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Policy Requirements under the Municipal Act, 2001
Considerations When Drafting Policies Required by the Municipal Act
Part 1: Procurement
Appendix A / Appendix B / Part 1 - Procurement / Part 2 - Hiring of Employees
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This document is general in nature and should not be relied on as a substitute for legal advice. SOLS is not liable for any damages that may follow as a result of a local board relying on the information presented in the document.
A library board solicitor should be consulted before passing a procurement resolution or approving hiring policies.
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In this section you will find:
- Purpose
- What are your library’s options?
- Why is a Resolution required?
- How detailed should the Resolution be?
- Must these resolutions and policies be approved by the Ministry?
- What are the common types of Procurement Processes and when are they used?
- What goals should your procurement policies support?
- When would a tendering process not be used?
- What is an "in-house" bid and under what circumstances would it be encouraged as part of a tendering process?
- How often and by what methods should procurement processes be reviewed to evaluate their effectiveness?
- How can the integrity of each process be maintained and the interests of all involved parties be protected?
- How can we be assured that our policies meet the requirements of the Act?
- How do price quotations offered to libraries through various consortia purchasing arrangements fit in competitive selection?
- Are there other important laws or regulations that must be considered in procurement?
- Inter-Provincial Trade Agreements
- Are there some sample policies to review?
- Resources
The purpose of this document is to assist library boards to meet the requirements of the Municipal Act, 2001. Section 271 of the Act states that before January 1, 2005, local boards are required to adopt policies with respect to the procurement of goods and services including:
- the types of procurement processes that shall be used;
- the goals to be achieved by using each type of procurement process;
- the circumstances under which each type of procurement process shall be used;
- the circumstances under which a tendering process is not required;
- the circumstances under which in-house bids will be encouraged as part of a tendering process;
- how the integrity of each procurement process will be maintained;
- how the interests of the municipality or local board, as the case may be, the public and persons participating in a procurement process will be protected; how and when the procurement processes will be reviewed to evaluate their effectiveness;
- any other prescribed matter.
Procurement is an extremely complex process. It is impossible to provide one policy that fits all situations. SOLS has developed some general considerations to assist library boards in deciding what actions to take to comply with the legislation.
SOLS is also including its Purchasing Policy to demonstrate certain elements of the procurement process. Please note that this sample in Appendix "A" is not intended to demonstrate compliance with the Act. It is included only to provide examples of certain procurement methods. Print and web resources are described throughout this document and a checklist is included as Appendix "B" to assist you in evaluating whether your choices meet the requirements set out in the Act.
What are your library’s options?
Library boards will find themselves in one of these three situations:
Situation 1: The Library contracts with the municipality to handle procurement and would adopt the municipality’s policies.
This situation is the simplest. Library procurement would be handled by the municipality as per the contract, and procurement activities would be done according to the municipal policies.
Situation 2: The library board does its own procurement but has decided to adopt the municipality’s procurement policies.
Many libraries will already have policies relating to the procurement of goods and services. A Guide to Developing Procurement Bylaws created by the Ministry of Municipal Affairs and Housing recommended looking into the library board’s existing policies as a first step. It would also be appropriate to consult the municipality’s policies early on as well. Certainly choosing to adopt the municipality’s policies will provide a quick solution, as long as the policies meet the Act’s requirements. Recent discussion on the oslib-listserv appears to indicate that many libraries are choosing to adopt the policies put forward by their municipalities.
Situation 3: The library does its own procurement and does not consider the municipality’s procurement policies suitable for the library’s needs.
The considerations outlined in this document are intended to assist a library of any size to meet the Act’s requirements. Although there is no requirement that these procurement policies be approved by either the municipality or by the Ministry of Municipal Affairs and Housing, it is still imperative that they comply with the provisions set out in the Act. It is also important to review the policy carefully and possibly seek a legal review of the policy before passing the resolution.
Whichever situation your library falls into, it is important that the policies you decide upon meet the requirements set out in the Act. Consequently, SOLS has created a Checklist (Appendix "B") to assist in determining if the policies you are considering adopting meet the requirements set out in the Act.
Why is a Resolution required?
As a local board covered by theMunicipal Act, 2001, a library board must pass a resolution to bring the new procurement policy into effect. A resolution is a method used by boards to bring policies into effect. Other methods include a motion or a vote by board members recorded in the minutes.
The resolution should also include the policy. Remember that the resolution should note that any previous procurement policy will be replaced by this new policy. Even if the library already contracts with the municipality for procurement or if the library decides to adopt the municipality’s procurement policies, the library board must pass a resolution indicating that the library’s procurement activities will follow the municipality’s policies.
How detailed should the Resolution be?
Procurement policies are very complex and, particularly for larger libraries, may be very long. How the process is handled can affect the library’s profile and reputation. An important aspect of procurement is the integrity of the process and the measures used to protect the interests of all parties involved in the process. The procurement process must be open and transparent. Consequently, policy matters that directly affect the interests of the public and suppliers should form part of the resolution. The resolution could also refer to the location of detailed implementation aspects that may be contained in "procedures."
Must these resolutions and policies be approved by the Ministry?
There is no requirement for these resolutions and policies to be approved by the Ministry of Municipal Affairs and Housing.
What are the common types of Procurement Processes and when are they used?
The following chart shows sourcing levels used by SOLS. While these levels may not be appropriate for all libraries, they adhere to the general principle that the more expensive the purchase, the more formal and stringent the sourcing process.
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Acquisition Method |
Guidelines |
Rationale/Examples |
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Petty Cash |
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Coffee for meetings |
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Direct Purchase Process Goods and Services under $2,000 |
No formal quotes are required Any employee authorized by a General Manager may use a Purchasing Card or Purchase Order Spending Authority gives verbal approval. |
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Informal Quotation Process Goods and Services $2,001 to $10,000 |
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Request for Quotation Process Goods and Services $10,001 to $25,000
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Request for Tender Process Goods and Services Over $25,000 |
At least five (5) sealed bids must be obtained whenever possible, preferably open tender posted on Ontario Professional Buyers’ Association website and Bid Navigator.
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Direct Purchase or Informal Quotation Process Consulting & Creative Services under $10,000 |
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Request for Proposal Consulting & Creative Services Over $25,000 |
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What goals should your procurement policies support?
A Guide to Developing Procurement Bylaws suggests that the following goals should be considered in developing procurement policies: Effectiveness, Objectivity, Fairness, Openness and Transparency, Accountability, and Efficiency.
These goals might be stated as a series of principles, as below, and should also be apparent throughout the policy statements.
Procure the necessary quality and quantity of goods and/or services in an efficient, timely and cost effective manner, while maintaining the controls necessary for a public institution.
Encourage the most open, competitive bidding process practicable for the acquisition and disposal of goods and/or services, and the objective and equitable treatment of all vendors.
Promote and maintain the integrity of the procurement process and protect the Board, vendors and staff involved in the process by providing clear direction and accountabilities.
Ensure impartiality and a clear audit trail For commodities over a certain dollar value by separating responsibilities between Spending Authority (authorizing expenses from a budget) and Commitment Authority (actually entering into a contractual agreement with a vendor).
When would a tendering process not be used?
A Guide to Developing Procurement Bylaws lists the following exceptions to using a tendering process. The policy should include those situations that would apply to your library.
"Typically, non-competitive procurement is used in the following circumstances:
when there is a statutory- or market-based monopoly on the item
when no bids were received in a competitive process
when the required item is covered by an exclusive right such as a patent, copyright or exclusive license
when the purchase is already covered by a lease-purchase agreement where payments are partially or totally credited to the purchase
when it is necessary to ensure compatibility with existing products or to avoid violating warranty/guarantee requirements when service is required
when the required item is in short supply due to market conditions
when competitive sourcing for low value procurement would be uneconomical or would not attract bids
when competitive procurement may be found to be impractical for such items as meal expenses, incidental travel expenses (e.g. taxi service, phone calls), and training and education expenses
when an urgent procurement is necessary for fulfilling a statutory order issued by a federal or provincial authority, such as an environmental, public health, or workplace safety compliance order."
What is an "in-house" bid and under what circumstances would it be encouraged as part of a tendering process?
An "In-House Bid" is a process that allows for a department internal to the organization to compete with external vendors on a tender. For example, in printing a publication, an in-house print shop might be asked to bid as well as external commercial printers. Few, if any libraries are large enough for this to be a question. Libraries might simply state that in-house bids are not solicited during the public procurement process.
How often and by what methods should procurement processes be reviewed to evaluate their effectiveness?
Procurement policies, as all other policies, should be reviewed on a regular basis. But how often that review will take place is a matter for the board to consider. It might generally be advisable to review all policies once during a board’s three-year term.
The review may be a formal using performance measures or more informal. Chapter 6 of A Guide to Developing Procurement Bylaws discusses developing a policy for reviewing procurement policies.
The process may include an annual report recommending any changes to the Procurement Policy to ensure that the procurement limits meet the needs and requirements of the Library to operate in an efficient and cost effective manner.
In addition, the staff designated to be in charge of procurement would, perhaps, complete a performance evaluation form at the completion of every high dollar contract for goods and/or services. It may be wise to follow this practice for all contracts regardless of dollar amount, since documented poor performance or non-performance on contracts could be used to determine the eligibility of bidders in future procurement activities.
How can the integrity of each process be maintained and the interests of all involved parties be protected?
Ensuring that integrity is maintained and the interests of all involved in the process are protected is perhaps the most difficult tasks in developing procurement policies. There must be statements throughout the policy relating to all stages of the procurement process. These various statements combine to create the required protection.
Chapter 5 of A Guide to Developing Procurement Bylaws considers risks to the goals of procurement policies at every stage of the procurement process. SOLS has developed a checklist included as Appendix "B" which has a series of questions that address potential risks to the process.
How can we be assured that our policies meet the requirements of the Act?
Local boards are expected to practice due diligence with respect to carrying out their duties. No one policy can be guaranteed to completely cover all possible contingencies. Depending on the complexity of your library’s situation and the dollar value of your procurement practices, it would be appropriate to have your policy and resolution reviewed by a qualified legal practitioner experienced in contracts and familiar with the practices of municipalities and local boards.
How do price quotations offered to libraries through various consortia purchasing arrangements fit in competitive selection?
SOLS, for example, negotiates prices on electronic products through COOL and/or offers a range of discounts on other goods and services through Charitable/Consortia Purchasing Agreements. These prices are based on competitive selection and negotiation. Two options for libraries would be 1) to consider the consortia purchase price as one quote or 2) state in policy that no sourcing is needed, since the competitive sourcing has already been done. Consortia Canada is another example of an organization that provides such opportunities.
Are there other important laws or regulations that must be considered in procurement?
Library board members are subject to the Municipal Conflict of Interest Act . Library employees are not. Since the library’s reputation and profile may be damaged by a real or perceived conflict of interest, some statement should be included about the involvement of board members or employees in the procurement process. The image and integrity of the employees and the library board must be preserved at all times. Here are some issues to consider.
- Purchase by the Library of any goods or services for personal use by or on behalf of any member of the Board, employees of the Library or their immediate families.
- The acceptance of gifts, benefits, money, discounts, favours or other assistance by elected officials, officers and employees, and their families.
- Whether an appointed officer or employee of the library board may have any interest, directly or indirectly, as a contracting party, partner, shareholder, surety or otherwise in any contract for goods or services.
Information provided by vendors as part of the procurement process may be subject to the Municipal Freedom of Information and Protection of Privacy legislation. Consequently, any disclosure of information received as part of soliciting bids or awarding contracts resulting from bid solicitations must be made by the appropriate officers in accordance with the provisions of the Municipal Freedom of Information and Protection of Privacy Act, R.S.O. 1990 , as amended.
All records and information pertaining to tenders, proposals and other sealed bids, which reveal a trade secret or scientific, technical, commercial, financial or other labour relations information, supplied in confidence implicitly or explicitly, must remain confidential if the disclosure could reasonably be expected to:
- prejudice significantly the competitive position or interfere significantly with the contractual or other negotiations of a person, group of persons, or organizations;
- result in similar information no longer being supplied to the library where it is in the public interest that similar information continue to be so supplied;
- result in undue loss or gain to any person, group, committee or financial institution or agency; or
- result in information whose disclosure could reasonably be expected to be injurious to the financial interests of the library.
Inter-Provincial Trade Agreements
There are requirements for the procurement of goods and services and construction over certain dollar levels based on principles of reciprocal non-discrimination and transparency.
Inter-provincial Trade Agreements are bi-lateral or multi-lateral agreements entered into by governments (federal, provincial, territorial) governing specific aspects of inter-jurisdictional trade. The intent of these agreements is to reduce barriers to the free movement of persons, goods and services and to establish open, efficient markets between signatory governments. For more information on the inter-provincial agreements applicable to Ontario procurement, see Appendix 4 of A Guide to Developing Procurement Bylaws p. 66-72.
Are there some sample policies to review?
There are samples policies posted on the Ontario Public Buyers’ Association website at the following address: http://www.vaxxine.com/opba/bylaws.htm.
The Ministry of Municipal Affairs and Housing does not hold these samples out as best practice in this area and makes no claim as to their legal sufficiency. Further, the MMAH is unable to comment on issues of completeness or legal compliance with respect to these documents and refers municipalities to their legal counsel for such advice.
A Guide to Developing Procurement Bylaws, Ministry of Municipal Affairs and Housing, July, 2003.
Ontario Public Buyers’ Association website at http://www.vaxxine.com/opba/bylaws.htm
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