Preliminary Project Plan (PPP). No specific procurement documents are produced in this phase, as a recommended option has not yet been selected.
The project may need to acquire specialist resources from service providers in support of the project identification and definition work effort.
The Feasibility Report includes project cost requirements for the delivery phase (capital and relevant operational costs). High-level cost estimates are provided for all options including assumptions, constraints and contingency funds/allowances. If a requirement to procure goods and/or services forms an integral part of any of the options, this requirement needs to be clearly described as it is essential for subsequent options analysis.
It is advisable to involve the Procurement Officer from Acquisitions Branch at this phase to begin to define the procurement plan and clarify the procurement requirements. Collaboration early on will facilitate the procurement process significantly, and will simplify many of the subsequent steps.
The project team conducts analysis activities and produces decision support deliverables to arrive at a recommended solution from among the various viable options. The core control point deliverable of the Analysis Phase is the Business Case, which contains the recommended solution.
The Project Manager, in consultation with all stakeholders, produces several documents that support the procurement process for acquiring the goods and services required to deliver the recommended option. These document deliverables include the following:
- financial Proposal Requirements and Pricing Tables (the basis of payment documentation);
- a Project Overview and Statement of Requirements (i.e. final Business Requirements);
- a Request for Information document; (if required)
- a Service Requirements Evaluation Criteria; and
- the Project Charter including a Procurement Statement.
A Request for Information (RFI) process may be conducted in the Analysis Phase as part of the project team's information gathering. RFIs are conducted for several reasons during a project, but in this phase, an RFI helps to determine the preferred option by:
- enabling the project to refine the business requirements;
- getting feedback from the Marketplace; and
- identifying what products, services or capabilities are potentially available in the marketplace.
While the procurement documentation is being prepared, the Project Manager liaises with the Procurement Officer in order to determine if there is an existing procurement vehicle available that would satisfy the project's requirements. If a vehicle exists, the Procurement Officer proposes a suitable vehicle. The Project Manager then ensures that all project requirements are met via this vehicle. If a pre-existing contracting vehicle is not available and the requirements are over $250K, the Project Manager develops the high-level requirements for the required goods and/or services. These requirements will be presented at the appropriate branch review committee. Upon review committee approval, the project will continue to the next phase of the procurement process.
Identification Close Out Phase:
The purpose of the Identification Close-Out Phase is to ensure an appropriate level of assessment, reporting, evaluation, hand-over and administrative closure has taken place for the (delivery organization) Project Manager to seamlessly proceed to the Delivery Stage.
In light of the Preliminary Project Approval (PPA) decision, obtained in the Analysis Phase, the Project Manager or delegate ensures that all project procurement deliverables and records prepared in this phase, including records of correspondence and records of decision are accessible, with the most recent version clearly identified and stored in an archived folder.
During the Project Delivery Stage, the project team fleshes out the procurement deliverables and follows the branch and departmental procurement process in accordance with established policies and procedures. The procedure enables the Project Manager and the Procurement Officer to determine whether or not to procure, how to procure, what to procure, how much to procure, and when to procure.
The following sections describe the information that needs to be captured for initial procurement planning purposes.
Procurement Planning Information
The delegated project team member collects procurement planning information, including the type of products and services needed, cost estimates, project constraints and so on.
List of Procured Goods and/or Services
The Project Manager or delegate creates a list of procured goods and/or services to document the known products and services to procure. Certain constraints may affect the potential procurement. The Project Manager lists the constraints that will impact the Project. This could include constraints such as cost (not to exceed) and schedule, quality plans, cash-flow projections, work breakdown structure, risks, staff plans, and/or contracting process duration factors that will limit the projects contract or procurement options.
The Project Manager lists assumptions that, for procurement planning purposes, are considered to be true, real, or certain.
The Project Manager (PM), with the assistance of the Procurement Officer, lists what is available in the marketplace, from whom, and under what terms and conditions. Depending on the complexity of the procurement, the PM may formalize this process by conducting a Request for Information (RFI) during the Planning Phase to assess which products or services may meet the requirements. The RFI documentation is prepared by the Procurement Officer.
Identifying the Evaluation Team
Depending on the complexity of the procurement of goods and/or services, the project may require an evaluation team. The role of the Evaluation Team is to evaluate the technical aspect of the bids received from the vendors. The Project Procurement Analyst(s) advise the Project Manager as to the competencies required for membership on the team. A minimum of three members will be on the evaluation team.
Procurement Activities That May Take Place in This Phase
Many different tools are available for the procurement of the goods and service required by the project. These include, but are not limited to, the following major tools:
- Request for Proposal (RFP)
- Request for Supply Arrangements
- Request for Standing Offers
- Invitation to Tender (ITT)
The project may need to acquire goods and services that are integral to the recommended solution, including Professional Services, Integration Services, a Commercial Off The Shelf System (COTS), or Technical Hardware. To acquire these goods and services, the Project Manager may consider internal branch or department options before considering external service providers. The range of available internal service options will depend on the branch, as will the process of paying for these goods and services.
Other Goods and Services
Projects may also need to acquire other goods and services to support project management or product development processes. These may be acquired using any of the available procurement tools.
Producing the Required Documentation for an RFP or other Appropriate Procurement Vehicle
Following the completion of the RFI process, if one was conducted, the project team begins to finalize the procurement documents that will be required in order to continue the process.
Among the core procurement deliverables the project team must develop, all of the following are required to support procurement process options (in some instances, these documents were begun or completed during an earlier phase):
- a Statement of Work (SOW);
- a Security Requirements Checklist (SRCL);
- a Request for Acquisition Services (RAS) - form 9200;
- evaluation Criteria (to be approved by the Client as a prerequisite before issuance of an RFP);
- a detailed scoring grid (to be approved by the Client Authority as a prerequisite before issuance of an RFP); and
- a Request for Proposal (RFP).
In addition, appropriate oversight and approvals at branch and departmental level, are required.
During the Design Phase, the project team completes all technical and business documents that will be needed to procure required goods and services, including the security requirements and final evaluation criteria. The Project Manager and the client review all documents and provide approval.
It is important to note that if an RFP (or other procurement vehicle) arises out of work done by the initial project, and a consultant was involved in the development of that RFP, that consultant's firm is excluded from bidding on that RFP.
The contracting authority finalizes the best sourcing strategy and finalizes all documents, which includes translation. The Project Manager approves these documents and obtains final approval to proceed. Once approval is obtained, the RFP is issued.
Once the bid period closes, the Evaluation Team performs the technical evaluation of the bids.
The Procurement Officer is responsible for the evaluation of the financial portion of the bids and for ensuring that the evaluation process is followed.
If a product or service provider is successfully identified, the Procurement Officer then awards the contract accordingly and completes the contracting documentation.
During the Implementation Phase the focus is on:
- acquiring the goods and services that were the subject of the procurement effort;
- ensuring the goods and services meet the requirements of the contract;
- administering the contract in accordance with the Financial Administration Act, the Accountability Act and other relevant legislation and regulation; and
- maintaining good records to track progress and to support payment where justified.
Contract Administration is the process of ensuring that the services and goods provided have met the contractual requirements. If the project has 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.
The project team files copies of the project contract documents and related information according to the Information Management Plan. The contract originals are held by the contracting authority.
Contract Time sheets and Invoices
The designated project representative signs the time sheets, sends copies to the Project Delivery Office and files the documents.
The Project Manager reviews and approves invoices against the requirements of the contract, makes a copy for internal filing and sends the original invoice to the designated branch authority for processing.
Professional services contracts are tracked by the Competency Centre or in non-matrix organizations by the home unit that has provided the contract resource. The Project Manager may feed this report into the overall project status report.
Contract authorities are specified in the contract document.
Contract Close Out
Contract close out involves ensuring that all work has been satisfactorily completed and that records have been updated to reflect final results. These records are then archived for future use.
The project manager verifies that the requirements of the contract have been met and documents the contracting lessons learned. The contracting authority also archives the contract information generated as a result of procurement management and tracking activities in accordance with the Information Management Plan.
This knowledge area applies to all PSPC projects where procurement is required.
- A tender, proposal or quotation submitted in response to a solicitation from a contracting authority. A bid covers the response to any of the three principal methods of soliciting bids, i.e. Invitation to Tender, RFP and Request for Quotation.
- Contract Approval Authority
- The authority delegated by the Minister of PSPC to the person designated to occupy a position, that is, the incumbent of a position, to approve on his/her behalf submissions to enter into contracts, to amend contracts or to issue standing offers up to specified dollar limits subject to the applicable legislation, regulations, PSPC general conditions and procedures in effect at such time, and constitutes approval to accept the terms and conditions stipulated in the submission on behalf of the Crown. See contract signing authority.
- Contracting Authority
- The appropriate Minister as defined in paragraph (a) or (b) of the definition "appropriate Minister" in section 2 of the Financial Administration Act.
- A corporation named in Schedule II to the Financial Administration Act.
- PSPC staff member authorized to enter into agreements in accordance with the delegation of authorities instrument.
- Contract Signing Authority
- The authority delegated by the Minister to the person designated to occupy a position, that is, the incumbent of a position, to sign on his/her behalf contract, contract amendment or Standing Offer documents after ascertaining that the approval authority has been duly granted and ensuring that the terms and conditions written in the documents reflect those approved by the contract approval authority. See contract approval authority.
- Government Electronic Tendering Service
- The service used by the federal government to post notices (e.g. Notices of Proposed Procurement, Advance Contract Award Notices and Contract Award Notices) and to distribute bid documents. This service is provided through MERX. For information about MERX , call 1-800-964-MERX (6379) or visit its Web site.
- Letter of Interest (LOI)
- A "letter of interest" or "request for information" is used when the buyer is interested in receiving feedback from suppliers and may lead to an opportunity as an open tender at a later day. Letters of interest may include attached documents.
- Procurement is the end-to-end process of acquiring or obtaining personnel, materiel, services, or property from outside a governmental or military service by means that have been authorized in pertinent directives, regulations and legal frameworks.
- Procurement Management Plan
- The document that describes how procurement processes from developing procurement documentation through contract closure will be managed. It is a subsidiary of the Project Management Plan.
- An offer that puts forth a solution to the problem, requirement or objective stated in the request.
- Request for Information
- A Request for Information (RFI) is a proposal requested from a potential seller or a service provider to determine what products and services are potentially available in the marketplace to meet a buyer's needs and to know the capability of a seller in terms of offerings and strengths of the seller.
- Request for Proposal
- A Government of Canada Request for Proposal (RFP) is an invitation for suppliers, through a bidding process, to submit a proposal on a specific good or service. An RFP, while generally used for requirements of $25,000 or more, is often employed for requirements where the selection of a supplier cannot be made solely on the basis of the lowest price. A RFP is used to procure the most cost-effective solution based upon evaluation criteria identified in the RFP.
- Standing Offer
- A standing offer is not a contract. It is an offer from a supplier to provide goods and/or services to the government at prearranged prices or pricing basis and under set terms and conditions for a specified period on an as-and-when requested basis. A separate contract is entered into each time a call-up is made against the standing offer. When a call-up is made, the terms and conditions are already in place and acceptance by the government of the supplier's offer is unconditional. The government's liability is limited to the actual value of the call-ups made within the period specified in the standing offer.
- Supply Arrangement
- A supply arrangement is a method of supply where the government, under the framework of the arrangement, may solicit bids from a pool of pre-qualified suppliers. A supply arrangement is not a contract and neither party is legally bound as a result of the signing of this document alone. The intent of the supply arrangement is to establish a framework to permit the expeditious processing of legally binding contracts for goods or services. A supply arrangement includes a set of terms and conditions used by PSPC.
- Technical Authority
- The individual responsible for providing information, guidance and advice on the technical aspect of a product.
The delegation of responsibilities for procurement is guided by principles from the Supply Policy Manual. All parties responsible for performing, managing, controlling and/or administering procurement activities are strongly encouraged to consult with other Project Leaders/Managers and Senior Project Managers, technical experts, as well as departmental Subject Matter Experts (SMEs), when developing or updating:
- procurement documents;
- scoring and evaluation procedures;
- financial administration documents; and
- the Procurement Management Plan (normally captured in the Project Management Plan.)
NOTE: Several of the tasks identified in this document must be undertaken by a Full Time Employee. In particular, whenever signatures and authority for work undertaken are required, these roles can only be the responsibility of an FTE.
Client/Business Line Owner
The Client/Business Line Owner is responsible for:
- ensuring a client focus is maintained;
- consulting on procurement activities; and
- reviewing and approving procurement documents.
Project Lead (Business Side)
The Project Lead (Business Side) is accountable to the Business Line owner/Sponsor for the effective cost management of project funds and the procurement of the human resources and materials of the project. The Project Director is specifically responsible for:
- authorizing all planning and procurement documents;
- liaising with the Project Steering Committee;
- acting as primary project interface with Acquisitions Branch; and
- any project procurement activity (or delegates this to a Procurement Manager).
The Project Manager is responsible for:
- determining which products and services to procure;
- determining the security requirement for the procurement process and deliverables;
- approving statements of work;
- delegating work in support of the procurement process to members of the project team;
- coordinating the development of the technical and business requirements that need to be to be included in the RFP documentation;
- approving technical and business requirements;
- approving evaluation criteria;
- approving time sheets and invoices; and
- reporting on Procurement Activities.
Procurement Officer (Acquisition Branch)
The Contracting Authority is responsible for:
- ensuring that all procurement activities within PSPC meet quality standards and adhere to prescribed policy and regulatory practices;
- creating the RFP/RFI;
- developing a procurement plan (normally a component of the Project Management Plan);
- overseeing the procurement process;
- determining the best procurement strategy;
- coordinating the development of statements of work; and
- coordinating the development of the evaluation criteria.
The Project Team is responsible for:
- developing technical and business requirements;
- performing work in support of the procurement process as delegated by the Project Manager;
- developing Statements of Work; and
- developing evaluation criteria.
The Evaluation Team is responsible for performing the technical evaluation of the RFP.
Branch Contract Review Board
In ITSB contract review is conducted by the Contract Review Board (CRB) in other branches there will be a contract review committee with a similar mandate.
The branch Contract Review Board is responsible for:
- reviewing procurement requirements over $250K;
- advising the project on procurement matters and resolving all important issues regarding sourcing arrangements on an as-needed basis;
- gathering contract information and maintaining an inventory of ITSB contract information; and
- reviewing sourcing requirements to ensure the maximum leveraging of supply arrangements and the alignment of sourcing strategies with service delivery and shared service strategy development.
Please direct enquiries about this Knowledge Area to the Director, Centre of Excellence, ITSB Project Delivery Office.
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