Real Property-1

Public Services and Procurement Canada's (PSPC) Real Property Management and Project Delivery Services (RP-1)

As the Government of Canada's real estate expert, Public Services and Procurement Canada (PSPC) manages a large and diverse real estate portfolio across the country.

PSPC must therefore ensure the provision of building maintenance services such as the operation, maintenance and management services for all mechanical, electrical systems and architectural components of the facilities and sites.

On November 7, 2014, following a full competitive procurement process, PSPC announced the awarding of six multi-year contracts to Brookfield Johnson Controls Canada LP for the delivery of diverse real property services, including the management of approximately 3,800 Crown-owned and leased buildings and assets across Canada (8 million m²).

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History of building management of federal government properties

For decades, real property management and related services were directly provided by Government of Canada employees. In the mid-1990s, in response to multiple challenges such as fiscal constraint, downsizing objectives of program reviews and other reform initiatives, PSPC chose to focus on its strategic advisory and service management roles, while identifying a more efficient method of providing day-to-day operational services. To achieve this, PSPC initiated in 1998 the outsourcing of property management and project delivery services.

The first generation of real property services outsourced to the private sector involved 13 contracts competitively tendered and awarded to Brookfield LePage Johnson Controls (now known as Brookfield Johnson Controls Canada LP). These contracts were for the management of 300 PSPC office facilities across the country, representing 2.5 million square metres.

With the success of the first generation of contracts, the initiative was renewed in 2005. The second generation of Real Property Services Management contracts was competitively tendered and eight contracts were awarded to SNC-Lavalin ProFac (now known as SNC-Lavalin Operations and Maintenance Inc.). These contracts, which have an operational end date of March 31, 2015, are for the management of over 1,000 Crown facilities owned by PSPC, the Canada Border Services Agency (CBSA), the Royal Canadian Mounted Police (RCMP) and Natural Resources Canada (NRCan) across the country, representing a maximum managed space of 3.34 million square metres.

The awarding of the third generation of contracts through a fair, open and transparent procurement process is a successful example of PSPC's continuing transformation agenda, moving towards greater use of private sector expertise, with the objective of being more efficient and offering best value to Canadians.

The six competitively tendered contracts for the delivery of diverse real property services include the management of up to approximately 3,800 Crown facilities owned by PSPC, CBSA, RCMP and NRCan and leased facilities across Canada (8 million m²).

The Real Property Services Management contract award

After three years of extensive consultation with national and regional firms, PSPC posted a competitive Request for Proposal between October 2013 and January 2014 on the Government Electronic Tendering Service. Industry, including industry associations and small and medium enterprises, was unanimous in recommending that market forces should prevail in selecting one or multiple firms based on the results obtained through a fair, open and transparent procurement process.

On November 7, 2014, following a fair, open and transparent procurement process, Brookfield Johnson Controls Canada LP was awarded six multi-year contracts for the provision of property management services, project delivery services, lease services and optional related real property services across Canada.

The initial contracts are for a period of up to eight years, at a total cost not to exceed $9.559 billion.

The contracts include options to extend the period by three additional two-year options.

The total potential value of the six contracts, including all optional services and all option years, is $22.8 billion.

Due to the nature of the work, many small and medium enterprises across the country will have access to the work through thousands of competitive subcontracting opportunities offered by the contractor. The contracts include a requirement that the contractor engage subcontractors through fair, open, transparent and competitive processes. In fact, about 50 per cent of the total value of the contracts will be subcontracted.

Why use the Real Property Management and Project Delivery Services model?

Real Property Services Management contracts leverage the private sector's ability to build human resources capacity and thus have the private-sector contractor absorb the risk related to the fluctuation of demand for real property services.

Leveraging the private sector contributes to key government priorities like achieving value for money, realizing efficiencies, eliminating duplication of efforts by the public and private sectors and fostering economic growth in Canada.

This model represents best value to Canadians. In fact, to date, PSPC has identified savings of $20 million per year as a result of the use of the private sector for the national delivery of real property services. The $20 million in costs savings related to the contracts awarded in 1998 has been permanently removed from PSPC's budget.

Furthermore, an additional $181 million for the first five years of the existing 2005 contracts was identified, bringing the total confirmed savings to $521 million.

Based on this information, the Department estimates additional savings of $181 million for the last five years of the 2005 contracts, which would bring the total confirmed and estimated savings from 1998 to 2015 to $702 million.

Additional efficiencies will be realized by increasing the number of properties covered by these contracts and enhancing PSPC's and other departments' access to maintenance and building management expertise.

Oversight measures in place for all PSPC contracts

While recognizing the value of leveraging the expertise of the private sector, PSPC maintains its commitment to due diligence and good stewardship through continually improving procurement practices. This is achieved through the use of fairness monitors, strong governance mechanisms and third-party expertise to ensure that all phases of the tender and award processes are conducted in an open, fair and transparent manner.

In this case, an independent third-party fairness monitor was engaged to observe the RP-1 procurement process and to attest to the fairness, openness and transparency of the process. The fairness monitor's services included reviewing relevant solicitation documents, monitoring communications with proponents and observing evaluation consensus meetings. The fairness monitor's reports concluded that the procurement was conducted in a fair, open and transparent manner and that equitable treatment was given to all bidders.

As the government's main buyer of goods and services, PSPC puts in place ongoing monitoring and continual improvement processes for the duration of its contracts. As part of this due diligence, PSPC has established numerous measures to ensure contract compliance and value for money. These measures include audits, inspections, performance measurement and reporting, internal controls over the approval of payments, and client satisfaction surveys.

Improving the process for Real Property Services Management contracts

In response to the recommendations of the various audits and reviews completed over the past few years, the government has implemented improvements to strengthen the management and controls of the Real Property Services Management contracts, including RP-1. These include the enhancement of the oversight framework; the development and application of tools to ensure that contractual obligations are met; the implementation of a performance delivery regime; and the use of monitoring and training activities to ensure consistency across regions and that procedures are well understood and applied systematically.

These improvements help ensure continued efficiency in the delivery of real property management services and value to Canadians.