This article is an excerpt from The Art of Tendering: A Global Due Diligence Guide, which is available for purchase.
While more and more public institutions are turning to fairness advisors for major projects, there is no guarantee of immunity from headline hazards, audit scrutiny, legal challenge, or project failure. In fact, if not properly managed, fairness advisors can increase your project risks. This discussion will debunk some common industry misconceptions about using fairness advisors and offer practical guidelines for properly selecting and integrating them into your overall project governance structure.
No Substitute for Internal Due Diligence
As the deals keep getting bigger and the stakes keep getting higher, the risks of project failure become more pronounced. With spending scandals putting a spotlight on government procurement, public institutions are under increasing pressure to ensure that their contract awards are fair and transparent.
Back in 2005, Justice Bellamy’s Toronto Computer Leasing and Toronto External Contracts Inquiries Report, known as the Bellamy Report, recommended the use of fairness consultants for major projects, noting that “the use of fairness commissioners is an important emerging risk mitigation tool aimed at strengthening both the reality and perception of integrity in public procurement.”
In some circles, particularly within some larger, more well-resourced government institutions, fairness consultants are viewed as adding value by bringing greater project transparency. However, while a fairness consultant’s “sign-off” can be useful to government ministers at press conferences when announcing high-profile contract awards, public institutions should not assume that they can simply outsource their project accountability to these private contractors.
Ultimately, it is the public institution that remains accountable for the project outcome. Careful consideration should therefore be given to overall project requirements before deciding to hire a fairness consultant. This first section canvasses five critical questions about using fairness advisors.
1. Are they worth the cost?
High-value, high-profile, complex, and controversial projects are the primary candidates for fairness consultants. However, given the additional cost, time, and complexity that a fairness consultant adds to a project through additional consulting fees and additional layers of inputs, reviews, and approvals, a public institution should give careful regard to value-for-money and project efficiency before deciding to add yet another consultant to an already complex project.
2. Are they governed by professional standards?
Where the decision to retain a fairness consultant has been made, the institution should think very critically about the qualifications of the individual in question, since fairness consultants are unregulated and unlicensed and come with no independent professional certification or governing body. They are not qualified to provide legal advice or to provide the technical expertise offered by other licensed professionals such as engineers, architects, and accountants.
Where advice is required in any of these specialized areas, the institution should retain the services of the appropriate licensed professional, rather than assuming that the fairness consultant can perform double duty and provide that input as well.
3. Are they independent?
The Bellamy Report recommends that the fairness consultant have a degree of independence from the project team. As the report states, “for complex projects, fairness commissioners are usually independent, external third parties, typically in the form of consultants.” However, public institutions should be aware that giving a consultant the title of “fairness commissioner,” “fairness auditor”, or “fairness monitor” does not provide formal independence or impartiality, bestow any special legal status, or require the consultant to perform the “fairness” function to any predetermined standard.
Unlike a lawyer, whose advice can be provided on a confidential solicitor-client basis, the fairness consultant’s input and observations are not privileged. The fairness consultant can be required to testify against the institution if a losing bidder launches legal proceedings. Further, unlike a court or tribunal, there is no due process guaranteed for the purchasing institution with respect to the “findings” of the fairness consultant.
4. Do they have a clear mandate?
Where the decision to retain a fairness consultant has been made, the purchasing organization should clearly define the role of this consultant at the outset of the project. As the Bellamy Report notes, one of the key functions of a fairness consultant is to oversee the fairness of the evaluation process; however, there is a significant risk of scope drift when a fairness consultant’s role is not clearly defined or properly adhered to.
5. Do they replace our due diligence duties?
As the Bellamy Report notes, a fairness consultant “should be seen as an adjunct to the procurement process, not as a substitute for the procedures, policies, and conduct of staff that show commitment to fairness and transparency in procurement.” At the end of the day, it is the public institution that is ultimately responsible for both the fairness of the process and the success of the project.
Implementation Recommendations
A fairness advisor can add significant value to a project by providing quasi-independent, arm’s-length oversight that increases confidence among the supplier community and public at large over the integrity of a procurement process. While the Bellamy Report does not preclude the use of internal staff to fulfil this role, it notes that “[f]or larger, more complex projects, it is much more likely to be an external expert”. As the Bellamy Report notes:
… the use of fairness commissioners is an important emerging risk mitigation tool aimed at strengthening both the reality and perception of integrity in public procurement. A fairness commissioner is an individual who monitors the procurement process with a view to:
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Providing the purchasing organization with assurance that procurement management practices and processes are of the highest standards.
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Communicating/demonstrating to external and internal observers that fairness, objectivity, impartiality, clarity, openness & transparency has been maintained.
As discussed below, public institutions should take the following three key recommendations into account when considering the use of fairness advisors:
- Select the right projects.
- Find the right skill set.
- Define the mandate.
1. Select the Right Projects
Fairness advisors are typically only used in major projects. While there is no single criterion for what constitutes a major project, high-value, high-profile, complex, and controversial projects are the primary candidates. While some jurisdictions have developed a formal policy to help determine when to retain a fairness advisor, most public institutions have no official policy. To help promote a consistent approach, all public institutions should adopt a formal policy for using fairness advisors.
2. Find the Right Skill Set
Once the decision to retain a fairness advisor has been made, the purchasing organization should consider the appropriate skill set required for the project. The ideal fairness consultant understands the business in question, has experience working within large government bureaucracies, has substantive knowledge of the law and practice of public procurement, and has the judgment to effectively balance these various perspectives and provide practical input to the project team.
3. Define the Mandate
While one of the key functions of a fairness advisor is to monitor the fairness of the evaluation process, a fairness advisor can also play a role during the preliminary planning phases of a project. The specific scope of the fairness advisor’s mandate should be carefully defined by the project team to clarify whether the consultant’s role is to simply monitor compliance with pre-established process rules, or whether it is to advise and help shape the creation of those fair process rules.
Future Considerations
While the procurement process must be fair and must be seen to be fair, these fairness and transparency considerations must be balanced against other critical objectives, including getting value-for-money for the taxpayer within reasonable timeframes. Before hiring a fairness consultant, public institutions should therefore ask themselves whether that time and money would be better spent focusing on the proper resourcing of their project teams to ensure that their organization meets the due diligence standards for which it will ultimately be held accountable.
