2. A strategic definition of the needs of public actors in Quebec

In Quebec, as elsewhere, measures to increase transparency and accountability in the conduct of public procurement focus on the organisation and management phase of the call for tenders. However, the identification of needs and planning stage of public procurement are also highly vulnerable to undue influence and corruption. The identification of needs stage is particularly vulnerable in large infrastructure projects, especially because of the degree of government discretion in investment decisions, the size of the amounts involved, the technical complexity of the projects and the multi-stage nature of the investment cycle. According to the OECD's Foreign Bribery Report (OECD, 2014[1]), almost 60% of bribery cases that occur abroad take place in sectors closely related to infrastructure (mining, construction, transport and business, information and communication).

Political influence, particularly at the stages of identification of needs and project planning, can lead to waste and the creation of “white elephants” (i.e. infrastructure that does not meet needs and whose costs are not justified by its usefulness). Thus, governments should ensure that controls exist throughout the entire public investment policy cycle, not just at the stages associated with the tendering phase (Figure 2.1). Several countries have adopted measures to reduce the risk of politicisation in each of these phases and thus avoid infrastructure projects being captured for the benefit of inefficient economic actors or vested interests.

This chapter focuses on the measures in place in Quebec to improve the transparency and accountability of public authorities at the identification of needs and public procurement planning stage. Focusing primarily on infrastructure projects, this chapter also deals more generally with the planning of overall public procurement.

In response to a recommendation of the Charbonneau Commission, an Independent Expert Committee (IEC) was established by the Ministry of Transportation on 31 March 2016 to provide advice on planning the public procurement for which it is responsible. The IEC’s members are three external and independent experts in the fields of engineering, finance and governance.

The objective behind the creation of the IEC is to ensure objectivity in the selection of infrastructure projects and to depoliticise the approval of road conservation and improvement projects at the Ministry of Transportation (CEIC, 2015[3]).

The specific structure of the IEC goes beyond the practices generally put in place in other OECD countries to depoliticise the planning of infrastructure projects, and to our knowledge does not appear to have any equivalent. Best practice in OECD countries to increase government accountability in needs identification and planning of infrastructure projects focuses more on specific projects rather than on processes for overall road infrastructure programming (Box 2.1).

Since its inception, the IEC has submitted two reports - for the 2017-19 road planning (IEC, 2017[4]) and the 2018-20 road planning respectively (IEC, 2018[5]). An important aspect of the 2018-2020 report is that it documents progress in implementing the recommendations of the 2017-2019 report. Both are available on the Ministry of Transportation’s (MTQ) website, which promotes government transparency and accountability regarding the implementation of the IEC's recommendations. The Ministry has produced an action plan to ensure the implementation of the IEC recommendations, and according to the information shared, it is currently being carried out. It noted that the MTQ ensures rigorous internal monitoring of the progress made in implementing the IEC's recommendations and has set reasonable deadlines for all recommendations.

To date, from the perspective of the MTQ and the Public Monitoring Committee on the recommendations of the Charbonneau Commission (Monitoring Committee), the IEC's work has been successful. The government could formalise its operation in a law or directive if it wants to ensure its sustainability.

According to the MTQ and the Monitoring Committee, the IEC makes a significant contribution to increasing transparency in planning public procurement and the work of the Ministry of Transportation. Since the IEC's mandate was originally limited to two years, it was renewed for another two-year period following a process of appointment of new members by the MTQ. Given the positive results of the IEC's work and the MTQ's desire to renew the IEC's mandate on an ongoing basis, the MTQ could consider formalising the IEC's role and mandate, as well as the monitoring process of the IEC's recommendations, within a law or a directive from the Minister of Transportation. Currently, there is no formal legislative authority or policy on the governance of the IEC in order to increase transparency on the implementation of its recommendations.

However, according to some of the stakeholders interviewed, the publication of these reports goes relatively unnoticed. The MTQ may consider other ways to share updates on the implementation of the IEC’s recommendations. Some of the report's findings raise issues of public interest, such as the increasing degradation of Quebec's road network despite increased investment in its maintenance. More frequent publication of the Government's planned actions to address the issues identified by the IEC would enhance transparency and accountability and contribute to public confidence in government.

The IEC's mandate is limited to infrastructure work for which the MTQ is responsible, but other major infrastructure projects are also vulnerable to the risk of politicisation.

There is a limited number of public contracts that are prone to being embezzled in order to acquire political capital at the local level, but this risk is not limited to road infrastructure projects for which the MTQ is responsible. According to the information gathered for this report, investment planning, i.e., the Quebec Infrastructure Plan (QIP), is approved by the Council of Ministers, with the prioritisation of major infrastructure projects carried out by each minister concerned (including those of the MTQ). Projects for the construction or improvement of real estate infrastructure of any kind, such as hospitals, educational institutions or regional service centres, are therefore also likely to be instrumentalised for political purposes, or at least have the appearance of being so.

Thus, the conclusions of the Charbonneau Commission that it is preferable to establish a certain distance between elected officials and infrastructure projects are applicable to the planning of major projects of all public bodies.

With this in mind, the Government of Quebec adopted the Public Infrastructure Act on 30 October 2013. This Act establishes the governance rules for planning public infrastructure investments and managing public infrastructure, to achieve a long-term vision and ensure their quality and sustainability.

In this regard, the President of the Treasury Board, who is responsible for enforcing the Public Infrastructure Act, is supported by his Under-Secretariat for Public Infrastructure in carrying out this function. The latter is responsible:

  • for co-ordinating the process of evaluating and monitoring the state of public infrastructure assets and monitoring their evolution

  • for collecting and analysing the investment needs of public bodies

  • for developing and implementing the 10-year Quebec Infrastructure Plan (QIP)

  • for preparing an annual report on monitoring public funding allocated to infrastructure

  • for advising the Treasury Board on planning, approving and managing public infrastructure projects

  • for developing and ensuring the implementation of the necessary framework to ensure optimal governance of major public infrastructure projects

  • for developing policies, strategies and guidelines on these matters.

Thus, in order to have comprehensive and in-depth knowledge of the infrastructure assets under the responsibility of the Government of Quebec, the main public bodies, as designated in section 3 of the Public Infrastructure Act, are required to submit an annual public infrastructure investments management plan (PAGI) to the President of the Treasury Board and to monitor the condition and asset maintenance deficit of the infrastructure assets under their responsibility, including the effect of investments made during the year. The information generated by the PAGI provides the Government of Quebec with an overview of the evolution of the condition and asset maintenance deficit of most public infrastructure assets.

Additionally, the Government of Quebec has created guiding principles for its public infrastructure investments, based on objectives that prioritise maintaining the supply of services to the public over improving services (Treasury Board Secretariat, 2018[6]). Thus, the guiding principles and the PAGI are taken into account in the QIP proposed to the government y the Treasury Board.

This QIP is accompanied by a report on the use of the funds allocated to infrastructure during the previous financial year and a forecast of their use for the current financial year. After analysing the QIP proposed by the Treasury Board and making the necessary changes, if any, the government attaches a final version of the QIP and the PAGI to the estimates tabled in the National Assembly so that they can be studied by the competent parliamentary committee within the framework of the budgetary allocations. Infrastructure projects worth more than USD 50 million that are being considered, planned or under construction, are made public by the Public Infrastructure Sub-Secretariat through a scorecard published on the Treasury Board Secretariat's website. This transparency tool can be found at the following URL: https://www.tresor.gouv.qc.ca/infrastructures-publiques/tableau-de-bord/.

In addition, with respect to the planning, approval and management of infrastructure projects, the government has adopted the Directive on the Management of Major Public Infrastructure Projects (the Directive), which provides a framework and rigorous management rules to support the decision-making process of the Council of Ministers for studying, planning and implementing major projects by public bodies and the significant changes that could be applied to them. Thus, this directive provides for the preparation of extensive documentation to support the need identification, the choice of the selected option and the implementation of major projects (preliminary project sheet, feasibility study and business case as well as progress and final reports).

Finally, to strengthen the monitoring of public infrastructure project implementation, the TBS has set up an Infrastructure Project Governance Committee, chaired by the Associate Secretary for Public Infrastructure of the TBS and consisting of permanent members of the TBS and SQI, as well as respondents from the ministries concerned.

Taken as a whole, the governance put in place by the TBS, namely the development and approval processes for the QIP and the PAGI, the Directive and the Public Infrastructure Projects Dashboard, are an innovative means of increasing transparency and accountability in the planning and prioritisation of Government of Quebec infrastructure projects. These processes are aligned with best practice within OECD countries, and may even compare favourably with some of them.

As shown in Figure 2.2 below, many OECD countries are developing a short list of infrastructure projects to be implemented in the medium term (e.g. within one electoral cycle).

Comprehensive and transparent planning of infrastructure projects increases the visibility and consistency of project prioritisation, thereby reducing subjective discretionary decisions.

Considering the success achieved by the IEC in support of the MTQ, the fact that the Council of Ministers has the authority to approve and modify the QIP, that the management of the politicisation risk must be updated on a regular basis and that the perspective of external experts could be valuable in this regard, the government could consider how to integrate the IEC's mandate into planning public procurement subject to the Directive on the Management of Major Public Infrastructure Projects. The exercise of the IEC's jurisdiction over all major public infrastructure projects could further reduce the appearance of vulnerability to political influences at the expense of governance or technical considerations, and thus increase public confidence in the objectivity of public infrastructure planning.

In the literature, (Schiele, 2007[7]; Barry et al., 1996[8]) the performance of procurement planning has long been recognised as a major component in assessing the strategic maturity of procurement within an organisation. In addition to its impact on the efficiency of public procurement, structured planning minimises the use of non-transparent procedures.

One of the main objectives of the ACPB, as identified in article 2, is to establish “effective and efficient contracting procedures, including careful, thorough evaluation of procurement requirements [...]”. The first step in an in-depth needs assessment is the planning of future needs by procurement officials. In practice, however, this objective is not achieved on a consistent and harmonised basis by all public bodies. Indeed, several stakeholders consulted during the data collection for this report reported a lack of expertise in some public bodies for planning their future needs in a specific and structured way before organising calls for tenders. According to the stakeholders, the lack of expertise in planning for future needs is even more evident in some municipalities, which are governed by the Cities and Towns Act and the Municipal Code.

The OECD experience shows that certain essential steps must be taken before launching the phase of identifying potential suppliers and analysing their capabilities.1 First, internal needs must be fully understood to ensure that the market analysis, which will be conducted at a later stage, targets the appropriate products or services.

Procurement planning is not only important for ensuring co-ordinated and efficient operations, but also reducing the unwarranted use of emergency and other exceptions. Nevertheless, this practice is relatively common in public procurement in Quebec, as shown in Figure 2.3.

In addition to reducing the risk of awarding contracts on an exceptional basis thus limiting the transparency of government contracts, procurement planning makes it possible to provide the private sector with an initial list of the needs of public bodies so that they are aware of possible future opportunities. The Government of Quebec has established general guidelines on contract management that include a section on procurement planning. Indeed, the guide Processus de référence en gestion contractuelle (Reference procedures for contract management), developed by the CSPQ, provides examples of best practices in order to promote their adoption.

Moreover, as discussed in “Mitigating the risk of politicisation of all major public infrastructure projects” section, the Government of Quebec has implemented a planning and prioritisation process developed for public infrastructure projects. In particular, the Directive requires the production of a feasibility study which must demonstrate the need to enable the Council of Ministers to decide on the relevance of an infrastructure project. The TBS may also require the deputy minister or head of the contracting authority to appoint an individual to co-ordinate the work of a team that provides centralised governance for the management of the public infrastructure project portfolio. As part of its work, the team advises the deputy minister or leader of the public body on the following aspects of public infrastructure projects:

  1. 1. identification, selection and prioritisation of projects

  2. 2. co-ordination and monitoring of projects

  3. 3. any other aspect as determined by the Treasury Board.

The Government of Quebec also organises reverse technology showcases, which require a structured procurement planning process by allowing public bodies to communicate their future information technology needs. These meetings, which are public and open to all businesses, allow them to obtain relevant information and adapt the design of their solutions to the needs of future government projects.

In a similar vein, procurement planning practices are implemented in a structured and permanent way in many OECD countries, as demonstrated in Chapter 4, and also serve to increase levels of competition in public procurement, thus indirectly limiting their exposure to corruption risks. However, the nature of the information published must be carefully assessed to ensure that increased transparency on the future needs of the public sector does not give rise to another type of corruption risk: collusion (OECD, 2012[10]).

Beyond the development of guidelines, the Government of Quebec is aware of the difficulties faced by public servants in establishing and following rigorous processes for the identification of needs prior to the development and submission phase of calls for tenders, and is therefore developing two centres of expertise. One of these centres will focus on public markets in the construction sector and will be led by the Société québécoise des infrastructures (SQI). The other centre will focus on purchasing information technology and will be led by the Centre de services partagés du Québec (CSPQ). Considering that these centres of expertise are expected to cover the entire contract management cycle, the SQI and the CSPQ could pay particular attention to the supervision of public bodies at the identification of needs stage.

A third centre of expertise dealing with contract management at municipal level has also been created. It was developed by the Ministry of Municipal Affairs and Housing (MAMH) in collaboration with the Fédération québécoise des municipalités (FQM) and the Union des municipalités du Québec (UMQ). It includes three working groups that share five priorities, namely: 1) identification of needs; 2) method of award; 3) call for tenders; 4) contract award; and 5) contract monitoring. According to the MAMH, the identification of needs was recognised as a priority, given that lack of knowledge sometimes makes it difficult to identify the optimal project, even though this step is essential to developing tender documents. In addition, too little attention is paid to the identification of needs, which results in a proliferation of addenda and changes in the guidelines, and can seriously undermine the credibility of a project. A lack of knowledge and interest in a rigorous definition process can also make a project more vulnerable to undue influence from third parties.

Although the Government of Quebec has implemented concrete measures to strengthen the needs planning process, their application is limited to certain types of public procurement, such as those in the infrastructure and information technology sector. Thus, the government could consider further strengthening its guidance at the stage of identifying and defining the needs of public bodies. For example, to complement the guidelines on procurement planning, the TBS could provide technical resources to support all public bodies in the application of best practices and requirements applicable to specific contexts. The benefits associated with consolidating technical expertise are also discussed in the “Providing support to municipalities and municipal officials in matters of integrity and public procurement” section in chapter 1.

In addition, the Government of Quebec could establish specific standards for documentation of the decision making process with respect to the identification of needs by public and municipal bodies. For its part, the MAMH supports the municipal community by helping it to establish its own standards. Although requirements exist for documentation to support Council of Ministers decisions in the infrastructure sector (see “Objective, transparent and politically independent planning of works and infrastructure projects” section), they do not consistently apply to all procurement by public and municipal bodies. Indeed, according to discussions with stakeholders for this report, audit results from the Quebec Auditor General revealed that some of the planning processes for public procurement in sectors other than infrastructure were poorly or not at all documented, particularly in relation to the cost estimates for public procurement. The examples of New Zealand and Croatia below help us to understand some of the benefits of formally publishing procurement plans, particularly with regard to audits (Box 2.2).

In view of the shortcomings identified at this stage of public procurement, the government could encourage internal and external audit bodies, all while respecting their autonomy, to include the process of identification of needs and procurement planning in their audits on a regular basis. An increased role for auditors in this phase would allow the implementation of a monitoring mechanism to ensure that projects are actually implemented in accordance with the plans of public bodies. This could strengthen the integrity of the planning process by enhancing accountability.

Finally, Quebec could draw on the experiences of many OECD countries where there is co-ordination of projects at both national and regional levels (Australia, Korea, Italy, Japan, New Zealand, United Kingdom, Sweden, and Turkey) to better co-ordinate the conduct of public procurement by the various levels of government. (Box 2.3).

Procurement planning processes are generally not harmonised or co-ordinated across public bodies. This can have a negative impact on accountability and the costs entailed by public procurement.

Within all contracting authorities (CA) surveyed, public procurement planning is generally conducted in a decentralised manner by the operational units or by the territorial directorates-general. However, there are some variations from one organisation to another. For example, the main organiser of public procurement at the RAMQ, the information technology directorate, submits an annual plan to the public contracts management body. But for the other directorates, intentions to organise public procurement processes are channelled in an ad hoc manner. There is also no co-ordination between public and municipal agencies wishing to tender simultaneously for a given contract.

Firstly, a lack of central planning co-ordination can affect transparency and accountability in an organisation's procurement process. For example, the Territorial Directorates General (TDG) prepare their proposed planning on the basis of intervention strategies and guidelines for the choice of projects to be prioritised, as established by central government. In the interests of efficiency and transparency, the IEC recently recommended that the MTQ examine the possibility of preparing a “suggested” plan for the entire province at central level, which could then be sent to the TDGs for validation (IEC, 2017[4]). The TDGs could then make changes to the plan based on the characteristics of their region. The objective behind this recommendation is to “facilitate the transparency and documentation of changes, deletions, amendments or additions introduced to meet regional particularities” (IEC, 2017[4]). In its 2018 report, the IEC also proposes that the MTQ's central organisation follow up with the TDGs on the preparation of projects before the planning, which could be used to identify any observable discrepancies between projects under development and departmental priorities earlier, and thus make corrections more quickly. Article 17 of the Public Infrastructure Act allows the TBS to require the deputy minister or head of the contracting authority to designate a team responsible for co-ordinating the centralised management of public infrastructure projects, including: 1) the identification, selection and prioritisation of projects; 2) the co-ordination and monitoring of projects; and 3) any other aspect determined by the TBS.

As mentioned earlier, a lack of co-ordination and planning of the various public procurement processes may require undue use of exceptions to the tendering process, which may increase costs and conceal any wrongdoings. Firms that regularly participate in calls for tenders report that there is no analysis at the government or municipal level of the ability of individual markets to meet the demand from one or more simultaneous calls for tenders in a given region (see also the discussion on market analysis in Chapter 3). Excessive demand in relation to the market's ability to meet it can lead to significant price increases and the need to resort to lower quality proposals. More integrated planning of the needs of public bodies would result in fewer calls for tenders being issued within the same market for a given period, which could have a positive impact on price and quality.

The Government of Quebec could therefore consider harmonising procurement planning processes so that they are consistent between various public bodies. The MAMH may consider doing the same for municipal agencies. These harmonised processes require better planning of decentralised units within each public agency, to have more integrated central planning at the level of public bodies. The Government of Quebec could be inspired by best practices implemented by some OECD countries, such as New Zealand and Italy (Box 2.4). Indeed, after several cases of public procurement wrongdoings exposed in the media, Italy has merged its public procurement authority into its anti-corruption agency (ANAC) and has extended the applicable powers of monitoring and intervention. As a result, Consip currently has robust and detailed procedures for procurement planning and market analysis.

Unplanned public procurement processes could remain possible in Quebec with sufficient justification, so that these procedures become the exception rather than the rule in all public bodies. With consolidated information on the future needs of the public sector, the Government of Québec could also put in place a strategic approach and a process to co-ordinate the carrying out of public procurement by various public and municipal bodies, so that it can assess the capacity of markets to meet demand.

References

[8] Barry, J. et al. (1996), “A Development Model for Effective MRO Procurement”, International Journal of Purchasing and Materials Management, Vol. 32/2, pp. 35-44, http://dx.doi.org/10.1111/j.1745-493X.1996.tb00284.x.

[3] CEIC (2015), Rapport final de la Commission d’enquête sur l’octroi et la gestion des contrats publics dans l’industrie de la construction, https://www.ceic.gouv.qc.ca/fileadmin/Fichiers_client/fichiers/Rapport_final/Rapport_final_CEIC_Integral_c.pdf.

[11] European Commission (n.d.), Increasing the quality of public procurement: Publish annual procurement plans, http://ec.europa.eu/regional_policy/sources/good_practices/GP_fiche_12.pdf (accessed on 13 May 2020).

[12] Government of New Zealand (2015), Government Rules of Sourcing: Rules for planning your procurement, approaching the market and contracting, Government of New Zealand, Public procurement, https://www.procurement.govt.nz/assets/procurement-property/documents/government-rules-of-sourcing-procurement.pdf.

[5] IEC (2018), Avis du Comité d’experts indépendants, Independent Experts Committee, https://www.transports.gouv.qc.ca/fr/projets-infrastructures/investissements/investissements-routiers/investissements-routiers-2018-2020/Documents/avis-programmation.pdf.

[4] IEC (2017), Avis du Comité d’experts indépendants, Independent Experts Committee, https://www.transports.gouv.qc.ca/fr/projets-infrastructures/investissements/investissements-routiers/investissements-routiers-2017-2019/Documents/comite_experts_final.pdf.

[6] OECD (2017), Getting Infrastructure Right: A framework for better governance, OECD Publishing, Paris, https://dx.doi.org/10.1787/9789264272453-en.

[2] OECD (2016), Integrity Framework for Public Investment, OECD Public Governance Reviews, OECD Publishing, Paris, https://dx.doi.org/10.1787/9789264251762-en.

[1] OECD (2014), OECD Foreign Bribery Report: An Analysis of the Crime of Bribery of Foreign Public Officials, OECD Publishing, Paris, https://dx.doi.org/10.1787/9789264226616-en.

[10] OECD (2012), OECD Recommendation of the Council on Fighting Bid Rigging in Public Procurement, OECD, Paris, https://www.oecd.org/daf/competition/RecommendationOnFightingBidRigging2012.pdf.

[7] Schiele, H. (2007), “Supply-management maturity, cost savings and purchasing absorptive capacity: Testing the procurement-performance link”, Journal of Purchasing & Supply Management, Vol. 13, pp. 274-293, http://dx.doi.org/10.1016/j.pursup.2007.10.002.

[14] Treasury Board Secretariat (2018), Balises à l’égard des exigences et des critères contractuels en services profesionnels liés à la construction, https://www.tresor.gouv.qc.ca/fileadmin/PDF/faire_affaire_avec_etat/Balise_construction_services_professionnels.pdf (accessed on 24 July 2018).

[13] Treasury Board Secretariat (2018), Entreprises inscrites au RENA, https://rena.tresor.gouv.qc.ca/rena/rechercher.aspx?type=lettre&lettre=a-z (accessed on 27 July 2018).

[9] Treasury Board Secretariat (2017), “Statistiques sur les contrats des organismes publics 2016-2017”, https://www.tresor.gouv.qc.ca/fileadmin/PDF/faire_affaire_avec_etat/statistiques/1617.pdf (accessed on 18 July 2018).

Note

← 1. Presentations made during an OECD workshop on improving public procurement practices at the Institute for Social Security and State Workers' Services (ISSSTE), 2-4 September 2014, Mexico City, by experts from Chile, Denmark, Portugal and the United Kingdom.

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