how do you measure up - year v -...
TRANSCRIPT
How Do You Measure Up?
Year VGlobal Due Diligence
Survey Results
Paul EmanuelliGeneral Counsel and Managing Director
Procurement Law [email protected]
416‐700‐8528
www.procurementoffice.com
Copyright Notice
The further reproduction of these materials withoutthe express written permission of the author isprohibited.
© Paul Emanuelli, 2018
For further information please contact:[email protected].
About the AuthorPaul Emanuelli is the General Counsel andManaging Director of the Procurement Office. Hewas recognized by Who’s Who Legal as one of thetop ten public procurement lawyers in the world.His portfolio includes advising on strategicgovernance in public purchasing and onnegotiating high-profile major procurementprojects. Paul has an extensive track record ofpublic speaking, publishing and training. He is theauthor of Government Procurement, The Laws ofPrecision Drafting, Accelerating the TenderingCycle and the Procurement Law Updatenewsletter. Paul hosts a monthly webinar seriesand has trained and presented to thousands ofprocurement professionals from hundreds ofinstitutions across North America through theProcurement Office and in collaboration withleading industry organizations including NIGP,SCMA, the University of the West Indies andOsgoode Hall Law School.
How Do You Measure Up?Global Survey Results
This webinar covers the results of our fifth annual institutionalcompliance review survey. Based on the Snapshot Review toolwe use to conduct due diligence reviews of client institutions,this survey helps organizations assess how they measure up tocore industry standards and compare to other organizations.For our fifth annual review, we opened up our survey beyondCanada to our global audience. These global results giveinsight into how your organization measures up to globalstandards and provide a better understanding of how you canenhance your institutional compliance practices.
How Do You Measure Up?Global Survey Results
These slides provide an in-depth snapshot of the state of theprocurement practice around the world, highlighting howpurchasing institutions assessed their procurement operationsacross eight target areas and 24 due diligence indicators.
In addition to providing insights on these global industrystandards, this presentation also highlights results from ourCanadian Treaty Compliance Test, providing “before and after”comparisons from last year’s CFTA and CETA compliancesurveys.
Breakdown by Sector
2.97%0.00%
5.94%
13.86%
3.96%
34.65%
0.00%1.98%6.93%
2.97%
10.89%5.94%
0.00%
5.94%3.96%
Federal Agency Federal Government Provincial or Territorial Agency
Provincial or Territorial Government Municipal Agency Municipal Government
Law Firm Private Sector Health Care Sector
School Board University College
Industry Association Non‐Profit Other
Survey responses came from a wide-range of sectors. The largest representation came fromthe municipal sector, with municipal-level governments and agencies accounting for over38% of the responses. About 1/5 of all responses came from provincial-, state- and territorial-level governments and agencies. Post-secondary institutions made up over 15% of theresponses received.
Institutional GovernanceOrganizations reported strong results in complying with open competition duties, with a fairlystable 70% of respondents answering “Strongly Agree” or “Agree” across the category.Consistently, around 20% of respondents were less confident, answering “Somewhat Agree”for all three institutional governance questions.
25%28% 29%
45% 44% 45%
23% 22% 21%
4%2% 2%3% 2% 3%
0%3%
0%
Strongly Agree Agree Somewhat Agree Somewhat Disagree Strongly Disagree Don't Know
1. Accountability Controls:Our organization has clear and consistent policies and procedures governing its procurement processes that set out a clear delineation of institutional roles and responsibilities, addresses reporting requirements and oversight mechanisms, and includes a clear and transparent approval authority framework that strikes an appropriate balance between accountability and efficiency.
2. Integrity Indicators:Our organization has clearly articulated rules addressing ethical conduct and conflict of interest, both generally and more specifically in the context of its procurement operations, to guard against improprieties including preferential treatment, bias and unfair advantage.
3. Open Competition Requirements:Our organization has the appropriate policies and procedures in place to ensure compliance with its open competition obligations and to avoid complaints based on inappropriate sole‐sourcing, discrimination, preferential treatment of local suppliers and biased specifications.
Project GovernanceFor Project Governance, however, only a minority of organizations reported that they“Strongly Agree” when it came to establishing proper project approval and review processes,defining project roles and responsibilities, and creating clear requirements and formats.
9% 8%
14%
23%
30%
36%
28% 29% 29%26%
24%
16%14%
6%4%
0%3%
0%
Strongly Agree Agree Somewhat Agree Somewhat Disagree Strongly Disagree Don't Know
4. Project Planning and Process Flow:Our organization engages in effective procurement planning and streams its procurement projects according to the value and complexity of the procurement to ensure the sufficient allocation of resources to higher risk projects and avoid bottlenecks in the process flow.
5. Project Team Roles and Responsibilities:Our organization's project governance process provides for the clear documentation of roles and responsibilities in order to avoid role overlaps and accountability gaps.
6. Clear Requirements and Formats:Our organization's project planning protocols mandate the preparation of clear requirements and the selection of appropriate procurement formats.
Forms and FormatsMost organizations showed high levels of confidence for format range and template content,with 58% and 59% of respondents answering “Strongly Agree” or “Agree”, respectively.However, those numbers dropped to only 47% when it came to awareness of format use.
14%
26%
19%
44%
33%
28%
24%
28%
34%
7%5%
7%5% 5%
3% 2% 2%
7. Range of Formats: 8. Template Content: 9. Awareness of Format Use:
Strongly Agree Agree Somewhat Agree Somewhat Disagree Strongly Disagree Don't Know
Our organization use a broad range of procurement formats based on domestic and international best practices.
Our organization's standard template content complies with the expanding body of red‐tape regulations flowing out of treaties, statutes, directives, good governance guidelines and case law developments.
Our organization has a clear understanding of the distinctions between different procurement formats and the legal and practical implications of selecting and using the different formats.
Document DraftingOrganizations reported weak drafting process flow, with 65% of responses as “SomewhatAgree” or worse. However, when considering drafting roles and responsibilities, anddocument readability, organizations were more confident, with over half responding with“Strongly Agree” and “Agree”.
10%
14%17%
24%
39%
45%
38%
27%
33%
20%
14%
4%7%
4%1%0%
2%0%
10. Drafting Process Flow: 11. Drafting Roles and Responsibilities: 12. Document Readability:
Strongly Agree Agree Somewhat Agree Somewhat Disagree Strongly Disagree Don't Know
Our organization has a clearly defined document drafting process that avoids duplication and delay and enables accelerated drafting.
Our organization has clearly identified roles and responsibilities for the drafting and assembly of its solicitation documents.
Our organization ensures better readability by using plain language in the main body of its solicitation documents and properly incorporating technical content within appendices and schedules.
Bidding RisksConfidence in managing bidding risks was consistent across all three questions, with mostorganizations reporting “Strongly Agree” or “Agree” for their contract scoping, materialdisclosures duties and evaluation defensibility processes.
13%11%
13%
44% 44%
52%
21%
31%
26%26%24%
16%
4%2% 3%
1%5%
1%
13. Contract Scoping: 14. Material Disclosures: 15. Evaluation Defensibility:
Strongly Agree Agree Somewhat Agree Somewhat Disagree Strongly Disagree Don't Know
Our organization ensures that its solicitations are designed with clearly drafted requirements, properly aligned pricing and scoring structures, and well‐tailored legal agreements.
Our organization has the proper material disclosure protocols built into its document drafting and procurement processes.
Our organization's evaluations are based on clear compliance standards, transparent scoring mechanisms and defensible award processes.
Contract ManagementContract Management reflected the lowest overall confidence levels, with a majorityresponding “Somewhat Agree” or worse to all questions. Specifically, only 26% oforganizations reported strong scope management, and a minimal 14% reported confidencein their performance tracking measures.
13%
6%3%
26%
20%
11%
27%
35%
26%23%
28% 29%
8% 7%
28%
3% 4% 4%
16. Contract AdministrationAccountability:
17. Scope Management: 18. Performance Tracking:
Strongly Agree Agree Somewhat Agree Somewhat Disagree Strongly Disagree Don't Know
Our organization has a proactive and clearly defined accountability structure for the contract administration stage of the procurement process.
Our organization has proper scope management practices to protect against improper scope increases.
Our organization has the performance tracking measures in place to deal with problematic contractors and properly bar them from future work.
TrainingOrganizations showed weak confidence in Training, with only 42% responding “StronglyAgree” or “Agree” when asked if they were being trained on industry developments and duediligence duties. Those numbers were only 45% for broader organizational awareness and52% for compliance with information management obligations.
11%14% 14%
31% 31%
38%35% 36% 36%
15%12%
6%6% 5%3%2% 1%
3%
19. Procurement Training: 20. Broader Organizational Awareness: 21. Information Management:
Strongly Agree Agree Somewhat Agree Somewhat Disagree Strongly Disagree Don't Know
The core procurement and legal staff in our organization are receiving the up‐to‐date training necessary to ensure that we are keeping pace with industry developments and meeting its due diligence duties.
Our organization is promoting a broader organizational awareness of proper procurement practices and achieving traction.
Our organization is aware of its information management obligations and its policies and procedures address the management of procurement‐related records.
InnovationFor Innovation, 46% of organizations reported that they have policies and processes in placeto manage supplier relations. When it came to bid-rigging prevention, though, 69% reportedweak confidence, answering “Somewhat Agree” or worse. And only 1/3 of organizations feltthat they effectively leverage technology within their procurement cycle.
10%7% 6%
36%
23%
29%32%
41%
31%
12% 13%
22%
5% 6%
11%
5%
9%
1%
22. Supplier Relations: 23. Bid Rigging Prevention: 24. Effective Use of Technology:
Strongly Agree Agree Somewhat Agree Somewhat Disagree Strongly Disagree Don't Know
Our organization has policies and processes in place to address supplier conduct, provide effective debriefings and manage bid disputes.
Our organization has policies and procedures in place to protect against bid rigging and collusion.
Our organization is keeping up with industry practices and leveraging technological innovations to enhance and accelerate its procurement cycle.
1. Institutional-level governance was one of the strongestcategories. ‘Hard’ top-down measures, such as opencompetition policies, standardized templates in a range offormats, and established roles and responsibilities allreported high confidence levels.
2. When it comes to more ‘hands-on’ or ‘soft’ measures, suchas workflow and project management, format selection, andcontract and scope management, organizations reported asignificant lack of confidence. This would suggest that whileorganizations have strong institutional governancestructures in place, the actual implementation of suchpolicies and procedures could use further support.
Main Global Trends
3. Over half of all organizations reported gaps in training,creating further resource gaps within institutions. Thereported lack of broader organizational awareness aboutpublic procurement duties also highlighted these gaps.
4. Innovation also showed a significant lack of confidence,specifically in regards to bid-rigging prevention and effectiveuse of technology. These gaps could be addressed withfurther technological advances. Process automations (suchas automated drafting, electronic bid receipt, digital bidevaluation and electronic reverse auctions) can helpprevent bid-rigging, which was identified as a significantglobal newsreel trend by our media monitoring team.
Main Global Trends
Post-Trade-Treaty Compliance Test
For our Canadian audience, the past year has been arollercoaster with the implementation of the Canadian FreeTrade Agreement and Canada-Europe ComprehensiveEconomic and Trade Agreement. Since that time, publicinstitutions have been working towards compliance, ensuringthat tendering templates, procurement procedures, and projectdesign and management align with new trade treaty obligationsand duties. There has also been a push for treaty compliancetraining, to ensure every member of procurement teamsunderstand their duties under the new rules.
Post-Trade-Treaty Compliance Test
We wanted to know how organizations have been doing in thetime since the treaties came into effect. To do that, wedeveloped a free assessment tool to help organizations takestock of their current compliance with the trade treaties. Thefollowing section provides a snapshot of the post-trade-treatytest results this year as compared to last year, giving us insightinto how Canadian organizations are faring in the new regime.
1. Posting Procedures
77.12%
13.07%
9.80%
1. Has your organization updated its posting procedures to ensure that core tender call information is available to all potential bidders on a “no‐
fee” basis as required under the new trade treaties?
Yes No Not Sure
The number of organizations that have updated their posting procedures has risen from 63%to 77%.
2. Electronic Bidding Procedures
68.18%
27.27%
4.55%
2. Has your organization implemented electronic bid submissions to enable the shorter posting timeframes recognized under the new trade
treaty rules?
Yes No Not Sure
In one of the largest increases recorded from last year’s results, 68% of respondents reportusing electronic bid submissions, whereas only 47% reported the same before the treatieswere implemented.
3. Award Notice and Debriefing Protocols
52.94%
23.53%
23.53%
3. Has your organization revised its contract award notice and debriefing practices to align with the higher disclosure duties contained in the
mandatory rules contained in the new trade treaties?
Yes No Not Sure
Another significant jump was recorded in award notice and debriefing protocols, where overhalf of organizations reported revisions, whereas only 35% did last year.
4. Bid Protest Protocols
36.60%
32.68%
30.72%
4. Has your organization revised its bid protest protocols to align with the new trade treaty bid protest rules?
Yes No Not Sure
As with last year, when it comes to bid protest protocols, organizations still have a long wayto go, with most organizations reporting that their bid protest protocols haven’t been alignedwith trade treaty rules or that they are unsure about compliance with new treaty standards.
5. Enhanced Consensus Scoring Protocols
45.10%
35.29%
19.61%
5. Has your organization implemented Enhanced Consensus Scoring to better ensure the defensibility of its contract awards in light of the new
bid protest procedures?
Yes No Not Sure
Organizations have remained fairly stable in terms of implementing Enhanced ConsensusScoring, with 45% reporting that they have this year, leaving significant room for growth.
6. Bidder Debarment Protocols
27.45%
37.91%
34.64%
6. Has your organization revised its bidder debarment rules to align with the stricter due process standards established under the new trade
treaties?
Yes No Not Sure
Bidder debarment rules have changed, but organizations have been slow to follow, with only27.45% reporting revisions to internal processes, up from 22% last year.
7. Negotiated RFP Formats
49.34%
28.29%
22.37%
7. Has your organization deployed the concurrent and consecutive negotiated RFP formats recognized under the new trade treaties in a
manner that is compliant with Canadian law?
Yes No Not Sure
Significant strides have been made in deploying concurrent and consecutive RFP formats,with almost 50% of organizations reporting deployment, up from 38% last year.
8. Electronic Auction Platforms
15.03%
64.71%
20.26%
8. Has your organization implemented the electronic auction procedures recognized under the new trade treaties in a manner that is compliant
with Canadian law?
Yes No Not Sure
Electronic auction platforms are still not being implemented, with the vast majority oforganizations responding “No” to adoption.
9. Policies and Procedures
45.10%
39.87%
15.03%
9. Has your organization updated its written policies and procedures to comply with the new trade treaty requirements?
Yes No Not Sure
A large increase was seen in updating written policies and procedures, with 45%organizations reporting new treaty compliance standards, up from 31% from last year.
10. Tendering Templates
64.47%
21.71%
13.82%
10. Has your organization updated its tendering templates to comply with the new trade treaty requirements?
Yes No Not Sure
Organizations have widely updated their tendering templates for treaty compliance, withalmost 65% reporting such updates, double from last year when only 31% reported updates.
11. Major Project Due Diligence
36.18%
43.42%
20.39%
11. Has your organization implemented specific due diligence procedures to ensure that its high‐risk major projects receive special
screening for treaty compliance?
Yes No Not Sure
This year, 43% of organizations responded “No” to updating their major project due diligencepractices. While an improvement from the 57% of respondents who reported the same failureto update last year, this continues to reflect a major risk area across the public procurementindustry.
12. Treaty Awareness Training
44.16%
43.51%
12.34%
12. Has your organization implemented a treaty awareness program to train staff on the new treaty rules?
Yes No Not Sure
Treaty awareness increased from last year, with 44% of responses acknowledging newtreaty rules training for staff. This is a significant leap from when just over a quarter oforganizations reported updated training last year.
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www.procurementoffice.com
For more information please contact:
Paul EmanuelliManaging Director and General Counsel
Procurement [email protected]
416‐700‐8528
Marilyn BrownSenior Counsel
Procurement [email protected]
416‐700‐8531
Heather BakerSenior Procurement Advisor
Procurement [email protected]
416‐700‐8535
Julia MillsProcurement Advisor and Communications Specialist
Procurement [email protected]
416‐700‐8530