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Public Services and Procurement Canada
Evaluation of the Business Dispute Management Program

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Executive summary

Public Services and Procurement Canada (PSPC) is committed to excelling in government operations and ensuring sound stewardship on behalf of Canadians by delivering high-quality services and programs that meet the needs of federal organizations. The Business Dispute Management Program (BDMP) is a neutral and confidential resource for contractors, other government departments and PSPC employees when they experience difficulties with a contract where PSPC is the contracting authority. The program offers conflict prevention and alternative dispute resolution (ADR) services as well as awareness presentations and skill training workshops.

This evaluation examined the relevance and the performance of the BDMP.

The program operated with a total budget of $148,644 in fiscal year 2017 to 2018 with 1.1 full time equivalents. The BDMP is delivered by the Fairness Monitoring and Business Dispute Directorate within the Departmental Oversight Branch (DOB).

The BDMP was created in 2008 to address a gap in the dispute management continuum at PSPC by making optional alternative dispute resolution services available. The program remains relevant in that its services align with the federal government commitment to open and transparent government while also supporting the priorities and objectives of PSPC's Acquisitions Program and the Real Property Services Branch. That said, there is overlap with the services provided by the BDMP and the Office of Procurement Ombudsman, some roles and responsibilities for the management of business disputes remain unclear due to the number of stakeholders involved, and visibility of the BDMP could be increased.

The BDMP has supported the timely resolution of business disputes through the economical provision of high-quality training services and alternative dispute resolution processes. Stakeholders perceive the program as an aid in addressing disputes and avoiding escalating costs with services delivered in a neutral, unbiased manner. Most stakeholders were satisfied with the services received regardless of whether their dispute was fully resolved, with many of the program's clients having been involved in disputes for extended periods of time prior to engaging BDMP. The proportion of disputes resolved is similar to those of other industries.

Management response

Management from DOB has had the opportunity to review the evaluation report and accept the conclusions and recommendations as part of our commitment to continuous improvement. A management action plan containing proposed measures to improve the performance and efficiency of our program activities was developed.

Recommendations and management action plan

Recommendation 1

The assistant deputy minister, Departmental Oversight Branch, in consultation with the assistant deputy minister, Real Property Services Branch and the assistant deputy ministers, Acquisitions Program, should undertake the following measures to clarify the role of the Business Dispute Management (BDM):

Management action plan 1.1

BDM will collaborate with Acquisitions Branch (AB) to develop business dispute management clauses promoting the use of ADR services and clarifying the escalation process when business disputes arise:

Management action plan 1.2

BDM will collaborate with Real Property Services (RPS) to identify the BDM as a provider of optional ADR services in the following internal RPS guidance documents.

New directives to be developed:

Management action plan 1.3

BDM will collaborate with RPS and AB to explore the need for a guidance document that clarifies the linkages between the various PSPC programs involved in managing business disputes. If it is determined that a departmental policy is required in support of PSPC business dispute processes, BDM will work with the Policy, Planning and Communications Branch (PPCB) to establish the required tool.

Recommendation 2

The assistant deputy minister, Departmental Oversight Branch, should develop a strategy to increase awareness among contractors, other government departments and PSPC staff of the role of the program in the provision of ADR services.

Management action plan 2.1

BDM will increase the awareness of the program with contractors, client departments and PSPC staff concerning BDM's ADR services by:

Management action plan 2.2

To promote visibility, BDM will collaborate with AB on the publication of web content concerning business dispute bodies, processes and coordination to support departmental procurement and contract documents by:

Introduction

This report presents the results of the evaluation of the Business Dispute Management Program (BDMP). This engagement was included in the Public Services and Procurement Canada (PSPC) 2018 to 2021 Risk-Based Audit and Evaluation Plan.

This evaluation assessed the BDMP for the period from April 1, 2013 to March 31, 2018. The objective of this evaluation was to assess the program's relevance and performance in achieving its expected outcomes in accordance with the Treasury Board Policy on Results. Multiple lines of evidence were used to assess the program. Information regarding the approach and methodologies, including limitations of the methodologies, can be found in appendix A.

PSPC manages large volumes of procurement and real property transactions on behalf of federal departments and agencies. Business disputes can arise when there is a disagreement between parties involved in a contract or real property transaction that impedes procurement activities or interferes with the fulfillment of the terms and conditions of the contract or real property agreement.

The BDMP provides an ADR service to those involved in contracts managed by PSPC. The BDMP services include:

The program operated with a total budget of $148,644 in the 2017 to 2018 fiscal year, with 1.1 full time equivalents.

Findings

The findings and conclusions below are based on multiple lines of evidence used during the evaluation. They are presented by evaluation issue (relevance and performance).

Relevance

To evaluate the program's relevance, the evaluation examined the BDMP's alignment with current federal government and departmental priorities; the legislative, regulatory or policy requirement for the program; and the continued need for the program.

The program's services align with departmental and government priorities, roles and responsibilities

The BDMP provision of ADR services aligns with government and PSPC priorities and roles and responsibilities. The BDMP aligns with the federal government's commitment to open, transparent government outlined in the 2015 Speech from the Throne and the direction provided in the 2017 ministerial mandate letter for PSPC which states "that delivery of government services should reflect public expectations around transparent, open, citizen-centred government." Stakeholder interviewees stated that the BDMP is aligned with the PSPC mandate "to deliver high quality services and programs that meet the needs of federal organizations and ensure sound stewardship on behalf of Canadians."

By providing dispute prevention and resolution services, the BDMP also helps support the Acquisitions Program in its priority of having "procurement practices that reflect public expectations around transparent, open citizen-centred government," identified in the 2018 to 2019 Departmental Plan. The BDMP supports the Real Property Services Branch priority of "service improvement," identified in its 2016 to 2019 business plan. By helping to prevent and resolve contract disputes, the BDMP supports the expected result of delivering real property projects on time, on scope and on budget. Similarly, the BDMP aligns with the objectives of the federal construction contract prompt payment initiative, identified in the 2018 to 2019 PSPC Departmental Plan.

The program provides stakeholders access to alternative dispute resolution services

The BDMP provides stakeholders involved in PSPC contract disputes access to ADR services. In 2008, PSPC's chief risk officer created the BDMP to address a gap in the dispute management continuum, thereby making optional ADR services available. The rationale was that this service could help resolve disputes prior to parties exercising formal procedures, such as review and appeal boards or litigation.

The value of ADR services is reflected in several government policies. The Treasury Board Contracting Policy (section 12.8) states that "the key factor when disputes arise is the expeditious handling of the disagreement." The policy emphasizes the importance of addressing disputes promptly using ADR practices such as negotiation, mediation and arbitration.

The Policy on Dispute Prevention and Resolution (Justice Canada) encourages its employees, which includes those providing legal services to clients in contractual disputes, to address disputes "as early and effectively as possible" and to collaborate with departments and agencies to ensure dispute resolution clauses are included in contracts. The value of ADR is also supported by a Justice Canada study which found that mediation led to improved outcomes and cost savings in comparison to litigation.

The PSPC Policy on Procurement (section 6.4.2) states that the assistant deputy minister, Departmental Oversight Branch, is responsible for "providing contract dispute resolution services under the Business Dispute Management Program." In the event that a dispute occurs during the administration of a PSPC contract, the PSPC supply manual, which serves as a guidance document for procurement officers, states that "consultation with the [BDMP] is recommended to prevent or limit unnecessary escalation and to create conditions for early resolution." Additionally, the Standard Acquisition Clauses and Conditions Manual includes dispute resolution clauses used in Real Property Services Branch construction contracts; however, these clauses do not reference the BDMP.

Numerous stakeholders' involvement can contribute to role and responsibility confusion

There are many stakeholders involved in the management of business disputes, which contributes to confusion over roles and responsibilities in some areas. The stakeholders involved in the management of procurement and real property disputes include project managers, claims representatives, commodity managers, contract authorities and procurement officers. In addition to the BDMP, other organizations also provide similar dispute management services, such as the Real Property Services Branch's project claims and procurement management group , the Acquisitions Branch's Specialized Support Services for Procurement , Legal Services and the Office of the Procurement Ombudsman (OPO).

In 2011, the Departmental Oversight Branch conducted a review of departmental business dispute processes found that there was no departmental policy, directive, or guidelines to link the different PSPC programs that deal with business disputes. The review found that these programs operated independently without any corporate wide coordination, overview, or governance. Since then, there have been some improvements in the coordination of business disputes. In recent years, Legal Services has referred enquiries to the BDMP. As a result, there has been an increase in the use of the BDMP among the Real Property Services Branch's project claims and procurement management Group. In the 2016 to 2017 and 2017 to 2018 fiscal years, the BDMP provided ADR services for a total of 19 construction disputes compared to a total of 7 in the previous 2 fiscal years. Additionally, the BDMP began delivering customized training to Acquisitions Program staff, contributing to increased awareness of the BDMP's ADR services. While improvements were made, stakeholder interviews indicated that some of the roles and responsibilities for the management of business disputes are still unclear, due to the number of stakeholders involved and a variety of direction and guidance available. Dispute resolution clauses are not mandatory for goods and services contracts, therefore there is a risk that the processes followed when disputes arise may not always be as clear or as consistently applied in comparison to construction contract disputes, which have standard dispute resolution clauses (although there is no specific reference to the BDMP).

Alternative dispute resolution services are offered by both the program and Office of the Procurement Ombudsman

The BDMP and OPO both offer ADR services to contractors and government departments. The OPO was established in 2008 to address a gap in the oversight of government procurement. Its mandate is to review procurement complaints and practices, make recommendations to improve practices, and provide ADR services for contract disputes. The organization's ADR services for disputes pertain to the interpretation or application of a contract's terms and conditions. However, the OPO's mandate excludes disputes involving leasing, letting and disposal of real property or the establishment of a suppliers list, whereas the BDMP does provide ADR services in these areas.

The OPO's services are available to all government departments. However, its ADR services have been used almost exclusively by suppliers (36 out of 37 of the requests for fiscal years 2013 to 2014 to 2017 to 2018). Since the OPO's creation in 2008, there have been 64 OPO ADR requests from suppliers for all government departments and 23 (36%) of these requests involved PSPC (only 2 of these requests resulted in the provision of mediation services by the OPO). For the BDMP, on the other hand, 26% (27 out of 104) of ADR files originated from suppliers, while 67% (69 out of 104) of ADR files originated from PSPC and other government departments, for fiscal years 2013 to 2014 to 2017 to 2018.

Nonetheless, both organizations offer services to parties involved in PSPC contracts, leading to some confusion and potential overlap in the roles and responsibilities. There is no guidance at this time as to when and under what circumstances procurement stakeholders should go to one organization rather than the other. Further, in its 2017 to 2018 Annual Report, the Procurement Ombudsman stated that he intends to ensure that their ADR services are "utilized to the greatest extent possible." The OPO is interested in inserting standardized dispute resolution clauses in contracts administered by PSPC to further promote their services. As a result, there may be increased overlap with the BDMP and the OPO services as the OPO undertakes measures to increase use of its services among PSPC stakeholders involved in contract disputes. Moving forward, it will be important for the BDMP and the OPO to clarify their respective roles and responsibilities.

Use of the program's services has been inhibited due to a lack of awareness

A lack of awareness of BDMP services has inhibited the use of ADR services. The volume of ADR activities has decreased by approximately 50% from fiscal years 2015 to 2016 to 2017 to 2018. Mediations and facilitated discussions declined, in part due to decreased awareness of the program, stemming from reduced outreach activities and training offered. This in turn, is largely due to declining program resources (from 3 to 1 full time equivalent) over this time frame, as a result of staff turnover. Nevertheless, all client stakeholders interviewed (10 out of 10) stated there was a continued need for the BDMP. Client stakeholders felt that the program helped to address disputes and avoid dispute escalation costs. In the 2018 to 2019 fiscal year, the BDMP hired 1 full time equivalent and significantly increased the number of training sessions provided to clients.

Performance

Performance is the extent to which a program is successful in achieving its intended outcomes and the degree to which it is able to do so in a cost-effective manner that demonstrates efficiency and economy. The evaluation examined both of these aspects of performance.

Logic model

A logic model is a visual representation that links a program's activities, outputs and outcomes; provides a systematic and visual method of illustrating the program theory; and shows the logic of how a program is expected to achieve its objectives. A logic model for the program was developed based on a detailed document review, meetings with program managers and interviews with key stakeholders. It was subsequently validated with program staff. The logic model is in appendix B.

The program supported timely, satisfactory business dispute resolution

The program achieved its immediate outcome of resolving business disputes in a timely manner, at the lowest possible level (for example avoided escalation) and to the satisfaction of all parties. Overall, clients were satisfied with the services received from the BDMP. The BDMP was responsive to ADR requests and stakeholders noted that the BDMP was an effective and timely mechanism in helping to resolve their business disputes. Most of the stakeholders surveyed (16 out of 18) and interviewed (7 out of 9) were satisfied with the services received during the ADR process, regardless of whether the dispute was fully resolved. Six out of nine clients interviewed indicated that the BDMP had contributed to the timely resolution of their business disputes and at the lowest possible level (for example avoided escalation to senior management and/or to litigation) (7 out of 9). Program data indicates that out of the 33 facilitated discussions and mediations conducted as of the 2017 to 2018 fiscal year, 43% of the disputes were fully resolved and 33% were partially resolved. The proportion of disputes that were resolved (fully and partially) is similar to the proportion of cases resolved according to industry benchmarks in areas such as civil, commercial, and workplace mediation.

Increased awareness could contribute to improved timeliness of Public Services and Procurement Canada contract dispute resolution

The program could contribute to improved timeliness of PSPC contract dispute resolution by increasing awareness of the BDMP among stakeholders. Although stakeholders reported that the BDMP had contributed to the timely resolution of their business disputes, program data indicates that many of the program's clients had been involved in disputes for an extended period of time prior to bringing the dispute to the BDMP. This suggests that greater awareness of the program could contribute to more timely resolution of business disputes. Program data indicates that for fiscal years 2013 to 2014 to 2017 to 2018, 42% (34 out of 81) of the BDMP ADR clients had been involved in their dispute for more than 13 months prior to the involvement of the BDMP. While construction contract disputes have dispute resolution clauses with clear timelines for the escalation and resolution of disputes, with a mediator required if the dispute is not resolved within 30 working days, dispute resolution clauses remain optional for goods and services contracts. The lack of mandatory dispute resolution clauses in these contracts is likely a contributing factor to the delayed resolution of some of these disputes. Long lasting disputes are often more costly and difficult to resolve, as disputing parties' positions can become more entrenched over time.

Five of seven client stakeholders interviewed indicated that the BDMP could improve the effectiveness and use of its ADR services by increasing awareness of the program among potential clients. Stakeholders also noted that the BDMP could more effectively mitigate business disputes if stakeholders were made aware of the program's services at the beginning of all PSPC contracts. Visibility may also be affected because the BDMP is an optional service situated in another branch and, in part, because the Acquisitions Program and the Real Property Services Branch have their own internal processes for managing disputes (for example negotiations, claims managers). The BDMP has acknowledged that it needs to increase awareness of its program and identified a lack of resources to engage in outreach activities as a factor that has contributed to reduced awareness. The program delivered a total of 4 awareness and learning sessions from the 2016 to 2017 to 2017 to 2018 fiscal years.

The program supported increased stakeholder understanding and competencies

The program achieved its immediate outcome of increasing understanding and competency in avoidance and management of business disputes. Overall, the evaluation found that through the provision of high quality training services to clients, the BDMP has contributed to the development of an increased understanding and knowledge in the avoidance and management of business disputes among their clients. The training recipients surveyed and the stakeholders interviewed noted improvements to their knowledge of, and ability in the management and avoidance of business disputes. Participants in the training courses were also satisfied with the quality of the training. They believed it was well organized and the facilitators had good subject knowledge, gave clear instructions, and adequately addressed questions.

The program contributed to the resolution of contract disputes with probity and integrity

The BDMP achieved its intermediate outcome by contributing to the resolution of PSPC contract disputes with probity and integrity. Stakeholders interviewed indicated that the BDMP contributed to resolving disputes with probity and integrity (9 out of 9) and most indicated that the ADR services were delivered in a fair, open, and transparent manner (3 out of 4). Clients interviewed and surveyed perceived the ADR services to have been delivered in a neutral, unbiased manner. They stated that mediators addressed issues objectively and appropriately, provided a safe space to have conversations without prejudice, dealt respectfully with all parties, helped clarify issues, and listened to and understood their issues and concerns.

The program delivers high quality services and training economically and efficiently

The BDMP operated in an economical and efficient manner, delivering high quality ADR and dispute management training services with limited resources. The BDMP has used minimal resources, operating with 1 to 3 full time equivalents from fiscal years 2013 to 2014 to 2017 to 2018. Over the last 5 fiscal years, program expenditures decreased while program outputs increased, however there continued to be a high level of satisfaction with the services among clients. Client stakeholders interviewed (9 out of 9) noted that their use of the BDMP ADR services contributed to the avoidance of more costly approaches to the resolution of their disputes, such as litigation.

Conclusion

Although there is some overlap, the BDMP is offering services that fill a gap in the business dispute management continuum at PSPC. Interviewees were of the opinion, and studies have shown, that ADR services avoid costlier and lengthier approaches to resolve disputes. This evaluation found, however, that the awareness of the BDMP is low within the procurement community, and that PSPC and its stakeholders would benefit from using its services at an earlier point in business disputes.

While many of the issues that were identified in the previous review (2011) of PSPC business dispute processes have not been resolved, there have been some improvements in BDMP staff liaising with the stakeholders in the Real Property Services Branch and the Acquisitions Program, as well as with Legal Services. Nevertheless, there continues to be some confusion with regards to the roles and responsibilities for the management of disputes. In addition, there continues to be some overlap with the ADR services provided by the OPO, creating uncertainty amongst PSPC stakeholders as to when and under what circumstances they should use the OPO or the BDMP.

Appendix A: About the evaluation

Authority

The deputy minister for Public Services and Procurement Canada PSPC approved this evaluation, on recommendation by the Audit and Evaluation Committee, as part of the 2018 to 2019 to 2020 to 2021 Risk Based Multi-Year Audit and Evaluation Plan.

Evaluation objectives

The evaluation examined the BDMP, delivered by the Integrity and Forensic Accounting Management Group within the Departmental Oversight Branch. This evaluation had 2 objectives:

Approach

The evaluation was conducted in accordance with the Policy and Directive on Results for the Government of Canada. The evaluation took place between April 2018 and September 2019 and was conducted in 3 phases: planning, examination and reporting. To assess the evaluation issues and questions, the following lines of evidence were used.

Document review: Documents reviewed included federal government legislative and policy documents; departmental documents, such as annual departmental plans and departmental results reports; and program documents, such as annual reports, studies, reviews, background documents, and presentations.

Program and performance data analysis: Given the size of the program, there was a limited amount of program performance data available to assess program outcomes. The evaluation also assessed the volume of program outputs, including ADR files, enquiries, and OPO files, among other outputs.

Surveys: Survey data collected by the BDMP was used to assess client perceptions (contractors, other government departments, and PSPC staff) of ADR and training services. The BDMP provides surveys to stakeholders following the completion of mediations and facilitated discussions. The BDMP also provides surveys to stakeholders following the completion of their training services.

Financial analysis: Financial data related to program budgets, revenues, and expenditures were examined to assess the economy and efficiency of the program.

Key informant interviews: Interviews were held with key program staff (n=2), clients (n=9), legal services (n=1), comparable programs (n=4), and other relevant stakeholders (n=1). The qualitative analysis of the interviews provided information about the program's activities, outputs, outcomes, relevance and performance.

Literature: A review of existing literature was undertaken in order to provide context on the trends in the use of alternative dispute resolution and identify the benefits of alternative dispute resolution. A comprehensive analysis conducted by the Department of Justice was identified and used as the main literature source regarding the use of mediation services.

Limitations of the methodology

The planning of the evaluation applied a risk based assessment to determine the most appropriate approach and level of effort to be applied in order to ensure the availability of timely and objective information to meet the needs of senior management. In the application of the approach, several issues were encountered. The evaluation addressed limitations of specific methods by triangulating findings across multiple lines of evidence. None of the identified issues were significant enough to prevent evaluation reporting.

Document and data review: Due in part to the small size of the program, there was a limited amount of performance measurement data available to assess the immediate and intermediate program outcomes. To address this weakness, program client satisfaction survey data and interviews were used to assess the achievement of program outcomes.

Interviews: As the program is small, there was a limited number of interviews conducted with key stakeholder groups. Additionally, the stakeholders interviewed had received a diverse range of services, making it more difficult to generalize across interview respondents. To address this weakness, the results of interviews were corroborated with the results of the client surveys and program data and documentation.

Survey: The evaluation relied on existing survey results developed and administered by the BDMP. While the program had conducted a comprehensive number and variety of surveys, covering client views for all ADR sessions and training activities provided, the evaluation was limited to the pre-defined questions contained in the BDMP surveys. Interviews, program data, and program documents were used to assess areas of program performance that were not covered by the client surveys.

Financial Analysis: Financial analysis was limited by the availability of financial and human resource data. In part due to the small size of the program, the expenditures associated with each program activity could not be separated to calculate program efficiency. As a consequence, the financial analysis was limited to a basic assessment of program economy (trends in expenditures and full time equivalents).

Reporting

Findings were documented in a director's draft report, which was subject to internal peer review and review by the director of evaluation. The program's director general was provided with the director's draft report and a request to validate facts and comment on the report. A head of evaluation draft report was prepared and provided to the assistant deputy minister, Departmental Oversight Branch, for acceptance as the Office of Primary Interest. The Office of Primary Interest was requested to respond with a management action plan. The draft final report, including the management action plan, were presented at PSPC's Performance Measurement, Evaluation and Results Committee for the deputy minister's approval in November 2019. The final report is submitted to the Treasury Board Secretariat and posted on the PSPC website.

Project team

The evaluation was conducted by employees of the Office of Program Evaluation, overseen by the director of evaluation and under the overall direction of the head of evaluation.

Appendix B: Program logic model

Appendix B: Program logic model – Text version below the graph

Image description

This appendix depicts the logic model of the Evaluation of Business Dispute Management Program. The logic model depicts program activities, outputs, immediate outcomes, intermediate outcomes, and PSPC strategic outcome.

Activities

The Business Dispute Management Program includes 2 areas of activity:

  • business dispute management services
  • policy and support services

The business dispute management services and policy and support services are comprised of more detailed program activities.

Business dispute management services

The business dispute management services is comprised of the following 3 activities:

  • assess requests for eligibility/suitability for business dispute management processes
  • provide consultations, one-on-one and group coaching and facilitated discussions
  • provide mediation and arbitration—in-house and externally through contracting
  • provide advice and guidance on disputes

Policy and support services

The policy and support activity is comprised of the following 4 activities:

  • develop, update business dispute management policies, guidelines and tools
  • provide advice and guidance
  • deliver awareness presentations and skill building workshops
  • coordinate and track alternative dispute resolution requests and processes for business disputes

Outputs

The activity, business dispute management services, leads to the following 5 outputs:

  • decisions regarding eligibility/suitability
  • referrals to other dispute resolution mechanisms
  • one-on-one coaching sessions
  • consultations, coaching sessions, facilitated discussions and mediations
  • contracts for mediations and arbitrations services with external service provider

The activity, policy and support services, leads to the following 5 outputs:

  • tools and guidance materials
  • responses to enquiries, advice, and guidance
  • awareness presentations/sessions and skills building workshops
  • data on alternative dispute resolution requests received from Office of the Procurement Ombudsman
  • program activity reports

Immediate outcomes

The Business Dispute Management Program includes 3 areas of activity for immediate outcomes:

  • business disputes are resolved in a timely manner
  • business disputes are resolved at the lowest possible level and to the satisfaction of all parties
  • increased understanding and competency in the avoidance and management of business disputes

Intermediate outcome

The 3 immediate outcomes under the program lead to the following intermediate outcome: disputes related to PSPC contracts are resolved with probity and integrity and are perceived to be so.

Public Services and Procurement Canada strategic outcome

The immediate outcome contributes to the Public Services and Procurement Canada strategic outcome: Fairness Monitoring Program and Business Dispute Management Program contributes to high-quality, central programs and services that ensure sound stewardship on behalf of Canadians and meet the program needs of federal institutions.

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