BH.04.NOV0918.R18 - Review of Compliance with Procurement Policy & Procedure

RECOMMENDATION(S):

(a) That the Finance + Facilities Committee makes recommendation to the Board of Health to receive this report, as presented, for information.

BACKGROUND:

In accordance with the Ontario Public Health Standards (OPHS), the Broader Public Sector Procurement Guidelines, and public sector organizational best practices, WDGPH has a procurement policy and procedure in place to set out the internal rules to be followed when purchases are made on behalf of the organization.

The current policy and procedure came into effect in December 2015, and a policy decision was made to align with the Board Public Sector Procurement Guideline as a best practice. Staff are in the process of updating the Procurement Policy and Procedure to include requirements from the Comprehensive Economic and Trade Agreement (CETA) between Canada and the European Union, the Canada Free Trade Agreement (CFTA) which recently came into effect, and the United States-Mexico-Canada Agreement (USMCA) which is pending approval.

Requirements 13 and 14 (d) of the Fiduciary Requirements domain and requirements 12 (g) and 14 (g) of the Good Governance and Management Practices domain of the Accountability Framework in the Ontario Public Health Standards outlines the Board of Health’s responsibility for ensuring that the organization has a procurement policy and procedure(s) and that the procurement policy is followed across all programs/service areas.
Specifically, the Fiduciary Requirements domain says that:

(13) The board of health shall comply with the Municipal Act, 2001 which requires that boards of health ensure that the administration adopts policies with respect to its procurement of goods and services. All procurement of goods and services should normally be through an open and competitive process.

(14) The board of health shall ensure that the administration implements appropriate financial management and oversight which ensures the following are in place

(d) A procedure to ensure that the procurement policy is followed across all programs/services areas.

And the Good Governance and Management Practices domain says that:

(12) The board of health shall develop and implement policies or by-laws regarding the functioning of the governing body, including:

(g) Procurement of external advisors to the board such as lawyers and auditors (if applicable).

(14) The board of health shall provide governance direction to the administration and ensure that the board of health remains informed about the activities of the organization on the following:

(g) Financial management, including procurement policies and practices.

To this end, this report is intended to:

1) Provide the BOH with an outline of the key aspects of WDGPH’s procurement policy and procedure

2) Provide the BOH with an evaluation of the effectiveness of the organization’s procurement processes

3) Present the results of an internal review of compliance with the procurement policy and procedure that was undertaken by the Manager of Finance and the Procurement & Projects Analyst, based on transactions that occurred between October 1, 2017 and September 30, 2018.

WDGPH’s procurement procedure sets out the processes that must be undertaken for purchases based on the total procurement value, as follows:

Goods and Non-Consulting Services

• $0 - $500 - Procurement Card with No Purchase Requisition;
• $501 - $10,000 - Informal - One Written Quote;
• $10,001 - $50,000 - Informal - Three Written Quotes OR Formal Invitational Competitive Process OR Formal Open Competitive Process; and
• $50,001 and more - Formal Open Competitive Process.

Consulting Services

• $0 - $50,000 - Informal – Three Written Quotes OR Formal Invitational Competitive Process OR Formal Competitive Process
• $50,001 and more - Formal Open Competitive Process

The total procurement value must not be reduced (i.e. dividing a single procurement into multiple procurements) in order to circumvent the approval or procurement processes.

Wherever possible, a competitive process will be used for purchases over $10,000. Any deviation from a competitive process, identified by the Procurement Processes in the above table, must be supported by a duly approved Single Source/Sole Source Certificate.2

PUBLIC HEALTH AND/OR FINANCIAL IMPLICATIONS:

Review Work

Approach

Two types of samples were selected:

• The top ten largest transactions recorded during the period; and
• A random sample of five other transactions during the period.

The rationale behind this approach was to test whether the largest transactions are in compliance with the policy and procedure, and to also check that the policy and procedure are being applied consistently, regardless of the size of the transaction.

Sample Selection

1) All Accounts Payable (AP) and Purchase Order (PO) transactions for the period October 1 2017 through September 30, 2018 were exported from Sage 300 ERP (accounting software) to Microsoft Excel.

2) Transactions in the following categories were eliminated, as all are exempt from the purchasing policy and procedure:

a. Board of Health Honorariums
b. Board of Health Mileage
c. Legal Fees
d. Audit Fees
e. Travel – Mileage
f. Travel – Parking

3) The population was then sorted by transaction size, from largest to smallest, and the ten largest transactions were selected for the sample.
4) Excel’s random number generator was then used to assign a random number between 0 and 1 to each transaction.
5) The random numbers generated were sorted from largest to smallest, which effectively sorted the remaining transactions in a random order.
6) The first five randomly sorted transactions were selected for the sample.
7) A total of 15 transactions was selected for review.

Review

The selected sample was sent to the Procurement & Projects Analyst to trace the transactions back through the procurement process, and to document the following information:

• Whether the Policy & Procedure is applicable to the transaction or exempt.
• The type of procurement process that was followed.
• If the Policy & Procedure is applicable to the transaction, and it exceeded the threshold for a competitive procurement process but did not undergo one, is there a Single Source/Sole Source Certificate on file?
• Whether or not the transaction is compliant with the WDGPH Procurement Policy & Procedure.

Results

All fifteen transactions examined were fully compliant with the Procurement Policy & Procedure.

Conclusion

Education and simplification of policies, procedures and guidelines around procurement will continue in support of maintaining the Agency’s commitment to open, fair and transparent procurement processes that help realize the best value for money.

PUBLIC HEALTH AND/OR FINANCIAL IMPLICATIONS:

N/A.

APPENDICES:

N/A.

REFERENCES:

1. Wellington-Dufferin-Guelph Public Health. (2015). Procurement Policy CA.51.01.112. Guelph, Ontario.
2. Wellington-Dufferin-Guelph Public Health. (2015). Procurement Procedure CA.51.02.112. Guelph, Ontario.