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Broader Public Sector Accountability Act, 2010

Presentation to Financial Management Institute of Canada

Ontario ChapterMinistry of Finance

Ministry of Government ServicesMay 18, 2011

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Agenda

The presentation will focus on:

• Context for the legislation

• Key elements of the Broader Public Sector Accountability Act

• Overview of the BPS Procurement Directive

• Overview of the BPS Expenses Directive

• Implementation Support

• Questions

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Current Environment

• Fiscal pressures affecting both the government and broader public sector organizations

• Increased scrutiny regarding how public funds are spent

• Increased focus on the accountability of organizations entrusted with the expenditure of public funds

• On October 20, 2010, the Auditor General released The Special Report on Consultant Use in Selected Health Organizations. The focus was on the hiring and management of consultants at the Ministry of Health and Long-Term Care, as well as at selected hospitals and Local Health Integration Networks (LHINs).

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Broader Public Sector Accountability Act (BPSAA)

The Broader Public Sector Accountability Act, 2010:

• Bans the practice of hiring external lobbyists using public funds

• Establishes new procurement and expense claim rules for designated broader public sector (BPS) organizations

• Allows the making of procurement and expense claim guidelines for BPS organizations who receive less than $10M

• For hospitals and LHINs adds reporting and accountability measures related to compliance

• Brings hospitals under freedom of information legislation (FIPPA)

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Application

• The directives apply to all designated BPS organizations under the Broader Public Sector Accountability Act, 2010 defined as follows:

- every hospital

- every school board

- every university in Ontario and every college of applied arts and technology and post-secondary institution in Ontario whether or not affiliated with a university, the enrolments of which are counted for purposes of calculating annual operating grants and entitlements

- every approved agency designated as a children’s aid society under subsection 15 (2) of Part I of the Child and Family Services Act

- every community care access corporation

- every corporation controlled by one or more designated broader public sector organizations that exists solely or primarily for the purpose of purchasing goods or services for the designated broader public sector organization or organizations

- every publicly funded organization that received public funds of 10 million dollars or more in the previous fiscal year of the Government of Ontario

Compliance

• The Act requires all designated BPS organizations to implement the requirements under the directives.

Directives: Application and Compliance

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BPS Procurement Directive – Principles

• The Broader Public Sector (BPS) Procurement Directive (Directive) replaces the Supply Chain Guideline issued by the Ministry of Finance in 2009.

Principles:

Accountability Organizations must be accountable for the results of their procurement decisions and the appropriateness of the processes.

Transparency Organizations must be transparent to all stakeholders. Wherever possible, stakeholders must have equal access to information on procurement opportunities, processes and results.

Value for Money Organizations must maximize the value they receive from the use of public funds. A value-for-money approach aims to deliver goods and services at the optimum total lifecycle cost.

Quality Service Delivery Front-line services provided by Organizations, such as teaching and patient care, must receive the right product, at the right time, in the right place.

Process Standardization Standardized processes remove inefficiencies and create a level playing field.

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Overview – BPS Procurement Directive

• The Broader Public Sector Accountability Act, 2010 provides the authority for the Management Board of Cabinet to issue directives governing the procurement of goods and services by designated broader public sector organizations.

• The Broader Public Sector (BPS) Procurement Directive:

- provides consistent procurement practices for designated BPS organizations

- establishes that publicly funded goods and services are acquired by BPS organizations through a process that is open, fair, and transparent

- establishes accountability through each stage of the procurement process

- maximizes the value that BPS organizations receive from the use of public funds

• The BPS Procurement Directive substantially aligns with:

- Provincial Trade Agreements

- Management Board of Cabinet (MBC) Procurement Directive

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BPS Procurement Directive – Requirements

Requirements:

• The Procurement Directive has the following requirements:

- A Supply Chain Code of Ethics

- Procurement Policies and Procedures (25 Mandatory requirements)

• The BPS Procurement Directive builds on the 2009 Supply Chain Guideline by introducing mandatory requirements related to:

- the approval authority framework related to consulting services

- competitive acquisition of consulting services regardless of dollar value

- effective management of BPS contracts

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Consultant – Definitions in the BPSAA

Term Definition

Consultant A person or entity that under an agreement, other than an employment agreement, provides expert or strategic advice and related services for consideration and decision-making.  

Consulting Services The provision of expertise or strategic advice that is presented for consideration and decision-making.

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Goods, Non-Consulting Services and Construction

Approval Authority Schedule

• Organizations must establish an approval authority schedule (AAS) for procurement of goods, non-consulting services and construction

• The AAS must be approved by the board of directors of the

Organization or its equivalent.

Required Competitive Procurement Thresholds

Goods, Non-Consulting Services and Construction

Total Procurement Value Means of Procurement

$100,000 or more Open competitive process

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Consulting Services

Approval Authority Schedule

• For invitational competitive and open competitive procurements, follow the approval authority schedule for goods and non-consulting services

• Prior to commencement, any procurement of consulting services must be approved in accordance with the Procurement Approval Authority Schedule for Consulting Services as described in the Directive.

• For non-competitive procurements, the BPS Procurement Directive includes a mandatory approval authority framework related to consulting services as outlined below:

Procurement Method

Procurement Value Approval Authority

Non-competitive* $0 up to but not including $1,000,000

President, CEO or equivalent

$1,000,000 or more Board of Directors or equivalent

*Exemption-based only

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Consulting Services

Consulting Services

Total Procurement Value Means of Procurement

$0 up to but not including $100,000

Invitational (minimum of three suppliers are invited to submit a bid) or open competitive process

$100,000 or more Open competitive process

Required Competitive Procurement Thresholds

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Contract Management

• Procurements and the resulting contracts must be managed responsibly and effectively.

– Payments in accordance with provisions of contracts

– Recovering overpayments

– Assignments properly documented

– Assess and manage supplier performance

– Dispute resolution process

– For services: clear term of references, expenses claims and rules compliant with the BPS Expenses Directive, reimbursement for expenses only if specified in the contract

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Broader Public Sector Expenses Directive

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BPS Expenses Directive - Purpose

• The BPS Expenses Directive improves accountability and transparency in the BPS by:

– requiring designated BPS organizations to establish expense rules where expenses are reimbursed from public funds, and

– setting out requirements for what needs to be included in each organization’s expense rules.

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BPS Expenses Directive – Application

• The directive applies to any person in a designated BPS organization making an expense claim, including:

- appointees,

- board members,

- elected officials (e.g. school trustees),

- employees, and

- consultants and contractors engaged by the organization providing consulting or other services.

• The directive serves as a guideline to all other publicly funded organizations as defined under the Broader Public Sector Accountability Act.

• The directive does not prevail over a collective agreement.

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BPS Expenses Directive - Requirements

The directive sets out 8 requirements that must be included in the expense rules for an organization.

1. An accountability framework

2. Prohibition on reimbursement of meal and hospitality expenses for consultants and other contractors

3. Rules specific to serving alcohol

4. Rules for hospitality events where hospitality is defined as the provision of food, beverage, accommodation, transportation and other amenities paid out of public funds to people who are not engaged to work for:

• designated BPS organizations (i.e. those covered by the directive), or• any of the Ontario government ministries, agencies and public entities covered by the

OPS Travel, Meal and Hospitality Expenses Directive.

5. Good record keeping practices

6. Rules for individuals making claims (e.g. all appropriate approvals should be obtained before incurring the expense, original itemized receipts are required, etc.)

7. Rules for individuals approving claims (e.g. cannot approve their own claims, provide approval only for expenses incurred in the performance of organization business, etc.)

8. Posting the rules on the organization’s public website

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BPS Expenses Directive - Requirements

• Guidance on the development of expense rules is provided through an appendix.

• To promote alignment with rules for government ministries, the information in the appendix reflects the general requirements of the Ontario Public Service (OPS) Travel, Meal and Hospitality Expenses Directive.

• This alignment will serve to provide the public with a consistent expectation of behaviour not only across the OPS but also the BPS.

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Additional Accountability Measures

Proposed Broader Public Sector Perquisites Directive

% Executive Office Reduction

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Context - BPSAA Amendments

• On December 14, 2010, the Minister of Finance announced that the government would introduce measures to eliminate unnecessary perks in the public and broader public sector.

• Amendments to the Broader Public Sector Accountability Act, 2010 (BPSAA), part of the budget bill, received Royal Assent on May 12, 2011. These amendments authorize Management Board of Cabinet (MBC) to issue directives on perquisites. This complements the existing MBC authority in the BPSAA to issue directives on expenses and procurement.

• A Perquisites Directive for the OPS will become effective on June 1, 2011.

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What are the BPSAA amendments?

• The amendments to the BPSAA authorize Management Board of Cabinet (MBC) to issue directives on perquisites.

• A directive would cover the designated BPS organizations, including:

- Hospitals- School Boards- Colleges- Universities- Community Care Access Centres- Children’s Aid Societies

- all organizations which received more than $10 million in fundingfrom the Ontario government in the previous fiscal year

• A directive would cover all persons in these organizations including:

- appointees,- board members,- elected officials (e.g. school trustees), and- employees.

• A directive would require these designated broader public sector organizations to establish rules on perquisites, and would set out what is an allowable perk and what is not.

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What is a Perquisite and What is Not?

• Perquisites, or perks, refer to a privilege: - that is provided to an individual or to a group of individuals, - that provides a personal benefit, and- that is not generally available to all employees.

• Perks are items that are provided by the employer, or reimbursed by the employer. They are not items paid by an individual, for example, a discounted rate provided to businesses by a gym, or discounted parking provided to tenants in an office building.

• Perks are not allowable if they are not business related requirements for the effective performance of an individual’s job.

• The following items would not be considered perks:- provisions of collective agreements- insured benefits- items generally available on a non-discriminatory basis for all or most employees (e.g. an employee

assistance program, pension plans)- health and safety requirements (e.g. provision of work boots)- employment accommodations made for human rights and/or accessibility considerations (e.g. special

workstations, work hours, religious holidays)- expenses covered under an organization’s existing expense rules on travel, meals, and hospitality

(established in accordance with the BPS Expenses Directive)

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Implementation

Effective date - TBD

The effective date of a BPS Perquisites Directive would be the date the new perquisites part of the BPSAA would be proclaimed. The directive will be released prior to the effective date to allow BPS organizations time to develop rules and come into compliance.

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10% Reduction Requirement

• Executive offices in certain BPS organizations are required to reduce office costs by 10 per cent over two years (by March 31, 2013).

• These organizations are being asked to reduce a minimum of 5 per cent in the first year, and 5 per cent in the second year of the restraint period.

• This initiative will help the BPS to free up valuable resources to reinvest within their organizations.

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10 % Reduction - Application

• The proposed restraint would require certain organizations to reduce the cost of executive offices by 10 per cent over two years.

• These organizations include:

– Hospitals, – Local Health Integration Networks (LHINs),– Boards as defined in the Education Act,– Universities, – Colleges, – Community Care Access Corporations, and the– Agencies as designated in the Public Sector Expenses Review Act, 2009.

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10% Reduction - Application and Scope

• An Executive Office is the office of:

– The Chief Executive Officer (CEO) and/or Chief Operating Officer (COO);

– Every member of senior management that reports directly to the CEO/COO.

• The baseline for reduction is the organization’s budget of their executive offices for the last fiscal year.

• All costs of executive offices in the organizations identified are included.

– E.g. office space/supplies, number of staff, salaries and wages, conferences and travel expenses can contribute to the 10 per cent restraint over the next two years.

What is Senior Management?

All executive offices will be required to reduce office costs, including any member of the senior management, that reports to the head of the organization. The offices of other levels of management that report directly to the CEO/COO would not be included in this restraint initiative.For example, a CEO may have both vice presidents and directors that report to her office. The senior positions would be executive offices, the directors may not be. Alternatively, in a smaller organization an executive director may only have directors reporting to her, and those directors would not necessarily be executive offices. Each organization knows best its structure and the positions/titles that are part of the executive offices. In general terms, an executive office is responsible for delivering major programs or setting the strategic direction of the organization. Each organization needs to determine the positions and offices that are considered their executive offices.

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10% Reduction - Compliance

• All organizations covered by this restraint will have the requirement written as a commitment in their accountability agreements e.g. Transfer Payment Agreements, Memoranda of Understanding.

• Each year a compliance report, signed by the highest ranking executive of each organization, will be required to indicate they have complied with the reduction.

• The compliance report will require organizations to provide the baseline amount and the amount that has been reduced.

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Compliance and Reporting

Implementation Support

Broader Public Sector Accountability Act Requirements

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Compliance & Reporting – BPSAA Requirements

• Compliance and enforcement provisions are included in the BPSAA.

- All designated BPS organizations are required to comply with the directives issued under the Act.

- The requirements of the Act are deemed to be part of any funding agreement.

- Any provision in an agreement that conflicts with the requirements of the Act is not valid, regardless of when the agreement came into force.

• Of the designated BPS organizations, only hospitals are required to prepare attestations regarding their compliance with specific aspects of the legislation. 

- Hospitals will also provide an annual report to LHINs on consultant use.

- The report will include information on the consultant firm engaged, the project, value and amount paid out and the selection process.

• Other designated broader public sector organizations are currently not required to report. However, the legislation provides the power to make regulations requiring these organizations to provide attestations of compliance with the requirements of the Act.

• Ministries may choose to provide policy direction on reporting.

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Implementation Support

Online support for implementing the BPS Procurement Directive and the BPS Expenses Directive - Ministry of Finance website includes:

• directives in English and French

• Webinar slide deck and overview questions

• FAQs

• the BPS Procurement Directive Implementation Guidebook

• a BPS Procurement Directive toolkit is being developed for BPS organizations. The toolkit includes checklists, templates and process maps (to come)

In addition, to support the BPS Procurement Directive, the Ministry of Finance:

• conducted information webinars in February 2011 attracting almost 1000 participants from over 400 organizations

• offered full day training sessions in March 2011 attracting almost 900 participants from more than 300 organizations

www.fin.gov.on.ca/bpssupplychain

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Thank you

• Questions?

Jim Hadjiyianni

Senior Manager

BPS Supply Chain Secretariat

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Treasury Board Office

Ministry of Finance

Catherine Brown

Assistant Deputy Minister

HR Management and Corporate Policy Division

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Ministry of Government Services