Do single-source contracts really increase the risk of impropriety in procurement?

Posted on March 3, 2016


“Untendered contracts increase the risk of impropriety in procurement,” Ricard said, describing single-source contracts as a type of  “higher risk” transaction. – from March 1st, 2015 CBC New article $85M contract with Manitoba Hydro was not tendered

While Provincial auditor general Norm Ricard acknowledged that he had not evaluated the $85 million contract between Manitoba Hydro and Tetra Tech, and therefore “could not comment on it specifically,” he did make reference to a 2014 AG report suggesting that there was a link between single-source contracts and impropriety.

In short, AG Ricard is of the belief that “untendered contracts increase the risk of impropriety in procurement.”


My first reaction to this generalized assessment of single-source contracting, is to  ask upon what actual numbers Ricard’s position is based?

For example, does the AG office have hard evidence that single-source contracts have resulted in a notable increase in costs to the taxpayer?

How about evidence showing that single-source contracts routinely result in a failed outcome i.e. the work done was lacking or, the desired objectives of the contracts were not achieved?

These would seem to be fair questions, given the seriousness of the suggestion that these types of contracts are vulnerable to various forms of buyer-supplier malfeasance.

Unless there is another report other than the one issued in 2014 under the heading “Waiving of Competitive Bids,” there does not appear to be any tangible evidence to support AG Ricard’s claims.

Like Ricard, who indicated that he had not yet evaluated the Hydro – Tetra Tech deal, I also have to do a more in-depth analysis of the 2014 report and the subsequent November 2015 Follow-Up.

However at this stage, and beyond cited procedural issues with single-source procurements, I have to stress that there is no hard data supporting Ricard’s referenced link between non-tendered contracts and impropriety.

Unfortunately, the mere suggestion of potential impropriety by the AG lends an element of credence to such claims.

This was demonstrated by a Twitter exchange I had earlier today, with one of the CBC reporters covering the story.

CBC Hydro Twitter1

In my Twitter exchange with Katie Nicholson, I had suggested that optics as opposed to hard data, is potentially at the heart of impropriety concerns. I even cited my 2011 interview with then Canadian Trade Minister Stockwell Day regarding the Buy American controversy, as an example of how optics and politics can unintentionally obfuscate the real issues.

In this context, even the 2014 AG report stated that when it comes to assessing the waiving of competitive bids, there was no way to definitively “conclude on whether they ensured fair value was obtained” . . . or not. (Note: refer to pages 409 and 416.)

Again there are, without question, procedural issues that do need to be addressed so that such assessments can take place. You will get  no argument from me regarding this last point. But in the absence of having tangible data as a back-up in the hear and now, I do believe that AG Ricard’s comments are based more on optics and political factors, than actual findings. For me, this is somewhat problematic.


Given the influence his office wields, I cannot help but think that there has to be a little bit more discretion in terms of making somewhat bold and definitive statements that “Untendered contracts increase the risk of impropriety in procurement,” and that “single-source contracts are a higher risk transaction.”  This is especially true when it comes to evaluating complex contracting, and the nature of the relationships that must be established between all stakeholders for an initiative or project to have the best opportunity for success.

So what are your thoughts regarding single-source contracting? Is it a question of absolute (and unfettered) power corrupting absolutely or, is it an effective approach for ensuring successful outcomes?


Posted in: Commentary