Pick me, pick me
Supply arrangements make the job easier
by Richard Bray
For many people in federal government purchasing, the first major example of a Supply Arrangement that came to their attention was the Government On-Line (GOL) procurement. Under the GOL initiative, federal departments and agencies will meet the goal of giving Canadians the world's best electronic connections to government by the year 2004.
In fact, even with more than 25 years of service, Jerome Thauvette, director of the Infrastructure and Systems Procurement Directorate at Public Works and Government Services Canada (PWGSC), says the GOL project is the first supply arrangement he has been involved in.
To describe this innovative procurement instrument he says, "If you want to try to place a supply arrangement, it is somewhere in between a contract and a Standing Offer," - a base document that can be used to do RFPs at stage two of the contracting process.
"If you want to buy pens and pencils and you don't know what quantities you will buy over the course of a year," he says, "what you want to do is go out and invite standing offer arrangements."
Under standing offers, he says, "We tell the industry we expect that we will be buying a certain number of pens and pencils, and if they have the type we are looking for, they give us a price. As we need these pens and pencils, we will place orders."
The major difference with a supply arrangement, Thauvette says, is that it allows the negotiation of certain components or elements of the work. The first stage of a supply arrangement pre-qualifies a number of vendors.
"We invite bid solicitations or what we can call Request for Supply Arrangement (RFSA), and we ask companies to be qualified based on certain criteria," Thauvette says. "For example, in the case of Government On-Line you must have been in business for a year, you must have done three projects of at least $50,000 that are related to electronic delivery, and so on. We negotiate everything we can to the greatest extent possible. We will try to negotiate all the terms and conditions that would to apply to any resulting contract at the second stage."
The result is a list of pre-qualified vendors offering their goods and services. In the case of GOL, which is a massive government-wide undertaking, several hundred vendors were pre-qualified. Thauvette makes it clear, however, that under a supply arrangement, PWGSC can state that it only wishes to pre-qualify a certain number of vendors.
"At stage two," Thauvette says, "at the back end of the supply arrangement, we reserve the right to negotiate things such as evaluation criteria that we want to use to select a winner. At that stage, when we have a specific requirement, we can be more explicit about the skill sets or resources that we identified at stage one. For example, 'You must have been a project manager for 10 years, and you must have done projects in such and such a field.'"
The other advantage of supply arrangements, he says, is that they allow PWGSC to make "work packages" more specific as the required work elements become known. "We can ask the potential vendor for a work proposal on how they intend to address a situation," he explains, "and rate the technical and management proposals that we get in terms of experience and proposed key resources and so on."
Rather than resent what could appear to be a two-stage system, industry welcomed a flexible approach in the case of the GOL supply arrangement.
"The industry was really concerned, because most of the work elements were not defined, in terms of GOL. They will be defined over the course of the next few years, in terms of specific projects. Companies were not in favour of the RFP kind of approach, because they felt they would have been left out at the outset," Thauvette says. "They could have been ruled out on price alone. They actually supported the supply arrangement, which was basically a pre-qualification of companies based on certain mandatory criteria and also to pre-negotiate all the terms and conditions. At the back end, we can focus strictly on each work element, as they come along, and our focus is then on competing the specific work element and developing criteria for each specific work element. We don't have to worry about going out with a full-blown RFP and inviting bids."
Thauvette says supply arrangements are becoming increasingly common, especially in professional services and information service. For software system initiatives, he says, PWGSC is currently in the process of renewing and inviting supply arrangements to ensure that the necessary resources to implement some of these solutions are available.
"We have also used supply arrangements in the past to buy services such as telecommunications," he adds. The flexibility they offer is important, he notes, because under standing offers, vendors can withdraw at any time, possibly leaving departments with no source of supply and a lengthy bid process to find new suppliers.
To learn more about supply arrangements or ask specific questions, Thauvette invites procurement professionals to call him at (819) 956-6880, or email him at email@example.com .
Richard Bray is an Ottawa-based freelance writer specializing in the IT sector. He has been published in magazines and newspapers in Australia, the United States and Canada and is now editor of Ottawa Computes. Before freelancing, he worked as a producer, reporter and senior writer for CBC in Toronto.