New rules should spark procurement practice review: Gleeson

By Peter Small, Contributor

Ontario hospitals and other broader public service organizations should review their procurement practices to make sure they comply with significant new rules announced by the provincial government, Toronto health lawyer Michael Gleeson tells

Administrators should first determine whether these interim rules are mandatory or just recommended for their institutions, says Gleeson, partner with DDO Health Law

“Step two would be — no matter if it is mandatory or recommended — to determine the best course of action and how the new rules may limit or change your day-to-day procurement process,” he says.

The Ontario government plans to centralize the province’s public sector purchasing process and aims to create more efficient delivery services, according to a news release. This new system will apply to Ontario ministries, provincial agencies, as well as broader public sector (BPS) organizations such as hospitals and schools.

The interim measures came into effect March 18 and will stay in place indefinitely, it says.

Under the rules, broader public service organizations, as a first option, are encouraged to use established provincial government vendor-of-record arrangements for any new purchases, Gleeson says.

“And any agreement that you enter into with a vendor should be for not more than two years going forward until further notice,” he adds.

Under the Ministry of Government and Consumer Services changes:

  • The interim measures do not affect contracts entered into prior to March 18.
  • The measures apply to new procurements of goods and services (consulting and non-consulting) valued at $25,000 or more.
  • A “new” procurement refers to any process of acquiring a good or service that begins after the interim measures came into effect, and where the buyer has no pre-existing commitment to acquire the good or service.
  • Buyers can exercise the extension options in an existing contract if it meets the requirements of the interim measures.
  • The measures do not apply where procurement is related to construction.

Gleeson says his health-sector clients are trying to determine if the government will allow them to continue using money-saving shared services or group purchasing organizations to acquire goods and services.

“It looks like they’re still encouraging the use of those means of purchasing because they do provide efficiencies,” says Gleeson, who estimates a large percentage of the province’s hospitals employ such co-operative procurement organizations.

The government is asking broader public service organizations to fill out a Procurement Rationale Report form for all new applicable purchases worth $25,000 or more, where they are not leveraging a bulk buying agreement and/or one that exceeds two years in length.

The form must be submitted at least 45 days before the procurement is released to the vendor community, Gleeson notes.

Shared services organizations would have to submit the form for any acquisitions they make on behalf of their broader public sector clients, he says.

Despite this reporting requirement, the government is clear that broader public sector organizations continue to control their own process, Gleeson says.

“They've been very explicit that the authority to make a decision about whether or not to go ahead with a procurement still lies with the purchasing agency,” he says.

It appears that the government wants to have the rationale report forms so it can gather information about what purchases are being made and gain a long-term view of how to create efficiencies, Gleeson says.

Moreover, the 45-day reporting window will allow the government to alert purchasing organizations to any opportunities for efficiencies of which they may not have been aware, Gleeson says, adding that the forms are likely to be voluminous given the large number of applicable acquisitions.

Submitting the forms is mandatory only for broader public sector organizations whose funding ministry has the legislative authority to provide them with direction on procurement. He says even if the reporting forms are not mandatory for your organization, it’s probably in your best interest to be a good corporate citizen and submit them.

“Whether it is mandatory for you or not will depend on where your funding comes from and for that I would recommend an organization seek legal counsel,” Gleeson says.

To Read More Michael Gleeson Posts Click Here