253464_Procurement_GuideAug8_for_web_English.doc

A policy including off ramp provisions in contracts

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A policy including “off ramp” provisions in contracts can help reduce this risk. When monitoring the performance and addressing poor performance …if the goods or services received are not inspected promptly to confirm compliance with the contract and any discrepancies quickly identified, then there is a risk of paying for something not wanted. A policy of promptly inspecting goods or services on receipt and a process for following up on discrepancies can reduce these risks. …if the contract work is not completed or completed, but the contractor’s suppliers or employees are left unpaid, then the municipality faces the financial risk of assuming these costs. A policy about how these types of risks will be managed should be specified. This could take the form of financial bonds or other forms of security deposits, provisions in the contract for liquidated damages, progress payments and holdbacks and payment bonds to guarantee the payment of labour and material. A Guide to Developing Procurement Bylaws 37
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Risks to Effectiveness (Cont’d) Risks How to maintain integrity and protect interests When monitoring the performance and addressing poor performance of suppliers The policy on performance surety should be carefully considered given that some forms of surety can prove to be expensive for small and medium sized businesses to obtain and thus limit competition. Where surety is deemed to be required, it should not be excessive but sufficient to cover the financial risks to the municipality/local board. …if systems are not in place to monitor supplier performance, then poorly performing contractors may be awarded new contracts, increasing the risk to the effectiveness of the procurement processes. Policies can be put in place to address these issues, including: randomly sampling contracts to ensure compliance with the set performance evaluation standards (and contract variation requirements) monitoring the performance of the contract against performance criteria and milestone achievement intervening early if contractor performance is unsatisfactory ensuring that employees who are required to manage contracts have sufficient experience, training and support. …if there is no policy to address repeated poor performance, then the municipality/local board is at risk of not realizing its procurement goals To minimize the risk of repeated poor performance, a policy should be in place for documenting evidence of unsatisfactory performance (in terms of failure to meet contract specifications, terms and conditions or for health and safety violations). The policy should make clear that evidence must be presented to those in a position to decide on the award of future work to the supplier.
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