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Focus On Series

Area Summary: Procurement of Goods and Services – Traditional Procurement

Relevant Audits

Audit Office

Report Title
(click on title to access summary)

Publication Date

OAG - Nova Scotia

Health and Wellness: Colchester Regional Hospital Replacement

May 2011

OAG - Nova Scotia

Health and Wellness: Long Term Care – New and Replacement Facilities

May 2011

OAG - New Brunswick

Point Lepreau Generating Station Refurbishment – Phase 1

December 2013

OAG - Canada

Capital Projects – Yukon Hospital Corporation

February 2013

OAG - Québec

Professional Service Contracts Related to Information Processing

November 2012

OAG - Western Australia

Fiona Stanley Hospital Project

May 2010

OAG - Western Australia

The Planning and Management of Perth Arena

March 2010

UK National Audit Office

Reducing the Cost of Procuring Fire and Rescue Service Vehicles and Specialist Equipment

July 2010

OAG - New Zealand

How the Ministry of Education Managed the 2008 National Schools Bus Transport Tender Process

January 2009

Examples of Audit Objectives

  • To assess whether roles and responsibilities were clearly defined, documented and communicated at the start of the project. (View report summary)
  • To assess the adequacy of the Department’s oversight of the project. (View report summary)
  • To assess the adequacy of processes used to determine and adjust budgets for the project. (View report summary)
  • To assess whether the project procurements were in compliance with applicable procurement policies. (View report summary)
  • To determine whether the Department had an adequate process to develop the requirements for the request for proposals for new long term care facilities. (View report summary)
  • To determine whether significant project risks have been identified and whether there are arrangements in place to manage them. (View report summary)
  • To determine whether the Department is providing adequate oversight during the development, construction, commissioning and initial licensing of long term care facilities. (View report summary)
  • To obtain assurance that the Secrétariat du Conseil du trésor (SCT) conducts an appropriate follow-up of contract management processes for professional services. (View report summary)

Examples of Audit Criteria[1]

  • The Corporation and the Department conducted an analysis of the health care needs of the communities and evaluated options on how to meet those needs most cost-effectively, including assessing how new services/programs would be integrated with existing ones. (View report summary)
  • The Corporation and the Department identified the requirement for the capital projects in their strategic and capital planning and explained how the projects would help them meet their respective mandates. (View report summary)
  • The Corporation and the Department collaborated with each other in determining the hospital facilities necessary to meet the needs. (View report summary)
  • The Corporation and the Department conducted a risk analysis for the decisions to build the two hospitals. (View report summary)
  • The Corporation and the Department incorporated mitigation strategies for identified risks. (View report summary)
  • The Corporation awarded contracts related to the projects according to relevant authorities. (View report summary)
  • Senior management regularly monitored the projects to determine whether they were on time, on budget, and being built to specifications. (View report summary)
  • Cost estimate and scheduling are done with rigour. (View report summary)
  • The contract is complete and signed before work begins and significant variances between the estimate and the value of the contract are explained and approved by proper authorities before contract signature. (View report summary)
  • Relevance of any amendments to contracts is demonstrated and amendments are approved in a timely manner by proper authorities. (View report summary)
  • Accountability to Treasury Board is complete and done on a timely basis. (View report summary)
  • The Ministry was expected to apply its RFP rules correctly and consistently. (View report summary)

[1] Few published audit reports include the audit criteria used to conduct the audit.

Examples of Evidence Gathering and Analysis Techniques

Testimonial Evidence

  • Interviewed current and former senior officers and project management staff. (View report summary)

File Review

  • Examined requests for proposals, bid submissions, documents and reports, and tested for compliance with policies and processes. (View report summary)


  • Used a targeted selection of 10 contracts from a total of 26 to assess whether the Yukon Hospital Corporation awarded contracts according to the Government of Yukon’s contracting policy. (View report summary)
  • Selected a sample of 25 bus operators among the 165 who participated in the qualification submissions phase. Evaluated their scores using the criteria in the RFP. Repeated the qualification submissions phase tasks carried out by each service agent. Considered the consistency with which each service agent applied the evaluation criteria to the submissions in the sample, and whether the service agents were consistent with each other in how they applied the evaluation criteria. (View report summary)
  • Selected a sample of four of the fifteen frameworks Firebuy has put in place, for detailed review. Examined procurement practices, with support of an external procurement expert, using desk-based research and interviews. (View report summary)


  • Surveyed 23 of the 46 Fire and Rescue Services in England by email to assess the use of Firebuy frameworks and other consortia/arrangements. (View report summary)
  • Surveyed all 50 suppliers on Firebuy’s Framework to gauge suppliers’ views on how Firebuy manages its framework contracts and their contribution to improving value for money across Fire and Rescue Services. (View report summary)

Examples of Findings

Planning and Budgeting

  • The project budget was not a realistic estimate of the expected costs to build the new hospital and was not sufficient to complete construction. It was based on assumptions that were unreasonable or unsupported. It did not, for instance, consider inflation over the life of the project. (View report summary)
  • Perth Arena is substantially over budget and late. It will cost more than three times the original estimate. The Arena is scheduled to open almost three years later than originally planned. Insufficient scoping and planning meant that both the original cost estimate and opening date were unrealistic. (View report summary)
  • The planning phase for Fiona Stanley Hospital was neither efficient nor effective. Attempts to fast track project planning to meet unrealistic deadlines caused delays and risks. The project business case and other key planning documents had significant gaps, which required additional time and resources to fix. (View report summary)
  • The Corporation did not conduct a full assessment of the communities’ health care needs in planning and designing the hospitals. It also did not determine the incremental operating costs for the hospitals until construction was well under way. The Corporation cannot demonstrate that the hospitals, as designed, are the most cost-effective option for meeting health care needs. (View report summary)
  • The new facility is larger than the existing facility and is designed to offer more services to more people. However, there has been no analysis to determine whether additional funding will be required to operate the new facility at its intended capacity when it opens. (View report summary)

Risk Assessment and Management

  • The Corporation and the Department could not provide a documented risk analysis to show that they had identified and assessed risks before beginning to build the hospitals. (View report summary)
  • Significant risks remain on the project. While these risks have been identified, the strategies to manage them are not all well advanced. Without effective management of these risks the hospital may be further delayed, cost more and may not deliver all the planned services to patients when it opens. (View report summary)

Compliance with Policies and Processes

  • The Department had an appropriate process to develop the request for proposals, and evaluate the bids received. The Department complied with the provincial procurement policy and appropriately awarded successful proposals. (View report summary)
  • The Department developed and followed an adequate process for the development, construction, commissioning and initial licensing of new and replacement facilities. (View report summary)
  • In all three projects, most contracts were competitively tendered and most change orders were appropriately justified and managed. (View report summary)
  • Supplier solicitation did not enable the objective of free competition to be fully reached. The average number of tenders received that were compliant and acceptable following a public call for tenders is not very high. (View report summary)

Project Governance and Oversight

  • While ineffective budgeting practices were significant contributors to apparent cost increases, oversight and project management weaknesses by both entities have contributed to project difficulties and cost overruns. Some significant decisions were made without sufficient consideration of the related costs. (View report summary)
  • The audit team found evidence of a rigorous oversight reporting structure operating throughout the life of the refurbishment project. (View report summary)
  • Several elements specified in the contract were not rigorously monitored by the entities. Deficiencies were noted, namely with regard to the execution of unplanned work, invoicing at higher rates than stipulated in the contract and non-compliance with the designated personnel. (View report summary)
  • Oversight was hampered by a lack of full and timely information. This delayed final project approval, and the start of subsequent phases. The additional scrutiny did, however, have the benefit of producing a more realistic scope, budget and timeline for the project, which have so far proved robust. (View report summary)
  • Key decisions on the project during contract negotiations have altered the planned allocation of risks between the state and contractor, increased the risks to the state, and led to project delays and cost increases. These decisions were made without systematic or sufficient analysis of their impact, consideration of alternatives, external scrutiny or legal advice. (View report summary)
  • The Department did not implement the project management and governance arrangements required to control a major project like the Arena. This resulted in inadequate transparency, oversight and blurred accountability. (View report summary)
  • The Department has not exercised sufficiently clear leadership, direction and oversight of Firebuy to ensure it achieved its original objectives. (View report summary)

Human Resources and Expertise

  • As for the use of external resources, when comparing the Government of Québec with other administrations, it is clear that the Government of Québec used these resources a lot more frequently. In the long term, frequent recourse to subcontracting may result in the stagnation or even the loss of internal expertise. Further, there is a risk this practice may create a dependency on suppliers. (View report summary)


  • The continued operation of Firebuy in its current form represents poor value for money. Firebuy has cost the taxpayer nearly twice as much to set up and run as the savings it claims to have helped local Fire and Rescue Services to deliver, and the cost of setting up and running the current frameworks are unlikely to be recouped over their lifetime. (View report summary)

Examples of Recommendations

  • The responsible entities should prepare a comprehensive assessment of the funding required to operate the new facility at its intended capacity and agree on the level of funding to be provided. (View report summary)
  • The Department should put a process in place to ensure management in charge of significant capital projects complete an adequate review and challenge of key estimates prepared by consultants. (View report summary)
  • The Department should take appropriate steps to ensure decisions to replace long term care facilities are based on a transparent, consistent process and are adequately supported and documented. (View report summary)
  • The decision-making process should be clearly documented, including identifying the roles and responsibilities of key players before significant amounts are expended. (View report summary)
  • An independent, third-party expert should be contracted to guide the process of selecting the best option, identifying and developing mitigation strategies for all significant risks, identifying a preferred proponent, and ensuring that the corporation gets the best possible outcome for provincial ratepayers. (View report summary)
  • Departments should improve the monitoring of elements in each contract with regard to:
    • the execution of the work, to ensure that it corresponds to the work provided for in the contract;
    • the application of rates provided for in the contract upon payment of the supplier;
    • the execution of the work by designated personnel. (View report summary)
  • The Department should reinforce the Strategic Asset Management framework with more rigorous staged project approval processes, and only recommend funding for those projects that demonstrate realistic budgets and timelines supported by sound planning. (View report summary)
  • The Department should exercise more active oversight of major projects and should ensure consistent application of the Strategic Asset Management Framework to all major capital projects. (View report summary)
  • The Department should quickly assess whether continuing with a nationally directed central procurement body is sensible. If it concludes that it is, the Department should assess how best to change the way Firebuy works to enable delivery of maximum savings cost effectively. (View report summary)