Public Procurement 101

How do cities and provinces spend money?

Procurement involves the act of seeking issuance, agreeing to terms, and acquiring goods or services from an external source often via a competitive bidding process.

With regard to infrastructure, provincial and territorial and municipal governments will issue tenders to invite private sector firms to provide price-for-service quotations align with the public project’s needs—a new park, library, bridge, bicycle lane, and so on.

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Public Works and Government Services Canada outlines four phases of the procurement process which tracks the project start to finish.

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Phase 1: Pre-Contractual

The first phase, the pre-contractual phase, involves the project’s planning. This includes detailing the requirements, justification of the project, environmental and intellectual property considerations, developing a procurement strategy around it, as well as choosing effective instruments and evaluation criteria.

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Phase 2: Contracting

Upon solicitation of the bid, the contracting phase begins. This includes conducting site visits with the approved bidders, responding to any inquiries that the bidders may have, holding relevant conferences, evaluating the bids, awarding the contract, and lastly, debriefing the unsuccessful bidders.

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Phase 3: Contract Management

After the contract is awarded, the contract management phase begins and regards progress monitoring, task authorizations, contract amendments and/or dispute resolution.

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Phase 4: Post-Contractual

The final action of the procurement process features closing out duties. Final amendments to the contract are made, audit trails are commenced, contractor performance and claims are assessed—final payments are made.

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PROGRESS DRAWS

Under the current structure, contractors are typically paid through periodic progress draws which, much like the procurement process, occurs in phases and is contingent on the stage of project completion.

Verification of each stage of completion is often conducted by a third-party consulting firm and/or by the owner themselves.

Understandably, contractor-consultant and/or contractor-owner disputes arise over the justification of contractual provisions and deficiencies in regard to project completion.

Even in cases where amendments must be made to the initial terms of the contract and are agreed upon through construction change directive or change orders, viz., amendments made to the initial scope or conduct of work, a contract, even while discerned as a legal document, allots contingencies pertaining to the construction project’s completion thereby affecting the release of funds.

Granted, although comprehensive, the public procurement process is ripe for improvements and reformations in order to increase the efficient delivery of new and/or existing construction, demolition, and development projects.

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Notes:

Government of Canada. 2014. "Phases of the Procurement Process." Government of Canada. Retrieved on May 19th, 2023. (Buyandsell.gc.ca)

In the event of unforeseen circumstances. Also, see force majeure clauses

"Contract" referring to the contract between the owner and the general contractor and includes any amendment to that contract; where "contractor" means a person contracting with or employed directly by the owner or an agent of the owner to supply services or materials to an improvement.

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