Canada: Newfoundland & Labrador: A New Public Procurement Act For 2017

Last Updated: December 7 2016
Article by John O'Dea

It's been a long time coming, but Newfoundland and Labrador is finally getting new public procurement legislation. On November 29, 2016, Bill 46, a new Newfoundland and Labrador Public Procurement Act to replace the 1981 Public Tender Act, passed third reading. Motivated by a 2008 report, "Review of Government's Procurement Legislation, Policies and Processes", the new Act will modernize the procurement framework in Newfoundland and Labrador, result in departmental reorganization of Service Newfoundland and Labrador and create new procurement policies.

The effective date of the Act isn't yet known, and the regulations that will provide much of the detail to implement the new Act aren't yet drafted, but it's likely both will come in 2017. In the meantime, here are five key aspects of the new NL public procurement legislation:

Shift from low price to value. The biggest change the new Act will implement: a shift from getting the best price to getting the best value. The present statute's focus on the "preferred bidder" as the lowest bid has made public bodies feel compelled to award contracts to the lowest qualified bid. The new Act's change in focus to "best value" from "preferred bidder" should ensure public bodies can give full consideration to the best value, not just the lowest bid, in its decision to award a tender.

Greater consistency. Oversight by a Chief Procurement Officer will allow for greater consistency across all public bodies in tender processes, evaluation and award. The Act establishes the new position of Chief Procurement Officer as the head of the renamed Public Procurement Agency. Appointed by Cabinet, the Chief will publish procurement policies, establish an electronic notification system, maintain oversight of public bodies' procurement activities, develop standardized procurement procedures, and establish an effective supplier complaint procedure. This complaint process will remove the reticence of unsuccessful bidders to challenge an award and while it may lead to more administrative challenges, it may result in fewer – and more expensive and time consuming – lawsuits. The Act also establishes a new Procurement Advisory Council to provide advice and make recommendations to the Minister of Service Newfoundland Labrador respecting procurement-related matters.

Increased transparency. Public bodies will need to ensure they have properly skilled procurement staff to comply with the requirements of the new Act. The new Act will require public bodies to follow certain procurement practices and procedures, adopt procurement standards and meet reporting obligations set out in the new Act. The head of a public body will be required to ensure that any procurement is documented, is within the public body's budgetary allocation, is carried out by a knowledgeable staff, that the process is carried out within the statutory framework (i.e. the Act, regulations and policies), and that an annual plan is filed with the newly created Public Procurement Agency. Within 30 days of an award, the public body must post the award on the electronic notification system.

More breadth. The Act applies to all public bodies, including government departments, school boards, health boards, academic institutions, municipalities, crown corporations and government agencies, in their acquisition of goods, leasing space, services and public works. The present statue exempts certain services, including legal, architectural, engineering, and accounting, from the tender requirement. The new Act redefines "professional services" as legal services and financial services (credit and money) and makes them subject to a Treasury Board policy. Services such as architectural, engineering and accounting are no longer considered "professional services" and will be treated the same as goods.

Some potential glitches. The proposed Act includes two definitions that could cause interpretation issues down the road unless addressed before the Act takes effect:

  • "Bid" Definition. The Act currently defines "bid" to mean an "offer" from a supplier submitted in response to a call for bids. However, this is contrary to the current law on tendering. As far back as 1981, the Supreme Court of Canada established that the process of bidding involves two contracts: Contract A (the bidding contract) and Contract B (the construction contract). The call for bids is the offer, and the submission of the bid is the acceptance. A more suitable definition of "bid" would be 'an offer in response to a call for bids'.
  • "Public body" definition. The new Act defines a "public body" to include a corporation in which the provincial Crown owns not less than 90% of the issued common shares. However, the Crown's common shares could be non-voting, leaving voting control – which is determinative of actual control – in other (private) hands. Defining a "public body" based voting power would be a more effective way to define those bodies that are intended to be subject to the Act.

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.

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