Review of Passport Canada's Competitive Acquisition Process

January 2011

Personal and sensitive information has been edited from this report (shown in the report as "*****") in accordance with the provisions of the Privacy and Access to Information Acts.

Executive Summary

This report presents the results of the internal audit of the acquisition process for Passport Canada's implementation of the electronic passport (ePassport). This audit is limited to the roles and responsibilities of Passport Canada and excludes the work of Public Works and Government Services Canada (PWGSC).

The Office of the Chief Audit Executive was requested to undertake this audit as a result of allegations of "questionable business practices" made by a proponent (bidder) about one of the technical evaluators on the project.

The clarity and consistency of references to the international standards to which PPTC must comply, the use of PWGSC as the Contracting Authority, the engagement of an independent Fairness Monitor, the participation of five PPTC staff as evaluators and the observation of the consensus meeting by the Fairness Monitor and the Contracting Authority all demonstrate an appropriate application of due diligence in the review and assessment of proponents submissions.

Recommendations:

During any high value acquisition process the application of due diligence by management cannot ensure that challenges to the process will not arise.

1. To help prevent such issues from occurring in future, it must be reinforced with staff that any request for meetings and / or presentations, so long as there is an ongoing active acquisition process underway, should be referred to PWGSC as the contracting authority.

2. It is also recommended to Passport Canada that as a general matter of course and especially at the beginning of a major acquisition project, it is a good practise to review with all employees the Values and Ethics Code for the Public Service to remind everyone of the importance of avoiding the risk of conflict of interest, either real or perceived.

Statement of Assurance

In my professional judgment as Chief Audit Executive, sufficient and appropriate audit procedures have been conducted and evidence gathered to support a high level of assurance on the accuracy of the information in this report. The results are based on a comparison of the conditions, as they existed at the time, against pre-established audit criteria that were agreed upon with management. The results are applicable only to the processes examined. The evidence was gathered in compliance with Treasury Board Policy, Directives, and Standards on internal audit for the Government of Canada.

Original signed by:

Yves Vaillancourt, Chief Audit Executive, January 24, 2011

1.0 Introduction

The Office of the Chief Audit Executive was asked to review the processes within the Passport Canada (PPTC) for the competitive ePassport acquisition, issued by Public Works and Government Services Canada (PWGSC), on behalf of Passport Canada, an Agency of DFAIT. The review is limited to the roles and responsibilities of PPTC and excludes the work of PWGSC.

We were requested to undertake this review as a result of allegations of "questionable business practices" between one of the technical evaluators and a proponent (bidder).

2.0 Project Requirement

The ePassport bid solicitation was issued to satisfy the requirements for the planned introduction of a highly secure passport document manufactured in accordance with standards (Doc 9303) published by the International Civil Aviation Organization (ICAO) and the International Standards Organization (ISO).

3.0 Methodology

In accordance with the terms of our engagement, we familiarized ourselves with the relevant documents, reviewed bid-solicitation related documentation (e.g. Request for Information, Solicitation of Interest and Qualification (SOIQ) and the Request for Proposal (RFP). We also interviewed two key Passport Office staff involved in the process.

4.0 Summary of Allegations

There are three allegations / concerns raised by the proponent:

1. Questionable business practices by an employee of PPTC who would have a role in the evaluation of bid submissions;

2. Senior representatives of PPTC met with the proponent and told him that he ***** would participate in the RFP; and,

3. The proponent's bid was disqualified due to: "a choice of a chip, which is a very small part of a large and complex project such as ePassport solutions, is in essence the reason for disqualifying our *****".

5.0 Observations – Overall Process

An initial "high-level" Request for Information (RFI) was issued on December 1, 2008. The key element was a highly secure passport document manufactured in accordance with standards (Doc 9303) published by the International Civil Aviation Organization (ICAO) and the International Standards Organization (ISO).

Given the nature of the request and the clarity of the identification of the applicable standards (Doc 9303), industry proponents would be expected to be aware of and appreciate the importance of the technical requirements.

The initial RFI was effectively issued as a means to alert the industry of PPTC procurement actions related to the ePassport and to obtain industry feedback.

The RFI was issued by the branch of PWGSC responsible for Communications, Photographic, Mapping, Printing and Publication Services.

A comprehensive analysis was produced to track comments and suggestions received from the 12 respondents.

A more comprehensive Solicitation of Interest and Qualification (SOIQ) was issued on July 22, 2010 and closed on August 26, 2010, approximately 18 months after the original RFI had closed. A total of five vendors responded in writing to the SOIQ and three were deemed qualified to proceed to the final RFP stage.

The process had numerous checks and balances to ensure openness, fairness and transparency.

Key among them was the role of PWGSC as the Contracting Authority throughout the process.

For the SOIQ stage of the acquisition process, a Fairness Monitor (FM) was engaged "to monitor the acquisition process for the ePassport Project and to provide assurance that this competitive process is conducted in an open, fair and transparent manner".

The FM observed the meetings of the Evaluation Committee, which was comprised of five members, of whom the employee was one, where consensus was reached on all mandatory requirements.

The opinion of the FM at the conclusion of the SOIQ phase was that it "was conducted in a fair manner. In this context, fairness is defined as decisions made objectively, free from personal favouritism and political influence and encompasses the elements of openness, competitiveness, transparency and compliance".

Additionally, the PWGSC Contracting Authority assisted at the consensus meeting.

The final RFP was posted on November 25, 2010 and is scheduled to close on or about January 17, 2011.

6.0 Observations - Allegation #1

It has been established through interview of the proponent and the employee subject to the allegations (conducted by PPTC Security Directorate) that meetings did take place between the two parties. However, the result is inconclusive as the parties offered different interpretations of the nature of those meetings.

As stated in Section 5, the process had numerous checks and balances to ensure openness, fairness and transparency. The role of PWGSC as contracting authority, the consistent use of a recognized international standard for ePassports, the use of a Fairness Monitor, the participation of five evaluators and a transparent and documented evaluation consensus meeting.

These steps taken together would make it virtually impossible for one individual to influence the overall outcome of the competitive acquisition process and negatively impact its openness, fairness and transparency.

7.0 Observations - Allegation #2

In the period between the original RFI and the SOIQ, the proponent met with senior representatives of PPTC in relation to the ePassport acquisition initiative. It was at this meeting of January 18, 2010 that the proponent alleges he was told he ***** would participate in the RFP.

Employees interviewed who were at the meeting confirm that no such commitments were given.

Minutes produced shortly after the meeting took place indicate that the session was more of a one way exchange with ***** presenting its ***** key players.

The minutes confirm that similar sessions were held with two other proponents.

The meeting with senior PPTC staff during a period when the acquisition process was still active, without the participation of PWGSC, was unfortunate but does not appear to have any impact on the fairness of the competitive ePassport acquisition process.

8.0 Observations - Allegation #3

The third allegation purports that the proponent's bid was disqualified due to: "a choice of a chip, which is a very small part of a large and complex project such ePassport solutions, is in essence the reason for disqualifying our *****".

As regards the allegation, as noted earlier, the key element of both the RFI and the SOIQ was a consistent requirement that the highly secure passport document be manufactured in accordance with standards (Doc 9303) published by the International Civil Aviation Organization (ICAO) and the International Standards Organization (ISO).

Given the nature of the request and the clarity of the identification of the applicable standards (Doc 9303), industry proponents would be expected to be aware of and appreciate the importance of the technical requirements.

Additionally, the proponent was advised in writing by the Contracting Authority, PWGSC, on November 9, 2010, that they had been "assessed in accordance with the criteria published in the SOIQ and found to be non-compliant with two of the mandatory criteria".

We were advised by PPTC staff who participated in the evaluation that the other shortcoming was a lack of experience in the personalization of ePassports.

9.0 Conclusion

The clarity and consistency of references to the international standards to which PPTC must comply, the use of PWGSC as the Contracting Authority, the engagement of an independent Fairness Monitor, the participation of five PPTC staff as evaluators and the observation of the consensus meeting by the Fairness Monitor and the Contracting Authority all demonstrate an appropriate application of due diligence in the review and assessment of proponents submissions.

10.0 Recommendations

During any high value acquisition process the application of due diligence by management cannot ensure that challenges to the process will not arise.

1. To help prevent such issues from occurring in future, it must be reinforced with staff that any request for meetings and / or presentations, so long as there is an ongoing active acquisition process underway, should be referred to PWGSC as the contracting authority.

2. It is also recommended to Passport Canada that as a general matter of course and especially at the beginning of a major acquisition project, it is a good practice to review with all employees the Values and Ethics Code for the Public Service to remind everyone of the importance of avoiding the risk of conflict of interest, either real or perceived.

Appendix A – Management Action Plan