On November 17, 2021, McCarthy Tétrault hosted Part One of our Two-Part series on a Deep Dive into Canada's Public Procurement Law. The seminar, hosted by Robert A. Glasgow, covered Canada's procurement landscape, Canada's Trade Agreements ("Trade Agreements"), and offered useful tips for government entities that publish procurement opportunities in Canada. Here are the top 5 takeaways from the session:
1. Canada's procurement market offers unprecedented opportunity
Canada has a very large public procurement landscape totalling more than $130 billion. Due to the country's ever changing needs and constant expansion, government tenders offer lucrative opportunities with high deal stream. Traditionally, the procurement market has been dominated by regional small-to-medium enterprises ("SMEs"). However, this may change as SMEs are faced with more competition due to Canada's three main Trade Agreements.
2. There are four key Trade Agreements governing Canadian procurements
The four key Trade Agreements include: the Canadian Free Trade Agreement ("CFTA"), the Canada-European Union Comprehensive Economic & Trade Agreement ("CETA"), the Comprehensive and Progressive Trans-Pacific Partnership ("CPTPP"), and the World Trade Organization Agreement on Government Procurement ("WTO-AGP"). The four main Trade Agreements exist to help make government tenders more transparent. They serve as a powerful tool - for both national and international vendors - in obtaining fair and reasonable access to procurement markets across the country.
First, the CFTA an internal agreement which covers federal procurements, provincial and sub-provincial procurements. The CFTA helps protect Canadian suppliers from regional discrimination. Federal contracts are adjudicated by the Canadian International Trade Tribunal ("CITT"), while provincial contracts have their own regulatory mechanisms in place.
Second, the CETA to government contracts between Canada and the EU. The CETA presents Canadian businesses with preferential access to and growth opportunities in the EU (and vice versa). Similar to the CFTA, federal contracts are reviewed by the CITT, while provincial contracts have their own regulatory mechanisms.
Third, the CPTPP takes many of the same commitments under the CFTA and CETA and expands them to the Asia-Pacific regions, providing Canadian suppliers with preferential access to public procurement markets throughout the Pacific.
Fourth, the WTO-AGP a multi-lateral agreement between World Trade Organization ("WTO") members who have signed together to open the procurement market to each other. It applies to select "sub-central" government entities and enables bids from both Canadian and foreign suppliers from 13 different countries.
It is not uncommon to be governed by multiple Trade Agreements at one time. It is the responsibility of both government entities and prospective vendors to understand their relevant obligations under the Trade Agreements. Notably, parties must adhere to the most strenuous obligation that applies to them.
3. NAFTA is no longer relevant to Canadian procurement contracts
As a practice point, parties should keep in mind the Canada, United States, Mexico Agreement ("CUSMA"), which replaced the North American Free Trade Agreement ("NAFTA") on July 1, 2020. As noted in a policy notice by the Government of Canada, Canada is not a party to the government procurement chapter in CUSMA, which pertains only to Mexico and the United States. This change does not affect legacy procurements created under NAFTA.
4. Trade Agreements impose common obligations on government procurements
Most of the Trade Agreements impose common obligations on government entities that publish procurement opportunities. The Trade Agreements demand consistency and transparency in the type of tender (open, limited, or closed submissions); set standards for submission periods; set conditions of participation; require transparent negotiation protocols (including Rank & Run or Best and Final Offer ("BAFO")); and mandate the use of transparent criteria to rank bids. In a number of decisions involving federal contracts, the CITT made it clear that suppliers have a right to know how to maximize their bid and how to make their bid as attractive as possible to a purchaser.
5. The CITT offers speedy dispute resolution for federal contracts
The Canadian International Trade Tribunal ("CITT") oversees federal procurement contracts under the CFTA and the CETA. Notably, the CITT has a statutory limit of 90 days to resolve a dispute and sets a strict 10 business day limitation period to bring a claim (from the actual or constructive knowledge of the breach). The CITT has substantial broad remedy powers to cancel, re-evaluate, and re-tender procurements in progress but it cannot cancel an existing contract. Notably, the Trade Agreement protections do not ordinarily apply to sub-contractors.
This series will continue with Part Two on December 1, 2021 https://www.mccarthy.ca/en/insightsevents/deep-dive-canadas-public-procurement-law. For further information on Procurement Law in Canada or if you have questions about the impact of Free Trade Agreements on your business, please contact your McCarthy Tétrault trusted advisor.
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