Audit of Procurement and Contracting Management Action Plan
Management Response to the Audit
Corporate Procurement management would like to thank Internal Audit for their collaborative approach in conducting this audit. Management agrees with the findings and recognizes that the recommendations offer opportunities to build on work underway by the Corporate Procurement Team to improve efficiency, effectiveness, and maturity of OSFI’s Corporate Procurement function. The recommendation on proactive disclosure reporting was especially appreciated as it brought to light an unknown gap in the data validation process that can now be addressed to ensure OSFI’s full compliance with its statutory reporting requirements.
Security and Facilities Services (SFS) management agrees and accepts the audit findings, the recommendations and the management action plan to address them.
Management Action Plans for each individual audit observation are outlined in the relevant sections. Some remedial actions have already been implemented. All recommendations will be addressed by March 31, 2023.
Recommendation 1 (High Risk)
Corporate Procurement should ensure the completeness and accuracy of proactive disclosure reporting by establishing additional controls, such as reconciliation mechanisms, within its review process.
Accountability: Chief Financial Officer
Target Overall Completion: Q1 2022-23
Milestone 1
Target Milestone Completion: Q4 2021-22
The Corporate Procurement team is on track to correct the gaps identified in proactive disclosure reporting by disclosing the 40 missing reportable contracts in the Q3 2021-22 disclosure report, which will be posted by January 31, 2022.
Milestone 2
Target Milestone Completion: Q4 2021-22
The Corporate Procurement team will establish and implement the following additional controls and reconciliation mechanisms to address the root causes of the identified gaps and ensure completeness and accuracy of OSFI’s proactive disclosure reporting moving forward:
- Validation and proactive correction of the contract reporting value in SAP for each procurement file.
- Documentation of procedures for treatment of Cancelled/Terminated contracts, The Director, Corporate Planning and Procurement Services will approve the documented procedures.
- Utilization of additional contract and amendment report(s) from SAP to reconcile completeness of the data set.
The new controls and reconciliation mechanisms will be implemented as part of the Q3 2021-22 proactive disclosure report review process in Q4 2021-22.
Milestone 3
Target Milestone Completion: Q1 2022-23
The Corporate Procurement team will update the documented procedures for the proactive disclosure of Contracts >$10K to formally incorporate the additional reconciliation mechanisms as part the review procedures. The Director, Corporate Planning and Procurement Services will approve the revised documented procedures.
Recommendation 2 (Low Risk)
SFS should develop guidance and tools to ensure that quality reviews are consistently performed and adequately documented.
Accountability: Senior Director, Communications and Corporate Affairs
Target Overall Completion: Q4 2022-23
Milestone 1
Target Milestone Completion: Q2 2022-23
The facilities team will review and update the tools required needed to complete their quality reviews on procurement files.
Milestone 2
Target Milestone Completion: Q3 2022-23
The Supervisor, Facilities and Materials Services will provide new staff with training on quality review requirements, as well as hold a “refresher session” for existing staff responsible for procurement within the team.
Milestone 3
Target Milestone Completion: Q4 2022-23
Facilities to centralize and restrict the procurement activities to a dedicated team. This will reduce the number of employees involved in procurement activities, foster greater adherence to Standard Operating Procedures and allowing for more regular and detailed quality review checks. These responsibilities will be incorporated into their goal commitment documents.
Recommendation 3 (Medium Risk)
The Corporate Procurement team should ensure that the triage, review, and approval processes are aligned to common thresholds, with periodic reviews to ensure they remain current.
Accountability: Chief Financial Officer
Target Overall Completion: Q2 2022-23
Milestone 1
Target Milestone Completion: Q2 2022-23
The Corporate Procurement team will review existing triage, review and approval processes to identify discrepancies in the treatment of complexity (i.e. risk) levels and align them to common definitions of complexity to ensure consistency in the prioritization of procurement transactions and improve the efficiency of the delivery of procurement services.
The Corporate Procurement team will then update the Work Allocation Guide, the Guideline on Procurement Strategy and Contract Approval and the Contracting Delegation chart to reflect the alignment to common risk/complexity thresholds by Q2 2022-23. The Corporate Procurement team will also establish an appropriate schedule for periodic review of these documents.
Recommendation 4 (Medium Risk)
Corporate Procurement should formalize the documentation and approval process for granting mandatory standing offer exemptions to ensure validity and consistency.
Accountability: Chief Financial Officer
Target Overall Completion: Q3 2022-23
Milestone 1
Target Milestone Completion: Q2 2022-23
The Corporate Procurement team will confer with the Director, Corporate Planning and Procurement Services and the Chief Financial Officer in Q4 2021-22 to determine appropriate considerations/criteria for granting mandatory standing offer/Supply arrangement exemptions. This will include determination of the appropriate level of approval based on the nature of the exemption and its associated risk level.
The Corporate Procurement team will then formally document the approval process, including the criteria and required approval levels for granting mandatory standing offer/Supply arrangement exemptions by Q2 2022-23 to ensure validity and consistency. The Chief Financial Officer will approve the process.
Milestone 2
Target Milestone Completion: Q3 2022-23
The Corporate Procurement team will report annually to the Chief Financial Officer on the number of exemptions granted to ensure transparency of exemptions and adherence to risk tolerance levels. Quarterly reporting will begin with reporting on Q1&Q2 2022-23 data in Q3 2022-23, and then quarter by quarter thereafter.
Recommendation 5 (Medium Risk)
SFS should develop processes and procedures for emergency procurements and any other exceptional requisitions, including establishing documentation and approval requirements.
Accountability: Senior Director, Communications and Corporate Affairs
Target Overall Completion: Q3 2022-23
Milestone 1
Target Milestone Completion: Q2 2022-23
Facilities to work with Procurement and Contracting team to define and document processes and procedures, including approvals for procuring in an emergency situation. Training will be delivered as part of the training provided in Milestone 2 in recommendation 2 above.
Milestone 2
Target Milestone Completion: Q3 2022-23
The Supervisor, Facilities and Materials services will educate all staff that are responsible for procurement on the newly defined processes and procedures.
Recommendation 6 (Medium Risk)
Corporate Procurement should consistently track and report on its achievement against established service standards.
Accountability: Chief Financial Officer
Target Overall Completion: Q3 2022-23
Milestone 1
Target Milestone Completion: Q4 2021-22
The Corporate Procurement team will finalize the procurement performance measures, which were developed in 2021-22 as part of its Contract Turnaround initiative to include tracking achievement against established service standards, and document a process for reporting on them for the Chief Financial Officer approval in Q4 2021-22.
Milestone 2
Target Milestone Completion: Q3 2022-23
The Corporate Procurement team will begin tracking data in Q1 2022-23 to enable quarterly reporting to the Chief Financial officer on achievement against established service standards beginning in Q3 2022-23.
Recommendation 7 (Medium Risk)
The Corporate Procurement team should develop and make accessible client guidance and tools for procurement processes, document requirements, and necessary approvals.
Accountability: Chief Financial Officer
Target Overall Completion: Q4 2022-23
Milestone 1
Target Milestone Completion: Q1 2022-23
The Corporate Procurement team has initiatives underway in FY 2021-22 which directly address this recommendation, specifically:
- The Contract Turnaround initiative
- The initiative to remedy root causes of Confirming Orders
As part of these initiatives the Corporate Procurement team developed and implemented standardized guidance on bid evaluation in Q3 2021-22.
In addition, the following Templates and Guidance are already under development and will be piloted by the Corporate Procurement team in Q1 2022-23:
- new Statement of Work templates with associated guidance
- a new request for contract form, and
- guidance on the development of bid evaluation criteria
- guidance on contract management
- a comprehensive standard contract award email to equip clients with the tools needed to effectively understand and manage their contracts.
The Corporate Procurement team will communicate the new templates and documented guidance via @OSFI notices and will make them available in a central location in eSpace in Q1 2022-23.
Milestone 2
Target Milestone Completion: Q3 2022-23
Under the first initiative noted under Milestone 1 above, work is underway by the Corporate Procurement team to develop guidance for clients in the form of infographics for various procurement processes. The infographics will outline the steps of the process, roles and responsibilities, and documentation requirements. The Corporate Procurement team will continue development of the infographics to make them available to clients by Q3 2022-23.
Milestone 3
Target Milestone Completion: Q4 2022-23
In addition to the above, the Corporate Procurement team will work with Communications to develop and implement an improved intranet presence to make the client guidance, tools and required documents easily accessible to clients by Q4 2022-23.