No. PUR-09. Title: Purchasing Procedures and Contract Management Policy Procedure SOP

Transcription

1 Title: Purchasing Procedures and Contract Management Policy Procedure SOP Category: Corporate Services & Operations Dept/Prog/Service: Purchasing Approved: Exec. VP, Corporate Services & Operations Signature: No. Distribution: Organization Wide Approval Date: Nov, 2001 Reviewed/Revised Date: Oct. 7, 2014 Next Review Date: Oct, 2017 CROSS REFERENCES: ADMIN-21 Approval Authorities, FIN-ap-03 Invoice/Cheque Request Authorization, PUR-04 Capital Equipment Procurement, PUR-10 Competitive Procurement Processes and PUR-17 Non-competitive, Single and Sole Sourcing Processes, and PUR-19 Supplier Debriefing and Bid Dispute Resolution 1. PURPOSE The purpose of this policy is to inform management of processes, time requirements and their role in procurement and contract management to facilitate sufficient planning and compliance with Broader Public Sector Procurement Directives. 2. POLICY STATEMENT All procurements and resulting contracts will be managed responsibly and effectively by all management and staff involved in the procurement processes. Unless a qualifying Agreement on Internal Trade (AIT) exemption, exclusion or single or sole source situation exists the procurement method utilized will be as follows: Procurement Value For goods and non-consulting services $0 up to but not including $25,000 For Consulting Services $0 to but not including $100,000 and for goods and non-consulting services $25,000 up to but not including $100,000 For all goods and services $100,000 and up to VOR ceiling price More than the VOR ceiling price Construction $100,000 or more Procurement Method Vendor-of-Record (VOR), Contracted Supplier or minimum three (3) documented verbal quotes Vendor-of-Record (VOR) or at minimum Invitational Competitive or Second-Stage Selection with minimum 3 pre-qualified suppliers invited Vendor-of-Record (VOR) or Open Competitive Open Competitive Open Competitive Purchasing will assist management throughout the procurement process to ensure all participants are informed of process steps, time requirements and procurement directives in order to achieve value for money through an open, fair and transparent process that is consistently managed. Management will allow sufficient time for planning, information gathering and the purchasing process to be accountable for the results of their procurement decisions and compliance with all laws and regulations. Management will ensure that signed written contracts are established where required and before the provision of goods or services commences and subsequently effectively manage the contracts during the applicable term. Before the provision of services, management will establish clear terms of reference and expense claim and reimbursement rules compliant with the Broader Public Sector Expenses Directive. This material has been prepared solely for use at Thunder Bay Regional Health Sciences Centre (TBRHSC). TBRHSC accepts no responsibility for use of this material by any person or organization not associated with TBRHSC. No part of this document may be reproduced in any form for publication without permission of TBRHSC. A printed copy of this document may not reflect the current electronic version on the TBRHSC intranet. Page 1 of 8

2 Purchasing Procedure and Contract Management Page 2 of 8 3. SCOPE Management or department manager refers to the most responsible administrator, whether manager or director or vice-president, for the department or area the supply or service is intended and compliant with functional centre mandates and accountability. Goods or services/goods and services means any goods, equipment, construction, and services, including but not limited to Information Technology and Consulting Services. 4. DEFINITIONS Agreement on Internal Trade (AIT) is an intergovernmental agreement that came into force in 1995 to foster improved interprovincial trade by addressing obstacles to the free movement of persons, goods, services and investments within Canada. Competitive Procurement is a set of formal procedures for developing a procurement contract through an invitational, bidding or proposal process. The intent is to solicit fair, impartial competitive bids. Consulting Services is the provision of expertise or strategic advice that is presented for consideration and decision-making, by person or entity under an agreement, other than an employment agreement. Invitational Competitive Procurement is any form of requesting a minimum of three (3) qualified suppliers to submit a written proposal in response to the defined requirements outlined by an individual/ organization. Open Competitive Procurement is a set of formal procedures for developing a procurement contract through a bidding or proposal process open to all potential suppliers via a public posting of defined requirements outlined by an individual/ organization. Procurement means acquisition by any means, including by purchase, rental, lease or conditional sale, of goods and services. Purchase Order (PO) means a written offer made by a purchaser to a supplier formally stating the terms and conditions of a proposed transaction. Request for Expressions of Interest (RFEI) is a document used to gather information about supplier interest in an opportunity or information about supplier capabilities/qualifications. Request for Information (RFI) is a document issued to potential suppliers to gather general supplier, service or product information. It is a procurement procedure whereby suppliers are provided with a general or preliminary description of a problem or need and are requested to provide information or advice on how to better define the problem or need, or alternative solutions. Request for Proposal (RFP) is a document used to request suppliers to supply solutions for the delivery of complex products or services or to provide alternative options or solutions. It is a process that uses predefined evaluation criteria in which price is not the only factor. Request for Quotation (RFQ) is a document similar to an RFT where an Organization describes exactly what needs to be purchased and the evaluation is based solely on price. Request for Supplier Qualifications (RFSQ) and/or Request for Pre-Qualifications (RFPQ) is a document used to gather information on supplier capabilities and qualifications with the intention of creating a list of pre-qualified suppliers. Request for Tender (RFT) is a document used to request supplier responses to supply goods or services based on stated delivery requirements, performance specifications, terms and conditions. An RFT usually focuses the evaluation criteria predominantly on price and delivery requirements.

3 Purchasing Procedure and Contract Management Page 3 of 8 Requisition A formal request to obtain goods or services made within an organization, generally from the end user to the procurement department. Vendor-of- Record (VOR) Arrangement means a procurement arrangement, typically established through an RFP that authorizes one or more qualified suppliers to provide goods/services for a defined period on terms and conditions, including pricing, as set out in the VOR agreement. VOR - Second-Stage Selection a formal second-stage process, where an organization invites a predefined number of pre-qualified VOR suppliers to submit a written proposal in response to the defined requirements outlined by an individual/ organization. A pre-defined number of suppliers to invite must be established for procurement value ranges and must be at least three (3) where Invitational Competitive Procurement is specified as the minimum procurement method to be used. 5. PROCEDURE Stock Requisitioning For supply items stocked by TBRHSC, the manager or authorized designate will complete a Stock Requisition and submit to Material Distribution (Stores). For printed supplies and forms a Printing Requisition is completed and submitted to the Print Shop. For departments with significant stock turnover, Purchasing will provide designated staff with access to an e-requisitioning system and/or a Stock Top Up system will be arranged with Materials Distribution. Refer to policy ADMIN-21 Signing Authorities and/or FIN-ap-03 for additional information on delegating signing authority. Ordering Designated Supplies or Services with Designated Suppliers Purchasing will establish designated suppliers via competitive procurement for common frequent items such as office supplies and travel arrangements. Purchasing will communicate details about the suppliers, changes in suppliers, methods of initiating purchases and allowable goods or services for purchase as well as coordinate staff training if required. Management and designated staff must use the designated suppliers for the designated products and services via the methods communicated or provided. Non-Stock Purchase Order Requisitioning For non-stock requisitioning or preliminary product information or capital, services and some repair items the department manager will complete a Non-Stock Purchase Order Requisition and submit to Purchasing. For all other non stock goods, the e-requisitioning system can be utilized. Access and training is arranged through the designated buyer for the area. Prior to commencing procurement, appropriate approval authorities must approve/sign the requisition. The required approval authority is dependent on the total pre-tax value of the procurement and must include all costs to acquire and install the goods and services for their intended use and the value of all contract extension terms. For information on approval authorities reference policy ADMIN 21. The Purchasing department will determine the appropriate means of procurement per policy, dependent on the total pre-tax value of the procurement including any contract term extensions. The overall value of procurement must not be reduced or divided into multiple procurements in order to circumvent the approval authority or competitive procurement thresholds. Managers must not select suppliers and/or offer contracts to Suppliers without the involvement of Purchasing.

4 Purchasing Procedure and Contract Management Page 4 of 8 Prior to commencing procurement for any professional services, management must consult with Purchasing to determine if the services will be defined as Consulting Services subject to competitive procurement and annual disclosure to the Northwest Local Health Integration Network. Services involved with decentralized supply chain activities, such as Information Technology/Systems and Pharmacy, or others that often require professional services and/or construction, such as Administration, Planning, and Human Resources, must work closely with Purchasing to ensure consistently managed, compliant, open, fair and transparent processes to maximize value for money. For capital acquisition see also PUR-04 for additional details and procedures pertaining to capital procurement. Vendor-of-Record To streamline the procurement process, Purchasing may utilize VOR arrangements established by: Ontario Ministry of Government Services (MGS) following the corresponding published VOR User Guide provided by the MGS TBRHSC and/or Northwest Supply Chain through an open competitive process Ontario Education Collaborative Marketplace, other MUSH sector (municipalities, universities, school boards, hospitals, nursing homes and long-term care facilities, police, and children s aid societies) and shared service organizations (SSO) it participates in. For each Vendor-of-Record, Purchasing in collaboration with the most responsible end user and working with the next level of signing authority, usually the Director or Senior Manager will identify a VOR ceiling price which is the maximum dollar value of an individual procurement under the VOR arrangement. A VOR ceiling will not exceed $100,000 unless the goods or services have been preapproved via a budgetary process or by appropriate signing authority. For any individual procurement above the VOR Ceiling price, TBRHSC must conduct procurement using a new Open Competitive Process instead of the VOR arrangement. Any competitive procurement to establish or pre-qualify a VOR must be approved by the appropriate approval authority based on the total estimated value of the procurement over the life of the VOR arrangement. Prior to final contracts being signed, the most responsible Director will review the contract. Where IT/IS may be impacted, the Senior Director of Informatics or appropriate designate must review the final contract prior to signing. Procurement Means and Methods Where the value of goods or services is $100,000 or more and a qualified VOR has not been established or the procurement value exceeds the VOR ceiling price, Purchasing will assign a Contract Procurement Specialist (CPS) to facilitate a formal Open Competitive Procurement process. Procurement for Consulting Services of any value must be by competitive means. Therefore, for Consulting Services valued at less than $100,000, where a qualified VOR has not been established, an Invitational Competitive Procurement process or Second-Stage Selection process with minimum three (3) invited suppliers will be utilized. Where the value of goods or non-consulting services is $25,000 and up to but not including $100,000 and a qualified VOR has not been established, Purchasing will lead an Invitational Competitive Procurement process or Second-Stage Selection process with minimum three (3) invited suppliers. Where the value of goods or non-consulting services is less than $25,000 Purchasing will work with the manager to determine the most appropriate means of procurement from one of the following: Vendor-of-Record Contracted Supplier with a current executed contract with TBRHSC where the provision of additional services at specified hourly rates has been defined Three verbal or written quotes(preferred method) where the exact same information is provided for quotation and results of verbal responses are recorded and kept on file

5 Purchasing Procedure and Contract Management Page 5 of 8 For any procurement means or method, evaluation criteria must be pre-determined and will include consideration of accessibility obligations, environmental sourcing and ergonomic requirements. Purchase Orders Where a formal contract is not established, Purchasing will provide a Purchase Order number for or a Purchase Order to the selected supplier. Purchasing s placement of the order with the supplier is expressly conditional upon supplier s acceptance of all of the terms and conditions of the purchase order and the mandatory terms and conditions stated in the request for documents. Any objection by the supplier to the terms and conditions must be in writing, within ten (10) days of the date of order and agreed to via a modified purchase order. Where a competitive process has been utilized and formal contact established, Purchasing will issue Purchase Order numbers to track payments under the contract. For significant construction related awards, where Canadian Construction Document Committee (CCDC) contracts, or equivalent, are signed, a Non-Receipt Purchase Order will be created for the purposes of retaining information such as cost, capital approval number, CCDC reference number and any other pertinent data deemed to provide future value. Information Gathering and Competitive Procurement The CPS will lead any formal competitive process open to public bidding or proposals and/or invited suppliers or VOR. A number of procedures and timelines must be carefully followed in order to solicit fair, impartial, competitive bids. Where deemed beneficial, Purchasing may lead supplier pre-qualification procedures and release a Request for Supplier Qualification (RFSQ) to gather information about supplier capabilities and qualifications in order to pre-qualify suppliers. This may be for an immediate product or service need or to identify qualified candidates in advance of expected future competitions. Purchasing will include in the RFSQ document terms and conditions that disclaims the obligation of TBRHSC to call on any supplier to provide goods or services as a result of pre-qualification. The manager and subject experts must provide all the functional and technical specifications to Purchasing including information on any desired consumable goods, warranties, service, training and/or transitional needs in clear concise terms. Before a Request for Quotation (RFQ), Request for Proposal (RFP) or Request for Tender (RFT) can be issued the manager and subject experts must also assist in determining the evaluation criteria and methodology that is published as part of the request. If required for complex procurement the CPS will lead an information gathering stage that may include informal supplier or product research or formal processes such as releasing a Request For Expressions of Interest (RFEI) or Request For Information (RFI) which take time and effort to conduct appropriately. The RFEI may be used to gain a better understanding of the capacity of the supplier community to provide the services or solutions needed. The RFI is to gain information or advice on how to better define the problem or need, or alternative solutions. A response to a RFEI or RFI must not pre-qualify a potential supplier and must not influence their chances of being the successful proponent on any subsequent opportunity. Where an external consultant has been retained to develop the competitive procurement documents the terms of agreement must preclude them from participating in the competition. In addition to other requirements and disclosures, the term of the agreement and any options to extend the agreement must be set out in the competitive procurement documents. For additional and detailed information on the formal competitive procedures including posting documents, timelines and bid receipt refer to PUR-10 Competitive Procurement Processes.

6 Purchasing Procedure and Contract Management Page 6 of 8 For additional and detailed information on the evaluation stage including evaluation criteria, evaluation process, evaluation team, evaluation matrix and winning bid refer to PUR-18 Evaluation Process. Non-competitive Procurement Process Due to special circumstances Purchasing may utilize or authorize non-competitive procurement means only in situations outlined in the exemption, exception, or non-application clauses of the Agreement on Internal Trade (AIT) or other trade agreement and in single-source and sole-source situations. For additional information refer to PUR-17 Non-Competitive, Single and Sole Sourcing Processes. Executing and Establishing the Contract Where a formal competitive process was established the contract must be finalized using the form and term of agreement that was released with the procurement documents. Extending the term of agreement beyond that set out in the competitive procurement document amounts to non-competitive procurement where the extension affects the value and/or stated deliverables of procurement. Regardless of procurement means or method an agreement between TBRHSC and the successful supplier must be formally defined in a signed written contract authorized by the appropriate approval authority before the provision of supplying goods or services commences. When executing the contract, TBRHSC will obtain the supplier signatures before obtaining the designated approval authority signature. All contracts must include appropriate cancellation or termination clauses and if appropriate, cancellation or termination at critical project life-cycle stages. With permission from Executive Vice President Corporate Services and Operations and/or Senior Director, Quality and Risk Management, the General Manager, Northwest Supply Chain or delegate may seek legal advice on the development of contract clauses. Purchasing will maintain and make available best practice contract templates. All agreements must be compliant will all related requirements including but not limited to Ontario law, contract law, law of competitive processes, privacy legislation, accessibility legislation, and trade agreements, Agreement on Internal Trade and Ontario-Quebec Trade and Cooperative Agreement. Where there is an immediate need for goods or services and TBRHSC and the supplier have been unable to finalize the contract described above, Purchasing may issue a letter of intent, memorandum of understanding (MOU) or an interim Purchase Order with reason for the decision and approval by the appropriate authority documented. For services the following must be established in the contract: Clear terms of reference for the assignment. The terms should include objectives, background, scope, constraints, staff responsibilities, tangible deliverables, metrics, timing, progress reporting, approval requirements, and knowledge transfer requirements. Expense claim and reimbursement rules compliant with the Broader Public Sector Expenses Directive and ensure all expenses are claimed and reimbursed in accordance with these rules. Under no circumstances can hospitality, incidental or food expenses be considered allowable expenses for consultants and contractors and are not allowed in any contract between TBRHSC and the consultant or contractor. Only after a contract agreement with the successful supplier has been finalized and executed is contract award communicated. For procurements valued at $100,000 or more, Purchasing must post the contract award notification in the same manner as the procurement documents were posted. The contract award

7 Purchasing Procedure and Contract Management Page 7 of 8 notification must list the name of the successful supplier, agreement start and end dates, and any extension options. All management and staff involved in procurement must maintain confidentiality throughout the procurement process, including but not limited to the evaluation stage and contract establishment phase in order to ensure a fair and consistently managed process. For additional information on supplier debriefing and dispute settlement refer to PUR-19 Supplier Debriefing and Bid Dispute Resolution Contract Management Contract management is an activity that all management and supply chain personnel participate in to maximize financial and operational performance and minimize risk. Typical contract management consists of the following steps: 1. Orientation (Common understanding and expectations before contract commences) 2. Relationship Management (Jointly determine rules of engagement) 3. Monitoring and Evaluation (Throughout life of contract, of contract compliance, end user satisfaction, issue management and internal compliance to TBRHSC policies and BPS directives) 4. Contract Extension and Closeout (Compliant with terms of contract or planned off boarding completed) 5. Continuous Improvement (Lessons learned, shared ownership for improvement and driving value) 6. Document Retention (Written trail of all contract management and communication retained in Purchasing for 7 years) The most responsible contract manager must monitor and evaluate contract deliverables, compliance and satisfaction with same as well as ensure all contract management documentation, communication and issues are forwarded to Purchasing for record retention and additional contract management activities (annual vendor performance review). For all contracts $100,000 or more, the most responsible manager, purchasing, and the supplier will conduct an annual contract management review whereby all the parties complete the Vendor Scorecard NSC-43 and subsequently complete a template specific to the contract deliverables and metrics if applicable. All invoices must contain detailed information sufficient to warrant payment. Where the contract provides for reimbursement of specified out-of-pocket expenditures, claims for reimbursement must include sufficient detailed receipts to warrant payment. Where a Purchase Order has been issued, all invoices, shipping notices, packing slips affecting this order must contain the applicable order number. Prior to authorizing invoice payment, management will also review the invoice and supporting details for contractual compliance. For service contracts management must ensure that expenses are claimed and reimbursed only where the contract explicitly provides for reimbursement of expenses. Service logs should be collected for each on site visit. Throughout the life of the contract, supplier performance must be managed and documented by both Purchasing and management and any performance issues must be addressed and disputes managed via the dispute resolution process identified in the contract. Any assignments of contract must be properly documented. Operational issues remain the responsibility of the most responsible manager including record retention. Issues needing escalation in action should be discussed with the CPS and/or Manager Regional Strategic Sourcing for advice or active engagement. All goods are to be shipped freight prepaid to TBRHSC destination, unless otherwise stated and agreed upon. The Purchase Order may be cancelled if delivery is not made or services are not performed by the date specified.

8 Purchasing Procedure and Contract Management Page 8 of 8 Purchasing will ensure the application and exemption of appropriate taxes per contract. The following lists most items exempt from Provincial taxes: Oxygen masks and similar equipment Communication equipment used by patients to call for assistance Patient lifting devices Research equipment Patient equipment such as beds, footstools, bath tubs, etc. normally free-standing in patients rooms Implants Incontinent products, feminine hygiene products Medical devices such as walkers, hearing aids, etc. Basic groceries but not snacks Banking services Water bills Toilet bath or shower seats Communication devices for impairments Heart monitoring devices Asthmatic devices (chambers, inhalers) Respiratory supplies Lymph derma devices Diabetic supplies Artificial limbs Canes and crutches Compression stockings 6. RELATED PRACTICES AND/OR LEGISLATIONS The Agreement on Internal Trade (AIT) July 1995 with protocols of amendment to 2012 Broader Public Sector Accountability Act, 2010 Broader Public Sector Procurement Directive, July 2011 Canadian Law of Competitive Processes and Contract Law Ontario-Quebec Trade and Cooperative Agreement, REFERENCES Broader Public Sector Accountability Act, Broader Public Sector Expenses Directive Part IV Expense Claims Allowable Expenses Broader Public Sector Procurement Directive, July 2011 Mandatory requirements 4, 5, 8, 15, 16, 17, 18, 19, 22 and definitions