Item - 2009.AU11.5
Tracking Status
- City Council adopted this item on October 26, 2009 without amendments.
- This item was considered by Audit Committee on October 20, 2009 and was adopted with amendments. It will be considered by City Council on October 26, 2009.
AU11.5 - Process for Non-Competitive Procurement (Sole Sourcing) Needs Improvement
- Decision Type:
- ACTION
- Status:
- Adopted
- Wards:
- All
City Council Decision
City Council on October 26 and 27, 2009, adopted the following:
1. City Council request the Treasurer to report annually to Government Management Committee a summary of all sole source purchases including divisional purchase orders, as well as sole source purchases reported to the Standing Committees and Council.
2. City Council request the Treasurer to require that staff in the Purchasing and Materials Management Division report significant inappropriate sole source activity to senior divisional staff in order to address performance and training issues of divisional staff.
3. City Council request the Treasurer to require that the reasons for all sole source purchases, including those purchases approved in Standing Committee and Council reports, are recorded in the financial information system on a consistent basis.
4. City Council request the Treasurer to ensure policies and procedures to control and monitor the new $50,000 limit on divisional purchase orders are finalized and issued to divisional staff as soon as possible. Such procedures should address the justification and documentation requirements for sole source purchases.
5. City Council request the Treasurer to ensure that sole source procedures clearly state that solicitation of informal bids is not permitted. Similarly, for non emergency situations, vendors should not start work before purchase orders are approved and wherever possible, the first phase of multi-phased projects should undergo a competitive procurement process.
6. City Council request the Treasurer to re-emphasize to divisional management the importance of identifying procurement requirements and ensure that this information is communicated to the Purchasing and Materials Management Division and City Legal on a timely basis. This process would allow for sufficient lead time, such that both the Purchasing and Materials Management Division and City Legal can schedule their respective resources to meet divisional timelines.
7. City Council request the Treasurer to develop and communicate guidelines to assist divisional staff in identifying contractual relationships where the potential exists that the contractor could be deemed an employee by the Canada Revenue Agency.
8. City Council request the City Manager to direct City divisions to report back to the Treasurer on any consulting/contractor arrangements that may pose a significant risk of being deemed City employees by the Canada Revenue Agency.
Background Information (Committee)
https://www.toronto.ca/legdocs/mmis/2009/au/bgrd/backgroundfile-22122.pdf
Appendix 1 - Auditor General's Office (May 1, 2009) Process for Non-Competitive Procurement (Sole Sourcing) Needs Improvement
https://www.toronto.ca/legdocs/mmis/2009/au/bgrd/backgroundfile-22123.pdf
Appendix 2 - Management's Response to the Auditor General's Review
https://www.toronto.ca/legdocs/mmis/2009/au/bgrd/backgroundfile-22124.pdf
Motions (City Council)
AU11.5 - Process for Non-Competitive Procurement (Sole Sourcing) Needs Improvement
- Decision Type:
- ACTION
- Status:
- Amended
- Wards:
- All
Committee Recommendations
The Audit Committee recommends that:
1. City Council request the Treasurer to report annually to Government Management Committee a summary of all sole source purchases including divisional purchase orders, as well as sole source purchases reported to the Standing Committees and Council.
2. City Council request the Treasurer to require that staff in the Purchasing and Materials Management Division report significant inappropriate sole source activity to senior divisional staff in order to address performance and training issues of divisional staff.
3. City Council request the Treasurer to require that the reasons for all sole source purchases, including those purchases approved in Standing Committee and Council reports, are recorded in the financial information system on a consistent basis.
4. City Council request the Treasurer to ensure policies and procedures to control and monitor the new $50,000 limit on divisional purchase orders are finalized and issued to divisional staff as soon as possible. Such procedures should address the justification and documentation requirements for sole source purchases.
5. City Council request the Treasurer to ensure that sole source procedures clearly state that solicitation of informal bids is not permitted. Similarly, for non emergency situations, vendors should not start work before purchase orders are approved and wherever possible, the first phase of multi-phased projects should undergo a competitive procurement process.
6. City Council request the Treasurer to re-emphasize to divisional management the importance of identifying procurement requirements and ensure that this information is communicated to the Purchasing and Materials Management Division and City Legal on a timely basis. This process would allow for sufficient lead time, such that both the Purchasing and Materials Management Division and City Legal can schedule their respective resources to meet divisional timelines.
7. City Council request the Treasurer to develop and communicate guidelines to assist divisional staff in identifying contractual relationships where the potential exists that the contractor could be deemed an employee by the Canada Revenue Agency.
8. City Council request the City Manager to direct City divisions to report back to the Treasurer on any consulting/contractor arrangements that may pose a significant risk of being deemed City employees by the Canada Revenue Agency.
Decision Advice and Other Information
The Audit Committee requested:
1. the Treasurer to report to the Audit Committee:
a. within three months, with a list of all sole source contracts which were awarded for amounts up to $500,000.00 during the period from January 1, 2007 to December 31, 2008, such list to include the names of awardees, dates, amounts and reasons for the sole source awards; and
b. annually thereafter, on amounts awarded through sole source contracts.
2. the Deputy City Manager and Chief Financial Officer to report to the Audit Committee on the advisability of requesting the City's agencies, boards and commissions to include information on sole source contracts as part of their annual reports.
Origin
Summary
The objective of this review was to determine whether sole source contracts complied with the City’s Municipal Code and purchasing policies and procedures.
Our review identified opportunities for improvement in reporting and processing sole source purchases. Our recommendations will improve the current sole source procurement process and will assist management in minimizing non-competitive procurement.
A management response to each of the recommendations is attached to this report.
Background Information
https://www.toronto.ca/legdocs/mmis/2009/au/bgrd/backgroundfile-22122.pdf
Appendix 1 - Auditor General's Office (May 1, 2009) Process for Non-Competitive Procurement (Sole Sourcing) Needs Improvement
https://www.toronto.ca/legdocs/mmis/2009/au/bgrd/backgroundfile-22123.pdf
Appendix 2 - Management's Response to the Auditor General's Review
https://www.toronto.ca/legdocs/mmis/2009/au/bgrd/backgroundfile-22124.pdf
Motions
That the Treasurer be requested to report to the Audit Committee within 3 months, with a list of all sole source contracts which were awarded for amounts up to $500,000 during the period from January 1, 2007 to December 31, 2008, such list to include the awardees names, dates, amounts and reasons for the sole source awards.
That the Audit Committee recommend to City Council that the City's Purchasing By-law be amended to reduce Divisional limits for awarding contracts from $50,000.00 to $7,500.00.
That the Treasurer be requested to report to the Audit Committee annually, on amounts awarded through sole source contracts.
That the Audit Committee request the Deputy City Manager and Chief Financial Officer to report to the Audit Committee on the advisability of requesting the City's agencies, boards and commissions to include information on sole source contracts as part of their annual reports.
That the Audit Committee recommend to City Council adoption of the recommendations contained in the report (May 22, 2009) from the Auditor General.