On October 5, 2023, the Treasury Board of Canada published new guidance on the procurement and use of contracted professional services, including management consulting. This update is in response to recent controversy about the high quantum of overall spending on outsourcing, and the proposed reduction of spending on such services by 15% in Budget 2023.
This new guidance, titled Manager’s Guide: Key Considerations When Procuring Professional Services (Manager’s Guide) is for managers who are considering procuring external professional services to achieve operational goals. The Manager’s Guide is intended to be an additional tool for managers:
To assist with the decision making of whether to outsource professional services; and
If a decision is made to outsource professional services, to assist with procurement structuring and management of the contract.
The impact of the guide will be a somewhat stricter regime for the engagement of professional and consulting services by the Government of Canada (Canada). Businesses who sell professional services to Canada should pay particularly close attention to the Manager’s Guide’s requirements.
Under the Manager’s Guide, “professional services” is defined broadly and covers a range of services, including but not limited to:
Technical, scientific or professional expertise from lawyers, architects, engineers and consultants (among other professionals);
Certain health care, welfare and training services; and
Certain operational and maintenance services.
The Manager’s Guide contains key considerations for three stages of procurement: (1) deciding whether to contract, (2) structuring procurement, and (3) managing contracts for external professional services.
1. Deciding Whether to Contract
When deciding whether to contract for professional services, the Manager’s Guide recommends managers consider, among others:
Whether the desired services, capacity, expertise or information exist within the organization, or whether an independent third-party service provider is needed;
How long the services are needed and whether the demand justifies full-time dedicated resources; and
Whether there are specific reasons for hiring externally, such as urgency, cost and/or access to knowledge and expertise.
2. Structuring Procurement
If managers decide external professional services are needed, the Manager’s Guide recommends reaching out and engaging the organization’s procurement specialist as early as possible.
The Manager’s Guide recommends the manager and procurement specialist consider whether (and how) they, among others:
Have clearly defined the professional services (for example, the requirements for the work);
Can leverage information from the organization’s prior similar contracts (if applicable);
Can ensure applicable laws, processes, policies, regulations and agreements are respected;
Will appropriately mitigate risks (for example, establishing off-ramps in the contract); and
Can support the federal government’s Indigenous businesses commitment (for example, a minimum of 5% of the total value of federal contracts is awarded to Indigenous businesses annually).
3. Managing Contracts
To enable managers to successfully manage the services contract, the Manager’s Guide recommends managers consider whether (and how) they, among others:
Have taken steps to ensure all contractual parties understand the contract’s terms;
Are monitoring and documenting the contractor’s performance and deliverables;
Are promptly addressing performance issues;
Are maintaining appropriate separation with the external professional to ensure an employer-employee relationship is not formed; and
Have coordinated risk mitigation with the procurement specialist.
The Manager’s Guide complements existing federal policies, directives and guidelines already in place with respect to procurement. It is not exhaustive, and managers must also review and comply with the Directive on the Management of Procurement and other relevant federal policies, directives, guidelines and procedures.
Canada will conduct reviews, evaluations and audits as necessary to ensure the Manager’s Guide is effectively used.
The Treasury Board of Canada has indicated that it will update the Manager’s Guide over the next two years and as required thereafter.
For further information, please contact:
or any other member of our Procurement group.
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