Challenge Function

Challenge function is a formal procurement review and oversight mechanism. It tests whether a proposed procurement is justified, compliant, fair, transparent, appropriately designed and likely to achieve value for money. The review happens inside the buying organization, before the solicitation reaches the market or before a major project is approved.

The mechanism takes different forms depending on the department and the scale of the procurement. It may be a central review board, a departmental committee or another advisory group. The term is used in Canadian federal procurement governance, and in defence procurement it also describes an independent review of military requirements before major project approvals.

How the Procurement Ombudsman describes the challenge function

The Office of the Procurement Ombudsman describes the procurement challenge and oversight function as a key component of the management controls that support sound procurement. According to its review of the function, the Treasury Board contracting framework encourages contracting authorities to maintain a formal challenge mechanism for contractual proposals.

The mechanism can range from a formal central review board to divisional or regional advisory groups. The function may review procurement strategy, evaluation criteria, contractual disputes, supplier debriefings and vendor performance. The structure is meant to suit the organization and the value of the procurement.

Challenge at the procurement-strategy stage

CanadaBuys instructs federal buyers to provide a challenge function when they develop a procurement strategy. Its guidance on developing a procurement strategy gives these examples of what reviewers question:

• proposed non-competitive procurements;
• requirements that are unnecessarily restrictive;
• the choice of solicitation method;
• the suitability of an Advance Contract Award Notice; and
• documented decisions to divide or "unbundle" requirements.

Challenge at the requirements-definition stage

CanadaBuys also identifies a challenge function earlier, while the requirement is being defined. In its guidance on the importance of a clear procurement requirement, reviewers test whether the statement of work or statement of requirements is sufficiently clear and understandable to suppliers. They also check that unexplained jargon is removed or defined and that point-rated criteria are calculated soundly.

The defence challenge function and the IRPDA

National Defence applies the term to major military procurements. Public Services and Procurement Canada describes the defence-procurement challenge function as including independent expert reviews of high-level mandatory requirements for projects over $100 million and selected other projects.

The department established the Independent Review Panel for Defence Acquisition (IRPDA) to provide this independent, third-party challenge. Under its terms of reference, the panel advises on major military-procurement requirements before approval is sought from the Minister of National Defence or the Treasury Board. Its progress report says the review focuses on alignment with government policy, the validity of the capability gap, and the clarity and appropriateness of mandatory requirements. The aim is to validate requirements before significant expenditure.

What the challenge function means for a supplier

The challenge function is an internal buyer-side control. It is not a supplier appeal or protest process. Suppliers should expect buyers to scrutinize whether requirements are clear, whether mandatory requirements are unnecessarily restrictive, whether evaluation criteria are properly designed, and whether the strategy and solicitation method are justified. A non-competitive approach must also be adequately supported.

In practice, submit a proposal that directly addresses the stated requirements. If you find an ambiguity, a restrictive requirement or an apparent inconsistency, raise it through the solicitation's authorized clarification process.