Office of the Auditor General of Canada (OAG) has audited public procurement by the Department of National Defense of Canada. The audit examined the timeliness of deliveries of necessary equipment and materiel to the Canadian Armed Forces. It verified that the requested materiel (tools, spare parts, uniforms, specialized clothing and rations) was delivered in a timely manner while avoiding needless transportation costs. The supply of ammunition and military equipment was excluded from the audit.

Audit Objectives:

The objective of this audit was to determine whether, for selected materiel, the Ministry of National Defense delivered in a timely manner the materiel items requested by Canadian Armed Forces personnel and whether the materiel supply chain from ordering to delivery to the Armed Forces was well established.

1.         The Ministry of National Defense did not stock the right quantities of materiel at the right locations. This required additional steps to procure materiel or to transfer it between locations, which slowed deliveries. Poor stock management also resulted in increased use of commercial transportation, which often costs more than other options. In addition, the Ministry of National Defense did not develop adequate performance indicators on stock availability.

2.         The Ministry of National Defense did not rigorously prioritize requests for military supplies; a large portion of high-priority requests were flagged as high priority without justification.

3.         For materiel movements within Canada, the Ministry of National Defense did not have the right controls to determine the most appropriate transportation methods to fill requests and to oversee transportation costs.

The procurement and delivery of particularly important materiel, in particular that required to maintain the security of the state, should be based on three pillars: timeliness, minimized transportation costs, and increased efficiency.

1.         The Ministry of National Defense should review its materiel forecasting and positioning to ensure that sufficient stocks are maintained at the right locations. It should also review its materiel availability measures at the warehouse and national levels and use these measures to monitor whether stock levels are met.

2.         The Ministry of National Defense should improve its oversight of high-priority requests to ensure that such requests are used only when necessary.

3.         The Ministry of National Defense should communicate the costs of all available transportation methods to the government and provide clear guidance on how to select the mode of transportation to ensure that decisions are founded on a full understanding of costs.

The Office of the Auditor General of Alberta audited the Alberta Infrastructure's public procurement to ensure procurement processes are effective in delivering value for money and reducing the risk of costly legal challenges. The Alberta Infrastructure's procurement processes were examined to ensure fair and competitive procurement of construction tenders.

Audit Criteria:

Under existing regulations, Alberta Infrastructure should:

• ensure the solicitation method is appropriate and ensure solicitation documents are posted for the required time and contain required information;
• ensure it has adequate controls to receive proponent responses;
• ensure it has adequate controls to protect the confidentiality of information received;
• ensure its procurement evaluation and contract award processes are clear, consistent, and impartial;
• prepare and retain appropriate procurement records and information;

•          ensure all pre- and post-award communication to proponents is complete and transparent.

The audit found that Alberta Infrastructure has processes to conduct procurements of its construction tenders fairly and competitively, but not all these processes are effective, and improvements can be made.

Alberta Infrastructure competitively procured its construction contracts, included the necessary information in solicitation documents and followed its evaluation process. However, Alberta Infrastructure's processes did not always result in procurements that were compliant with the trade agreements. Moreover, it did not always follow its process for receiving submissions and ensuring only submissions received on or before the procurement close were considered for evaluation. Alberta Infrastructure had weaknesses in its procurement information system access controls and it did not always evaluate proponent submissions consistently.

Fair and competitive procurement processes are needed to ensure Albertans get good value from the significant dollars their government spends on construction projects. Fair and competitive processes provide market participants with an equal opportunity to bid and help ensure capital projects are delivered within the scope, on budget and on schedule.

1.         Alberta Infrastructure should improve controls for receiving submissions and posting of solicitation documents.

2.         Alberta Infrastructure should ensure its controls for verifying that it receives electronic submissions on or before the procurement close are operating appropriately.

3.         Alberta Infrastructure should improve its access controls for its procurement information systems.

4.         Alberta Infrastructure should improve its controls for:

• verifying compliance with request for proposal requirements;
• identifying potential conflicts of interest;
• ensuring evaluation comments are adequately documented.

The Office of the Auditor General of British Columbia audited the prioritization, planning, implementation and evaluation of capital projects at the Ministry of Advanced Education. The audit focused on whether procurement of major construction projects in the Ministry of Advanced Education is in keeping with government policy.

Audit Criteria:

The Ministry of Advanced Education was required to ensure that:

• Post-secondary institution capital planning processes include prioritizing projects to determine where the greatest capital asset needs exist.
• The capital procurement planning and risk management activities carried out are in line with government’s framework and guide.
• Capital procurement is being accomplished in a competitive and transparent manner, demonstrating value for money.

• Results of capital procurement processes are monitored and reported on to regulatory agencies and made available to the public.

The Ministry of Advanced Education’s planning processes, at the time the projects were planned (2005-2009), for capital procurement were not meeting all of the related requirements of government’s Capital Asset Management Framework or the Ministry’s Capital Asset Reference Guide for the completed projects. However, upon re-examination of their recent practices, it was confirmed that the Ministry is now compliant.

Using a standardized approach helps decision-makers understand the pros and cons of the choices they have to make, especially when needs exceed the money available.

It was recommended that Treasury Board staff:

1.         Define the key capital project documents that must be retained, where they should be kept, who should retain them, and for how long.

It was recommended that the Ministry of Advanced Education:

1.         Use its improved understanding of the condition of its facilities to prioritize significant maintenance and new construction projects, and to inform its capital planning goals and priorities.

2.         Follow its documentation processes to ensure capital submissions are complete.

3.         Require post-secondary institutions to report on their compliance with the conflict-of-interest principles in the Capital Asset Management Framework for major projects, as part of the post-awarding communication to the Ministry.

4.         Create a risk-based audit plan to ensure that periodic, independent procurement or financial audits (or both) are completed for significant, provincial government-funded capital projects.

5.         Improve its knowledge management practices by requiring project managers to review lessons learned on significant projects, and share and discuss project successes and challenges with Ministry staff.

6.         Require post-secondary institutions, after they complete a capital project, to assess and report back on their progress against the original business case objectives.