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5. 2009 CONSOLIDATED ANNUAL SUMMARY
DÉCLARATION ANNUELLE INTÉGRÉE DE 2009
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COMMITTEE RECOMMENDATION
That Council receive this report for information.
Recommandation du ComitÉ
Que le Conseil municipal prenne connaissance du présent rapport.
DOCUMENTATION
1. City Treasurer’s report dated 24 June 2010 (ACS2010-CMR-FIN-0043).
Report to/Rapport au :
Corporate Services and Economic Development Committee
Comité des services organisationnels et du développement économique
and Council / et au Conseil
24 June 2010/ le 24 juin 2010
Submitted by/Soumis par : Marian Simulik, City Treasurer/Trésorière municipale
Contact Person/Personne ressource : Jeff Byrne, Chief Procurement Officer /
Agent principal des achats
Finance Department/Service des finances
(613) 580-2424 x25175, Jeff.Byrne@ottawa.ca
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Ref N°: ACS2010-CMR-FIN-0043 |
SUBJECT: |
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OBJET : |
REPORT RECOMMENDATION
That the Corporate Services and Economic Development Committee and Council receive this report for information.
RECOMMANDATION DU RAPPORT
Que le Comité des services organisationnels et du développement économique et le Conseil municipal prennent connaissance du présent rapport.
EXECUTIVE SUMMARY
The Purchasing by-law requires the Supply Branch to report to Council on a quarterly basis on all contracts awarded under delegated authority. This report provides a consolidated summary of the information provided in the quarterly reports.
Supply Management awarded $984.4 million in contracts in 2009, a 27.5% increase over 2008, attributable mostly to the Infrastructure Stimulus Fund. Of the $984.4 million in contracts awarded, 93% were awarded as a result of a competitive bid solicitation process. Furthermore, when one takes into account contracts where the City had no option but to award to a specific supplier (for example, contracts pertaining to utilities, patents and copyrights, and where for technical reasons no alternative supplier exists), this percentage increases to almost 99%.
The City of Ottawa continued to be a strong consumer of local products in 2009, spending approximately 95.4% of the annual purchasing dollar in Ottawa and the surrounding area, for goods and services that are available in the local community.
Supply Management continued its evolution towards becoming a more strategic organization, as opposed to merely a transactional one. In support of this evolution, and where appropriate, Supply Management increased its reliance on innovative procurement strategies and evaluated more then just price alone. These best value procurement strategies optimized innovation and long term cost performance to the maximum extent possible.
In an effort to increase transparency and competitiveness in the quotation process, Supply Management has begun posting bidding opportunities <$50,000 on the City’s website.
Purchasing staff continued to make use of the independent fairness commissioners for procurement issues which are either very complex, or have the potential of becoming contentious. In 2009, the City spent approximately $141,185 on fairness commissioner services.
As part of the solicitation process bidders are encouraged to offer the City a cash discount for prompt payment of invoices. In 2009 the City obtained $532,632 in prompt payment discounts.
A payment without reference is a legitimate payment method permitted within corporate procedure and is recognized in the Purchasing By-Law. As payments without reference do not go through Supply Management, an assessment of their compliance with the Purchasing by-law can only be made after the fact. In 2009, 9 suppliers, representing 2.5% of suppliers paid without reference to a contract, were paid in a manner not in compliance with the Purchasing By-law. Supply Management has already worked with each of the client departments accountable for the non-compliant purchases to establish, where appropriate, competitive processes to acquire the goods or services in the future.
This report includes information on ethical purchasing, supplier performance, the fuel hedging strategy, financial agreements as well as the annual report on sponsorship and advertising.
RÉSUMÉ
Le Règlement sur les achats impose à la Direction des approvisionnements l'obligation de présenter un rapport trimestriel au Conseil sur tous les contrats accordés en vertu d'une délégation de pouvoirs. Le présent rapport est un sommaire intégré de l'information fournie dans les rapports trimestriels.
En 2009, la valeur des contrats accordés par Gestion de l'approvisionnement s'est élevée à 984,4 millions de dollars, une hausse de 27,5 % par rapport à 2008 attribuable principalement au Fonds de stimulation de l'infrastructure, et les contrats accordés à la suite d'un processus concurrentiel comptent pour 93 % du montant de 984,4 millions. Ce pourcentage atteint presque 99 % si l'on tient compte des situations où la Ville n'avait d'autre choix que d'accorder le contrat à un fournisseur particulier (par exemple, les contrats avec les services publics, ceux impliquant un brevet ou un droit d'auteur et ceux où il n'existait, pour des raisons techniques, qu'un seul fournisseur).
La Ville d'Ottawa est demeurée en 2009 un important acheteur de produits locaux, s'étant procuré environ 95,4 % de ses biens et services à Ottawa et dans la région avoisinante.
Gestion de l'approvisionnement a poursuivi sa transformation en organisme d'approvisionnement stratégique, par opposition à un organisme s'occupant simplement de l'administration des transactions. Pour renforcer cette évolution, Gestion de l'approvisionnement a accru, là où c'était approprié, son recours à des stratégies novatrices d'approvisionnement et à des évaluations de facteurs autres que le prix. Ces stratégies d'optimisation de la valeur reçue ont favorisé au maximum l'innovation et la rentabilité à long terme.
Cherchant à accroître la transparence et la concurrence du processus d'appel d'offres, Gestion de l'approvisionnement a commencé à publier les demandes de soumissions inférieures à 50 000 $ sur le site Web de la Ville.
Le personnel responsable des achats a continué de recourir à des commissaires à l'équité indépendants dans certains dossiers d'achat, soit parce qu'ils étaient très complexes, soit qu'ils risquaient de devenir litigieux. En 2009, la Ville a dépensé environ 141 185 $ pour les services de commissaires à l'équité.
Dans le cadre du processus d'appel d'offres, les soumissionnaires sont encouragés à offrir à la Ville un rabais pour paiement accéléré des factures. En 2009, la valeur de ces rabais s'est élevée à 532 632 $.
Le paiement sans référence à un bon de commande est un moyen de paiement légitime, autorisé par la procédure municipale et admis dans le Règlement sur les achats. Comme les paiements sans référence ne passent pas par Gestion de l'approvisionnement, l'évaluation de leur conformité au Règlement sur les achats ne peut se faire qu'après coup. En 2009, 9 fournisseurs, représentant 2.5 p. 100 des fournisseurs payés sans référence à un contrat, ont été payés d’une manière non conforme au Règlement sur les achats. Gestion de l'approvisionnement a déjà rencontré chacun des services clients responsables de ces achats non conformes pour établir, dans les cas appropriés, un processus concurrentiel pour leurs achats futurs de biens ou services.
Le présent rapport renferme des renseignements sur l’approvisionnement éthique, le rendement des fournisseurs, la stratégie de couverture contre les risques liés aux fluctuations du prix du carburant, les ententes financières ainsi que le rapport annuel sur les commandites et la publicité.
BACKGROUND
The Purchasing by-law requires the Supply Branch to report to Council on a quarterly basis on all contracts awarded under delegated authority. The reports identify the contracts categorized by Consulting Services, Professional Services, Follow-on Contracts and Amendments.
Four Quarterly Reports were provided to Council for the year 2009:
1) January 1 to March 31, 2009;
2) April 1 to June 30, 2009;
3) July 1 to September 30, 2009; and
4) October 1 to December 31, 2009.
This report provides a consolidated summary of the information provided in the above referenced reports.
DISCUSSION
Purchasing 2009 - Summary
In total, Supply Management awarded $984.4 million in contracts in 2009. When compared to the total value of contracts awarded in 2007 and 2008, 2009 amounted to an approximate increase in total award of 27.5%, attributable mostly to the Infrastructure Stimulus Fund (Figure 1).
Figure 1 – 2009 Total Purchases (>$10,000)
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2009 |
2008 |
2007 |
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$984.4 M* |
$771.8 M |
$778.6 M |
* Increase due primarily to Infrastructure Stimulus Fund
Please note that the $984.4M includes only those contracts awarded under delegated authority greater then $10,000, and does not include contracts awarded by Council, the Police Services Board, the Library Board or by Payment Without Reference. When these contracts are considered the actual figure surpasses $1billion.
Contracts awarded by the Police Services Board totalled $9.5million
Contracts awarded by the Library Board totalled $0.8 million
Purchases <$10,000 totalled $64.3million
Payments without reference >$10,000 totalled $99.6 million
Figure 1(a) – 2009 Total Number and Value of Contracts (>$10,000) by Quarter
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|
Q1 |
Q2 |
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|
# |
$ |
# |
$ |
|
AG |
6 |
$224,651 |
13 |
$259,009 |
|
CM |
100 |
16,024,412 |
54 |
$14,236,908 |
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CO |
455 |
$42,226,572 |
422 |
$51,363,290 |
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ISCS |
297 |
$173,619,188 |
430 |
$200,535,897 |
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Total |
858 |
$232,134,824 |
919 |
$266,395,103 |
|
|
Q3 |
Q4 |
Total |
|||
|
|
# |
$ |
# |
$ |
# |
$ |
|
AG |
10 |
$216,111 |
5 |
$228,641 |
34 |
$928,411 |
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CM |
72 |
$15,095,217 |
55 |
$12,104,813 |
281 |
$57,461,350 |
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CO |
358 |
$36,729,132 |
338 |
$40,747,154 |
1573 |
$171,066,149 |
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ISCS |
483 |
$187,067,715 |
459 |
$193,686,842 |
1669 |
$754,909,643 |
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Total |
923 |
$239,108,175 |
857 |
$246,767,450 |
3557 |
$984,405,553 |
As detailed in Figure 1(b), approximately 91% of all contracts awarded by Supply Management were valued at greater-than or equal-to $100,000, with a further 7% valued between $25,000 and $100,000. Contracts with a value between $10,000 and $25,000 accounted for only 2% of the total value of the contracts awarded.
Figure 1(b) – 2009 Purchasing Breakdown
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Contract Amount
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Total Dollar Value |
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$894.3M |
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|
Between $25,000 and $100,000
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$69.9M |
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Between $10,000 and $25,000
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$20.2M |
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Total |
$984.4M |
Professional and Consulting Services
Professional Services contracts pertain to the required skills of professionals for a defined service requirement or for a specific project related deliverable including but not limited to the areas of engineering, architecture, design, planning, information technology, financial auditing and fairness commissioners.
Consulting Services contracts pertain to assistance to management, including but not limited to the areas of strategic analysis, organizational design, change management, policy development, feasibility studies and other services intended to assist decision making within the organization.
Figure 2 provides a breakdown of the Professional and Consulting Services contacts awarded by Supply Management in 2009. As per Figure 2, Supply Management awarded $121.8 million in Professional Services contracts in 2009, and a further $9.3 million in consulting services.
Figure 2 - Professional and Consulting Services Contracts > $10,000
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2009 Total
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Total # of Contracts |
Total Value |
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Professional Services |
$121,814,552 |
|
|
Consulting Services |
101 |
$9,327,220 |
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Total |
1207 |
$131,141,772 |
Both the value and number contracts awarded for specialized professional services increased in 2009. Contracts awarded for professional services increased by approximately 48% in terms of value, and 54% in terms of number of contracts. This increase is attributable to the Infrastructure Stimulus Fund
Procurement Strategies: Competitive Purchases
Supply Management continued to be a strong advocate of competitive procurement processes in 2009. Of the $984.4 million in contracts awarded, 93% were awarded as a result of a competitive solicitation process.
Furthermore, when the awards are adjusted to take into account contracts where there was no option but to award to a specific supplier (for example, contracts pertaining to utilities, patents and copyrights, and where for technical reasons no alternative supplier exists), the percentage of competitive purchases increases to 99%.
Figure 3 provides a side-by-side comparison of the percentage of competitive vs. non-competitive contracts awarded by Supply Management, both before and after adjustment.
Figure 3 – Competitive and Non-Competitive Procurements ($)
Procurement Strategies: Non-Competitive Purchases
The non-competitive contracts awarded by Supply Management were awarded in accordance with the sole source rationales identified in sections 22(1) and 22(7) of the Purchasing By-law.
Figure 4 provides an overview of the non-competitive contracts by rational. The first four line items, totalling $60.5M, pertain to contracts awarded to the only supplier capable of providing the service/requirement (for example, contracts pertaining to utilities, patents and copyrights, and where for technical reasons no alternative supplier exists).
Figure 4 – Non-competitive contract awards by rational (>$10,000)
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Purchasing By-law Section
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Dollar Value |
Number of contracts |
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$27.47M |
||
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Only one acceptable / cost effective option Section - 22(1)(c) |
$15.7M |
353 |
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Section - 22(1)(d) |
$7.45M |
90 |
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Utilities |
$9.93M |
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|
Sub-Total |
$60.55M |
|
|
Requirement in Short Supply |
$0.08M |
|
|
Security / Confidentiality Section - 22(1)(e) |
$1.09M |
|
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Special Circumstance Section - 22(1)(f) |
$5.24M |
28 |
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Follow-on Contract Section - 22(1)(g) |
$0.01M |
1 |
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Professional Services <$50,000 Section - 22(1)(h) |
$0.3M |
17 |
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City Manager approval |
$3.31M |
1 |
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Sub-Total |
$10.03M |
54 |
|
|
||
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Total |
$70.58M |
782 |
Local Purchasing
The City of Ottawa continued to be a strong consumer of local products in 2009, spending approximately 95.4% of the annual purchasing dollar in Ottawa and the surrounding area, for goods and services which are available in the local community.
Figure 5 includes a pair of charts identifying the geographical vendor breakdown for the 2009 purchasing contracts included in the four Delegation of Authority reports.
The figures have been adjusted to remove those goods and services consumed annually by the City which are not available locally (e.g. transit buses are not manufactured in Ottawa, nor is winter rock salt mined locally).
Figure 5 – Adjusted 2009 geographical vendor breakdown
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Total $ of Vendors |
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|
% Breakdown by $ of Vendors |
|
|
Ottawa & Surrounding Area |
$732,055,748 |
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Ottawa & Surrounding Area |
95.4% |
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Ontario (not Ottawa area) |
$ 24,918,710 |
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Ontario (not Ottawa area) |
3.2% |
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Quebec |
$ 5,796,562 |
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Quebec |
0.8% |
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Other locations |
$ 4,805,783 |
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Other locations |
0.6% |
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TOTAL |
$767,576,803 |
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TOTAL |
100.0% |
Portfolio Breakdown
When broken-down by Portfolio (Figure 6), the Infrastructure Services and Community Sustainability portfolio was the largest purchaser by a significant margin. 76.7% of all contracts awarded by Supply Management were awarded on behalf of the Infrastructure Services and Community Sustainability portfolio, for a total value of $754.9M.
Figure 6 – 2009 Purchasing Breakdown by Portfolio (total number of contracts awarded)
Of the $754.9M awarded on behalf of the Infrastructure Services and Community Sustainability portfolio, 69% ($520.6M) was awarded on behalf of the Infrastructure Services Department. This is a 51%, or $253.8M, increase over 2008, attributable to the Infrastructure Stimulus Fund.
Also within the Infrastructure Services and Community Sustainability portfolio, Transit Services was the second largest purchaser. Contracts awarded on behalf of Transit Services increased by $130.5M; which when compared to 2008 is an increase of 79%. This increase is attributable to two major bus acquisitions, which were two of the three highest valued procurements conducted in 2009.
After the Infrastructure Services and Transit Services Departments, which accounted for 51% and 22% respectively, of the $754.9M awarded on behalf of the Infrastructure Services and Community Sustainability portfolio, the Environmental Services Department was the third largest client within this portfolio. Environmental Services accounted for a further 8% ($57.8M) of the $784.4M awarded.
The City Operations portfolio was Supply Management’s second largest portfolio client representing 17.4% of all contracts awarded by Supply Management. The total value of all contracts awarded on behalf of the City Operations portfolio was $171.1M. Of the $171.1M awarded on behalf of City Operations, 67% ($114.5M) was awarded on behalf of the Public Works Department; 17% ($29.6M) was awarded on behalf of the Information Technology Department; and 6% ($11M) was awarded on behalf of the Emergency and Protective Services Department.
The contracts awarded on behalf of the City Manager’s Office and the Office of the Auditor General accounted for 5.8% and 0.1%, respectively, of all contracts awarded by Supply Management. In total, this amounted to $57.5M awarded on behalf of the City Manager’s Office (of which 85% was awarded on behalf of the Finance Department), and $0.9M awarded on behalf of the Office of the Auditor General.
Figure 7 compares the total value of all contracts awarded on behalf of each Department.
Figure 8 compares the total number of contracts awarded on behalf of each Department.
Figure 9 combines Figures 7 and 8 in a tabular format.
Figure 7 – Contracts Awarded by Department ($)
Figure 8 – Contracts Awarded by Department (#)
Figure 9 – Breakdown by Department ($ and #)
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Departmental Breakdown |
Number of Contracts |
Value of Contracts |
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Auditor General |
34 |
928,411 |
|
|
|
|
|
City Manager |
|
|
|
City Manager (Office) |
6 |
439,788 |
|
Real Estate Partnership and Development Office |
98 |
4,412,303 |
|
Finance |
135 |
48,835,678 |
|
City Clerk Solicitor |
42 |
3,773,579 |
|
|
|
|
|
City Operations |
|
|
|
City Operations (Office) |
1 |
25,000 |
|
Information Technology Services |
298 |
29,626,346 |
|
Communication & Customer Service (no longer in use) |
15 |
1,855,319 |
|
Ottawa Public Health |
42 |
2,691,751 |
|
Emergency & Protective Services |
141 |
11,014,241 |
|
Community & Social Services |
33 |
5,466,646 |
|
Parks Recreation & Cultural Services |
58 |
1,713,869 |
|
Public Works |
901 |
114,455,478 |
|
Organizational Development & Performance |
24 |
1,493,831 |
|
Human Resources |
60 |
2,763,662 |
|
|
|
|
|
Infrastructure Services & Community Sustainability |
|
|
|
Infrastructure Services & Community Sustainability (Office) |
1 |
26,400 |
|
Environmental Services |
296 |
57,864,770 |
|
Transit Services |
263 |
166,088,975 |
|
Rail Implementation Office |
5 |
237,903 |
|
Planning & Growth Management |
61 |
8,693,870 |
|
Infrastructure Services |
1025 |
520,563,928 |
|
Infrastructure Services & Community Sustainability |
18 |
$ 1,433,794 |
Strategic Sourcing
In addition to continuing to be a strong advocate for competitive procurement processes, Supply Management continued its evolution towards becoming a more strategic organization, as opposed to merely a transactional one.
As discussed in the Purchasing By-Law Review (Ref N°: ACS2009-CMR-FIN-0058), some corporations consider purchasing to be a straightforward means to an end: the goal is to minimize costs while meeting functional, purchasing requirements. As a result, the primary purchasing model often rests on finding the best price for each isolated transaction through individual purchases. However, this approach misses a significant strategic potential to add value to the organization through the purchasing function by driving innovation and superior long-term cost performance.
As such, one of the first tasks of the Chief Procurement Officer, will be to transform the City’s current purchasing unit from a transactional procurement organization to one with a more strategic focus. Briefly, strategic sourcing benefits an organization in several ways, including:
(1) improved ability of the organization to achieve strategic goals due to alignment of purchasing strategies with business strategies; and
(2) improved contribution from purchasing outcomes to service delivery.
Finally, this transformation will include the establishment of a Strategic Sourcing Group within Supply Management who would focus on corporate business strategy identification, alignment of sourcing strategies and business strategies, use of a “total cost” model, increasing both internal client and external supplier collaboration, and enhancing the City’s overall procurement skills and visibility.
In support of this evolution, and where appropriate, Supply Management increased its reliance on innovative procurement strategies in 2009. This included strategies that evaluated more then just price alone. These best value procurement strategies optimized technical performance and cost to the maximum extent possible.
Figure 10 provides a percentage breakdown of the competitive selection methodologies used by Supply Management in 2009. As indicated, 38.8% of all competitive contracts were awarded on the basis of Best Value; amounting to a 14% increase over 2008. Conversely, 61.1% of competitive contracts were awarded on the basis of Lowest Responsive bid; which is a 14% decrease compared to 2008.
Figure 10 – Competitive Selection Methodologies
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Strategic Sourcing: Updated Request for Quotation Procedures
As part of its strategic evolution, and in an effort to increase transparency and competitiveness in the quotation process, Supply Management will begin posting bidding opportunities <$50,000 under the Purchasing section of the City’s website.
Along with MERX and the Ottawa Construction Association (OCA) website, which are used to advertise bidding opportunities greater then $50,000, the Purchasing section of Ottawa.ca will serve as a centre of information for suppliers looking to quote on opportunities valued at less then $50,000.
By posting these bidding opportunities on the City website suppliers who would otherwise not have been aware of the opportunity will now be able to compete for the City’s business. This will have the double impact of both increasing competition and the City’s presence in the supplier community.
Supply Management plans to begin posting Request for Quotations on the City’s website in Q2 2010.
Fairness Commissioners
Purchasing staff continued to make use of the independent fairness commissioners for procurement issues which are either very complex, or have the potential of becoming contentious.
In 2009, the City has spent approximately $141,185 on fairness commissioner services, as follows:
|
Vendor |
Project |
Amount ($) |
Total Vendor Price |
|
|
|
|
|
|
PPI Consulting Limited |
City Recreational Facilities |
22,552 |
|
|
PPI Consulting Limited |
Rail Implementation Office |
50,000 |
|
|
PPI Consulting Limited |
IIMS Replacement Project. |
18,000 |
|
|
PPI Consulting Limited |
VOIP |
31,440 |
$ 121,992 |
|
|
|
|
|
|
P3 Advisors |
Pay and Display |
19,193 |
$ 19,139 |
|
|
|
|
|
|
|
Total: |
141,185 |
|
Supply Management will continue to use Fairness Commissioner services on an “as needed” basis, selected from the competitive standing offer now in place, in planned procurement processes which are complex or potentially contentious, as determined by the Chief Procurement Officer.
Ethical Purchasing
As discussed in the City of Ottawa Ethical Purchasing Policy Report (Ref N°: ACS2010-CMR-FIN-0010), in 2009 the City received its first complaint under the City’s Ethical Purchasing Policy, approved by Council in 2007.
This complaint pertained to the procurement of cafeteria and food concession services at the cafeterias at Centrepointe, Constellation and City Hall from the Ottawa Fair Trade Network (OFTN) on Fair Trade certified coffee, tea and hot chocolate. A response back to the OFTN confirmed that the City’s contractors are compliant with the policy objectives and provided documentation to illustrate their commitment to Fair Trading.
This complaint was discussed and reviewed by a Stakeholder Committee comprised of business, labour and fair trade representatives on May 14, 2009. The Stakeholder Committee supported the City’s response to the complainant and acknowledged the City for its efforts in advancing the goals and objectives of the Ethical Purchasing Policy.
Supplier Performance
Subsections 37(1) and 37(2) of the City’s Purchasing By-law provide a discretion to the City Treasurer, in consultation with the City Clerk and Solicitor, to prohibit an unsatisfactory supplier from bidding on future City contracts where the performance of the supplier has been unsatisfactory in terms of failure to meet contract specifications, terms and conditions or for Health and Safety violations.
This discretion was used once in 2009 to prohibit a supplier of brush grinding services from bidding on future City brush grinding requirements for a period of two-years.
The contractor in question had been a service provider to the City for two years performing brush grinding at the Trail Road Landfill site and the Barnsdale site.
Over the period of the contract, the contractor had repeatedly not met the service requirements as detailed in the tender and has been in default of contract. These defaults had been noted and brought to the contractor’s attention with little or no resolve. The defaults included but were not limited to;
· failure to complete all work in each calendar year by December 21st,
· failure to meet the minimum response times for commencement of services,
· unacceptable delays in providing services, and
· contractor equipment not meeting tender specifications and/or MOE requirements.
The contractor did not challenge the exercise of the City Treasurer’s discretion.
Prompt Payment Discounts
As part of the solicitation process bidders are encouraged to offer the City a cash discount for prompt payment of invoices. This prompt payment discount is taken into consideration in the proposal evaluation and contract award, provided that the minimum number of working days for payment is fifteen (15).
In 2009 the City obtained $532,632 in prompt payment discounts.
Payment Without Reference
A payment without reference is a legitimate payment method permitted within corporate procedure and is recognized in the Purchasing By-Law. These types of payments provide a cost effective process for low dollar value goods and services and are the standard method used for paying utility and telecommunication costs. As payments without reference do not go through Supply Management, an assessment of their compliance with the Purchasing by-law can only be made after the fact.
Document 2 of this report lists the purchases greater than $10,000, paid without reference to a contract. In 2009, purchases paid without reference to a contract totalled $99.6 million. The 2008 payment without reference report included only those purchases greater then $25,000 and totalled $80.6 million.
Of $99.6 million in payments made without reference to a contract in 2009, approximately $43.2 million were paid to utility companies or other companies that have a monopoly on the provision of a good or service. These purchases would not be set up through a purchase order.
The majority of the other purchases identified, valued at $56.4 million have been procured through a competitive process and paid without reference to expedite payments for small value items.
Periodically reviewing the number of invoices per vendor and the total dollar amount paid to each vendor illustrates noticeable purchasing trends. Supply Management reviews payments without reference to ensure the purchases were in compliance to the Purchasing By-law and then consults with client departments to determine appropriate procurement methods.
In 2009, 9 suppliers, who were paid through payments without reference, have been identified in Document 2 as being contracted with in a manner not in compliance with the Purchasing By-law. The value of these purchases totals $339,545 which is an approximate decrease of 32% compared to the value of non-compliant purchases identified and reported in 2008.
The total value of the contracts resulting from procurements not in compliance with the Purchasing By-law account for 0.003% of the total value of all contracts paid without reference to a contract.
Supply Management has already worked with each of the client departments accountable for the non-compliant purchases to establish, where appropriate, competitive processes to acquire the goods or services required. The results of this effort will be presented to Council in the 2010 Delegation of Authority year-end report.
The review of payments without reference does not include those issued by members of Ottawa City Council and the Mayor as the City's Purchasing By-law does not apply to the Mayor and Members of Council.
Fuel Hedging Strategy
The City entered into an agreement with Suncor Energy Products Inc. for the supply of bulk diesel fuel in 2009 and employed a fuel hedging strategy. The details of the transactions are as follows:
- On 12 December 2008, the Supply Branch arranged for a Fixed price of 0.8250 per litre for Diesel Fuel for 75% of the City’s estimated 2009 requirements from Suncor.
- On 10 July 2009, the City hedged 15% of the City’s estimated 2009 Diesel Fuel requirements at 0.8400 litre with the Canadian Imperial Bank of Commerce.
- The balance of the Diesel Fuel (10%) was purchased at the monthly Floating Rack rate from Suncor.
Sponsorship and Advertising
In accordance with the Sponsorship and Advertising Policy, Supply Management Division is
responsible for preparing an annual report to Council on all Sponsorships exceeding $25,000.
Document 3 provides the details of these sponsorships, which total $1,126,961.
Financial Agreements
Document 4 provides a detailed report on all subsisting Financial Agreements from operating departments engaged in commodity purchase agreements. The report contains the following information and documents:
- A statement about the status of the agreements during the period of the report, including a comparison of the expected and actual results of using the agreements;
- A statement indicating whether all of the agreements entered during the period of the report are consistent with the City’s statement of policies and goals relating to the use of Financial Agreements to address commodity pricing and costs; and
- A statement of transactions with financial institutions.
RURAL IMPLICATIONS
There are no rural implications.
CONSULTATION
The preparation of this report is required by the Purchasing By-law and as such no public consultation is required.
LEGAL/RISK MANAGEMENT IMPLICATIONS
There are no legal/risk management impediments to receiving the information in this report. The information is required to be disclosed pursuant to the Purchasing By-law.
FINANCIAL IMPLICATIONS
Prior to a contract approval, Supply Branch staff confirms that the appropriate funds are available in the budget, based on receipt of a funded requisition in SAP. The availability of funds is a condition of approval under the Purchasing By-Law.
SUPPORTING DOCUMENTATIONS
Document 1 - 2009 Consolidated Delegation of Authority Report Summary
Document 3 - List of suppliers awarded sponsorships and advertising contract(s) of a cumulative total value of $10,000 or more in 2009.
Document 4 - Annual Commodity Price Hedging Report as per BY-LAW NO. 2008 - 426
DISPOSITION
Report forwarded for information pursuant to the Purchasing By-law.