OGCA perspective: Why are they still sole-sourcing?

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By Giovanni Cautillo

Special to Ontario Construction Report

The members of the Ontario General Contractors’ Association (OGCA) are witnessing an ever-increasing epidemic that is slowing proliferating procurement departments throughout Ontario.

No, it is not the COVID-19 global pandemic that we are seeing; that is somewhat more manageable than what is currently occurring. What I am referring to is the growing instances of public buyers of construction opting to ignore standard procurement practices in lieu of sole-sourcing projects.

The question that remains is why? Why would any public buyer of construction opt to completely eliminate any form of open competition, decide to proceed without the use of a fair, open and transparent tendering process, and instead, simply offer only one contractor the project?

From my standpoint, the response to that question can come in the form of some highly specialized ability, expertise or knowledge that would be imperative on said project for it to be successful in nature. The only issue that remains is that I have yet to find such a specifically specialized project where this form of procurement may be acceptable. The projects that the OGCA is witnessing being sole-sourced are standard, rudimentary ones that any general contractor can accomplish.

The OGCA has objected directly to the buyers of construction whenever we are made aware of any such procurement occurring. I would like to share with you the rationale as to why the OGCA believes this form of procurement breaches standardized procurement requirements in Ontario.

Firstly, the Canada-European Union Comprehensive Economic and Trade Agreement (CETA) strictly prohibits the practice of sole-sourcing of any procurement project, save and except for the following reasons.

  • One, that the “goods/services can only be provided by one supplier and no reasonable alternative or substitute exists due to protection of patents, copyrights or other exclusive rights, or due to an absence of competition for technical reasons.”
  • Two, “for additional deliveries by the original supplier that were not included in the initial procurement where a change of supplier cannot be made for economic or technical reasons such as requirements of interchangeability or interoperability with existing equipment, software, services or installations procured under the initial procurement; and would cause significant inconvenience or substantial duplication of costs of the procuring entity.”
  • And three, “as is strictly necessary where for reasons of extreme urgency brought about by events unforeseeable by the procuring entity, the goods/services cannot be obtained in time using open tendering procedures.”

Furthermore, CETA notes that if sole-sourcing is used, then the procuring entity must prepare a report and publish it, outlining the value and kind of goods/services sole sourced, indicating the circumstances and conditions that justified the sole-source award and publishing said intention to sole-source in advance and ask for comments, similar to federal Advance Contract Award Notices (ACANs).

Understandably, the projects that are being sole-sourced in Ontario did not align with the exceptions noted above and hence, were in clear breach of CETA.

Additionally, the OGCA took the preemptive position that the buyers of construction would likely argue that the reference to “events unforeseeable by the procuring entity” would be relied upon to argue that COVID-19 could be used as an impediment to procurement. The OGCA retorted that construction was deemed essential over this past year and that many like projects were properly tendered and procured by other buyers of construction who represent academic, municipal, medical and other institutional, industrial, and commercial projects.

Secondly, sole-sourcing of any construction project is an extremely bad procurement practice as it eliminates competition. This practice does not clearly indicate to both the buyer of construction and especially to the constituents of that public entity that they have indeed obtained the “best price,” and the OGCA believes that this is not in the best interest of the taxpayer.

The OGCA believes that once the actual taxpayers have been made aware of this type of procurement practice being utilized, the offending jurisdiction will be placed under a different level of scrutiny on all procurements moving forward, and new checks and balances will be requested by the public to ensure proper industry practices are being followed.

Thirdly, the OGCA highlighted for the offending public buyers of construction that the Broader Public Sector Procurement Directive (BPSPD), issued by the Management Board of Cabinet, clearly sets out procurement rules in the purchase of goods and services by organizations in Ontario using public funds. The BPS Procurement Directive applies to all designated BPS organizations under the Broader Public Sector Accountability Act, 2010. A complete list of which entities are mandated to utilize this directive can be found through the attached link: https://oecm.ca/sourcing/bps-procurement-directive.

The issuance of a sole-sourced construction project is not in anyone’s best interests, other than possibly the contractor receiving said award. Instead, by doing so, the buyer of construction has, intentionally or inadvertently, brought attention to this as a practice that is not tolerated in Ontario, and is akin to criminal on the part of the buyer. The optics of utilizing this form of procurement are atrocious, and the negative stigma of corruption will then quickly proliferate the entire purchasing entity.

With all of the negative connotations associated with sole-sourcing, the OGCA cannot understand why any public buyer of construction would ever decide to move to this as a viable alternative to a fair, open and transparent tendering process.

Should any of our members know of any public buyer of construction that is sole-sourcing a project, or if you require any assistance from the OGCA, please contact me directly at giovanni@ogca.ca or via phone at (905) 671-3969.

Giovanni Cautillo is the OGCA’s president.

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