3.1. Procurement strategy: Introduction
- A procurement strategy defines in general terms how a good, service, or construction will be procured, and will include, at the highest level, the determination to proceed competitively or non-competitively and applicable details in support of industrial and regional benefits or other national objectives. The strategy could be quite straightforward, such as the decision to use a standing offer, or could be more detailed, which would be used for major projects.
- The development of a procurement strategy begins with the first meeting between Public Works and Government Services Canada and the client, and often even before this point. It is the most important step in the procurement process as it influences the scope of the requirement and determines the extent of competition.
- In developing the procurement strategy, the guiding principles described in 1.10.5 Guiding Principles must be taken into consideration. Specifically, the procurement strategy must satisfy the client's operational requirements and comply with legal requirements, while achieving best value, and advancing national objectives.
- The assessment of pricing considerations, options and potential risks and the alignment of pricing strategy to the procurement strategy is done early on and throughout the acquisition lifecycle.
3.1.1 Planning the procurement
- A non-exhaustive list of some of the factors that the client and the contracting officer can take into account when developing the procurement strategy are listed as follows:
- the method of supply;
- total estimated cost including all options, as well as maintenance and storage costs, as applicable;
- contract period;
- delivery requirements;
- the procurement schedule;
- evaluation procedures and method of selection;
- environmental factors;
- commercial products versus customized solutions;
- risk factors;
- limitation of liability or indemnification;
- possible use of a fairness monitor;
- the participation of small and medium enterprises;
- Indigenous considerations;
- accessibility requirements;
- other national objectives;
- compatibility with existing solutions;
- the opportunity to consolidate requirements;
- disposal of the product, if applicable, and
- renewal (procurement of a replacement good or service and all transfer costs).
- The contracting officer is required to engage the services of a Price Support Directorate advisor when a procurement presents any of the following characteristics, in accordance with the Directive on the Use of Cost and Price Analysis Services:
- Any potential sole-source procurement with a total estimated value of $1,000,000 or more, including applicable taxes, options and amendments.
- Any competitive procurement with a total estimated value of $1,000,000 or more, including applicable taxes and options, where only one compliant bid is received.
- Any competitive procurement with a total estimated value of $1,000,000 or more, including applicable taxes, with contract provisions for negotiated prices or where prices are likely to be negotiated as a result of a contract amendment.
- Any competitive procurement, with a total estimated value of $10,000,000 or more, including applicable taxes, options and amendments.
- The approval authority must be given the opportunity to approve or reject the proposed procurement strategy as early as possible in the process, to avoid the situation where a contracting officer has done significant work following a strategy which may not be approved.
- The procurement strategy must identify any deviations to contracting policies.
- If events during the procurement process result in a significant change in the procurement strategy, a revised procurement plan must be approved before implementation or completion of the procurement process.
- For related information, see 6.5 Procurement Approval Documents.
3.1.5 Procurement Risk Assessments for Complexity Level 1, 2 and 3 Procurements
- As soon as the key elements of the procurement strategy have been determined, or when it is determined that Treasury Board approval is required, the contracting officer must complete a procurement risk assessment (PRA), prior to preparing an approval document. For further instructions on completing the approval documents refer to section 6.5 Procurement Approval Documents.
- The procurement risk assessment process is applied in order to determine the level of risk the Government of Canada is exposed to when entering into contracts. The assessment process also provides the foundation for risk response strategies that will be employed to mitigate procurement risks and provide guidance to the contracting officer when high risks are identified.
- The PRA process places an emphasis on:
- The early assessment of contract risk factors that may put a procurement at risk;
- Recording the risks and identifying the response strategies in the approval documents;
- Communicating these risks to management and clients, as necessary; and
- Ensuring that risks are re-assessed in the procurement when circumstances dictate, as part of monitoring and continuous improvement.
- At any time during the procurement process, there may be a requirement to re-assess the complexity of the procurement or risk in the procurement because of changing factors in the procurement or its environment. If this occurs, a revised procurement risk assessment must be prepared to determine if any of the risk factors have changed.
- For Complexity Levels 1 through 3 inclusive, the procurement risk assessments are available on the Procurement Corner page on The Source, Public Works and Government Services Canada’s intranet site (available internally only).
- For Complexity Levels 4 and 5 inclusive, due to the high level of risk and uncertainty associated with these Complexity Levels, the contracting officer must contact the Risk Management Advisory Services (RMAS) who will work with the contracting officer in completing a custom risk assessment specific to the complexities of a Level 4 or 5 procurement.
- For procurements that fall under Schedule 3 of PWGSC’s Common Services Acquisitions Authorities (i.e., within Departmental Authority), contracting officers must identify the risks and the associated risk response measures for those risks identified as medium-high and high. Contracting officers are encouraged to discuss the issues associated with these risks with their supervisor, manager, or RMAS.
- For procurements that require the approval of Treasury Board, contracting officers must consult RMAS and work collaboratively to ensure that all relevant medium, medium-high and high risks are identified appropriately within the Treasury Board submission document. For more information on seeking Treasury Board approval, refer to section 184.108.40.206 Procurement requiring a Treasury Board Submission.
- When approval is required to issue an amendment, a Procurement Risk Assessment for Amendments (PRAA) must be completed. See Annex 6.4.6 Contract Amendment Approval Instructions for more detail.
- For more information on the Risk Assessment Framework, see the Acquisition Program Risk Assessment Framework.
3.1.10 Addressing Identified Risks in the Approval Document
- The approval document should contain the following elements:
- Risk Statement: This statement describes what risk may occur, the harm it may cause, the likelihood of the harm occurring and the extent (or severity) of its impact.
- Risk Response: This describes the action that can be taken to reduce the level of risk. Risk response measures can take the form of risk reduction so that the impact of the risk is lowered. Alternatively, avoidance and prevention measures can also reduce the likelihood of occurrence.
- Residual Risk: The residual risk is what remains after risk response measures have been applied. In theory, no risk can be completely eliminated, and so there must be a description of the remaining level of risk involved in the procurement. The level of the residual risk can be a critical factor in determining how to proceed with the procurement because the residual may be at an unacceptable level.
- A copy of the completed Procurement Risk Assessment (PRA) (see 3.1.5 Procurement Risk Assessments for Complexity Level 1, 2 and 3 Procurements) must accompany the approval document and be kept on file.
- The approval authority may direct the contracting officer to review the procurement strategy or risk factors; to seek review by Legal Services, Cost Analysts or other subject matter experts; or to repeat the complexity assessment or risk assessment.
- In cases where the PRA is revised, a copy must be attached to the approval document indicating which version it is and the reason for the revised PRA.
3.1.15 Complex Procurement
With the promulgation PN105R1 - Procurement Complexity Levels, Risk Assessment and Approval Authorities, the content of this section was reviewed and incorporated in sections 3.1.5 Procurement Risk Assessments for Complexity Level 1, 2 and 3 Procurements and 220.127.116.11 Complex Procurements requiring a Treasury Board Submission.
For reference purposes, section 3.1.15 is available in the Supply Manual Archive, Version 2014-3.