By Paul Emanuelli

This article is an excerpt from The Art of Tendering: A Global Due Diligence Guide, which is available for purchase.

In its October 2017 report entitled Obtaining the Best Value Through the Use of Vendor Rosters, the Toronto Auditor General’s Office made a series of recommendations on how to manage vendor framework arrangements. As the report explained, a “vendor roster is a list of sellers (suppliers, consultants, contractors, etc.) created by the City [of Toronto] to purchase a specific type of good or service”, and that by “evaluating and pre-qualifying vendors known to be capable of meeting its standards, the City can then save time and resources by making (repeated) future purchases under a simplified process.” The Auditor General noted that the City “introduced its rosters program around the year 2008, and currently buys approximately $88 million of goods and services per year through its 43 rosters.”

The Auditor General found room for improvement in how the City managed its framework agreements. For example, the Auditor General concluded that the City could save almost $1 million a year if it avoided using automatic rotational awards whenever possible, opting instead for second-stage competitive bidding processes for those same awards:

We observed a number of rosters using a rotational selection method in which the City purchases equally from each vendor. This contrasts with competitive rosters that use a bidding system to try to obtain the best value for the City.
Rotational methods can cost the City money when it purchases from the most expensive vendor(s), especially in markets where the price varies widely. Out of a sample of three rosters, the potential price difference between selecting the lowest priced vendor exclusively vs. on a rotational basis is estimated to be $940,000 per year. The City can likely save costs by increasing the use of rosters that use value based selection methods wherever possible.

To further bolster cost savings, the Auditor General recommended that the City purchasing department develop clear guidelines for the use of framework arrangements that prioritized cost as a selection factor. Additionally, the report advocated for the creation of guidelines to assist in the development of prequalification criteria in the oversight and monitoring of the prequalification processes.

The report also proposed that the City purchasing department review the City’s roster management practices to “identify opportunities for improving efficiencies and maximizing the use of rosters by divisional staff”. Finally, the Auditor General advised that the City develop “a reporting process on the roster program’s overall activities”—a process that should include publishing an accurate roster, actively maintaining the roster through quarterly updates, and enabling access to that information to relevant City staff.

As this report illustrates, public institutions are undergoing heightened scrutiny in the way they manage their multiple supplier arrangements. Organizations should implement the most current open framework practices to best ensure the achievement of transparency, efficiency, and value-for-money in their multiple-award portfolios.