NS Health didn’t follow procurement rules

HALIFAX – Nova Scotia Health needs to follow procurement rules to ensure a competitive, fair, and transparent process results in best value for taxpayers’ money, said auditor general Kim Adair (pictured).

Testing of six sole-sourced health contracts shows Nova Scotia Health is inappropriately using alternative procurement and not following provincial policy.

It’s important to note that the auditor general’s concerns are not with the specific vendors selected or the projects pursued by Nova Scotia Health, but rather how alternative procurement was used to select vendors without competition.

Since 2020, Nova Scotia Health has handed out billions of dollars in high-value alternative procurement contracts.

While established rules outline a competitive process is required for any procurement valued at over $25,000, they recognize exceptions are permitted for urgent, specialized or exceptional circumstances.

For five of the six vendors in the sample, the vendor was awarded the contract before the use of alternative procurement was approved by senior management.

“Alternative procurement reduces competition and public transparency and potentially discriminates against vendors while increasing the government’s reliance on a single vendor,” said Adair.

Alternative procurement must only be used when specific circumstances are met, such as, only one vendor can provide what is required; in emergencies; or to maintain compatibility with existing products.

However, audit testing reveals that weak rationale was used to justify the use of alternative procurement for four of the six vendors examined. In some cases, the scope and value of the work was later significantly expanded.

“The lack of competitive bidding makes it challenging to objectively determine the most qualified vendor and most reasonable cost,” said Adair.

Nova Scotia Health might need to act quickly to address the challenges facing the province’s healthcare system, but expediency should not take priority over appropriate due diligence, nor does it justify non-compliance with procurement policy, she said.

Once the sole-sourced contracts were awarded, the audit found the contract work was subject to regular monitoring, but improvements are needed to ensure vendors deliver.

The Auditor General makes 13 recommendations in the report, including providing clear justification to support the use of alternative procurement and outlining the steps taken to obtain the best value possible.

“Any expenditure of public funds must be made in a transparent manner that maximizes value,” Adair said.