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-With the implementation of the New Deal in 2007, community governments are responsible for managing the construction of community public infrastructure.  This means that a Council and community government staff, including the LGA, finance people and the Works Foreman all need to learn new skills related to procurement and contracting.
-Good procurement and contracting practices (www.maca.gov.nt.ca/toolkit/project_management/Proj%20Con%20Man%20Course%20-%202006.doc) are essential to managing capital projects.
-.5.1	Procurement
-Procurement is a general term that refers to the process by which the resources (goods and services) required for a project may be acquired.
-The CPI funding used by community governments for capital projects is public money provided by taxpayers. It is important that good policies and procedures are in place to ensure community governments receive good value for the money spent.  Many communities have a procurement by-law outlining their procurement and contracting procedures.
-Following are some of the more important aspects of procurement that the LGA (and Council) should be aware of:
-Competitive Bids
-For projects over $5,000, GNWT rules stipulate that community governments should follow a competitive bidding process.
-A competitive process involves seeking written bids in the form of tenders or proposals. This can be done in two different ways:
-•	Giving public notice of the opportunity to bid.  This is an open process, any company or individual may bid.  Different means of advertising that can be used include newspaper ads, public notices or the Internet.
-•	Inviting bids from certain firms.  Using this approach, certain qualified proponents are contacted directly and invited to bid, there is no public notice or advertisement.  When this process is used, it is customary to seek at least three different bids.
-Bids can be obtained in the form of a proposal or tender, depending on the nature of the project.
-A Request for Proposals (RFP) is used when the purchaser is looking for the best value solution to resolve a problem or acquire goods and services but isn’t sure how to achieve it.  Examples of when the RFP method should be used include:
-•	If the good or service needed is not well defined;
-•	If there is no detailed material or performance specification;
-•	A general solution to a problem is sought; or,
-•	The bidders’ solutions are likely to be varied or difficult to evaluate.
-An RFP is usually used to hire professionals such as an architect, engineer, lawyer or consultant.
-Another process that is related to RFPs is a Request for Qualifications (RFQ). To avoid potentially struggling with a large number of proposals to evaluate, a community government can run a RFQ to pre-qualify proponents for a particular requirement.  This is usually used when there are many contractors likely to bid and it would be helpful to quickly get to a short list of qualified proponents that could be invited to respond to a full RFP.
-A tender is used when the purchaser knows exactly what good or service they want and is looking to acquire it for the best price.  Tenders should be used when:
-•	The good or service required is clearly defined (e.g. equipment); or,
-•	There is a detailed methodology, procedure or material and performance specification available.
-It is important to note that there are legal obligations on a community government when it uses a tendering process.  Once tenders come in, contracts are formed between the community government and the bidders.  As a result, care must be taken by the community government to follow due process.  An overview of the main steps in a typical tendering process is as follows:
-•	Preparing tender documents that contain detailed information regarding design and specifications;
-•	Placing ads and notices to solicit responses from contractors;
-•	Designating one official spokesperson to field bidders’ questions and ensure all relevant information is communicated to all bidders;
-•	Receiving tenders up to the closing date;
-•	Opening and reviewing the tenders.  This should be done as soon as possible after the closing date.  In reviewing the tenders, the review committee should:
-o	Make sure each tender contains all information requested
-o	Ensure that a bidder is qualified to provide the good or service
-o	Make sure the bids meet the specifications requested
-o	Evaluate the tenders to determine the lowest price quote that is responsive to the tender requirements
-•	Award the contract to the lowest price bidder that was responsive to all tender specifications and requirements.
-The complicated nature of tendering may require that community governments hire project managers to assist.
-Sole Sourcing
-Sole sourcing involves the direct awarding of a contract to one firm or individual without using a competitive bidding process.  There are several instances where sole sourcing is considered acceptable:
-•	When a contract is worth less than $1,000;
-•	When the work is an emergency and there is no time to run a competitive bidding process; and,
-•	There is clearly only one qualified firm available.
-Sole sourcing should not be used unless necessary.  Potential negatives associated with sole sourcing include the possibility that the community government isn’t receiving good value for money (as there are no competing bids) and the possible perception by other firms that the community government is showing favouritism or bias towards one firm.
-.5.2	Contracting
-Contracting refers to the preparation and award of contracts and the activities involved in contract administration.  A contract is considered to be in place and binding once it has been signed by authorized representatives from the contractor and community government.
-To help protect the community government, it is recommended that all procurement documents and activities be reviewed by an independent legal counsel retained by the community government.
-Several items for the LGA to note regarding contract administration include:
-•	Have a pre-construction meeting (see section 7.4.3 above)
-•	Ensure that any required securities and insurance certificates are in place
-•	Payments to the contractor or consultant are usually made on a monthly basis and are referred to as Progress Payments
-•	Changes in the scope of work for the project will result in change orders.  A change order is a written agreement between the community government and the contractor to modify, add to or alter the work from that originally specified in the contract. When approved by both parties, a change order becomes part of the contract.
-•	Holdback funds.  In accordance with the NWT Builder’s Lien Act, 10% of all construction contract payment is held back by the project owner.  The holdback is released to the contractor 45 days after substantial completion of the project unless someone files a claim (i.e. a lien) for money owed to them.
-•	Completion certificates.  Once the project is basically done, the contractor, an engineer and the LGA and Works Foreman typically conduct an inspection to note any uncompleted work or missing equipment.  This is called an Interim Certificate of Completion.  Once any deficiencies are corrected, the contractor will request that the community government do a final inspection which results in a final certificate of completion.  After this is achieved, any holdback funds should be released to the contractor based on a final invoice and a statutory declaration that the contractor has paid all his obligations to sub-trades and suppliers.

7.5 procurement and contracting.1306876900.txt.gz · Last modified: 2017/12/05 17:50 (external edit)

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