Canada: The Impact Of New Trade Agreements On Public Procurement

All designated broader public sector organizations, as provided for under section 12 of the Broader Public Sector Accountability Act, 2010 ("BPSAA"), including school boards, colleges, and universities (collectively "Education Sector"), are subject to the procurement rules set out in the Broader Public Sector ("BPS") Procurement Directive (the "Directive") and in Ontario's various trade commitments. These procurement rules are built on the principles of fairness, transparency and reciprocal non-discrimination.

Ontario's trade commitments include, but are not limited to, the domestic Canadian Free Trade Agreement ("CFTA") and the international Canada-EU Comprehensive Economic and Trade Agreement ("CETA"). These trade commitments are an effort to support the exchange of goods and services between Ontario and other countries and provinces.

The following provides an overview of the CFTA, CETA and their impact on the Education Sector.

Canadian Free Trade Agreement

The CFTA came into force on July 1, 2017. It is a domestic trade agreement among the provinces, territories and federal government, which replaces the Agreement on Internal Trade ("AIT"). Any references to the AIT in the Directive should be read as a reference to the CFTA until such time as the Government of Ontario makes appropriate amendments to the Directive to reflect relevant content from the CFTA.

The spirit and intent of Chapter 5 of the CFTA, titled "Government Procurement", is similar to the procurement chapter in the AIT. When comparing the CFTA to its predecessor AIT, some changes to keep in mind include that thresholds will be adjusted every two years to take into account inflation, and all obligations are now incorporated into the procurement chapter rather than being segregated into annexes. Further, the CFTA procurement rules were drafted to align with CETA.

Canada – EU Comprehensive Economic and Trade Agreement

CETA came into force on September 21, 2017. It is an international trade agreement between Canada and the European Union and its member States. It sets new standards in the trade of goods and services, non-tariff barriers, investment, government procurement and other areas, such as labour, professional certification and environment.

Chapter 19 of CETA covers government procurement. Under CETA, Canada has agreed to broad coverage at the federal, provincial and municipal levels to ensure that procurement processes are carried out in an open, fair, and transparent manner. However, CETA only applies to high value procurement contracts to ensure that governments can continue to support local development. Exceptions have been built into CETA's procurement rules for cultural industries, aboriginal businesses, defence, research and development, financial services and services in the fields of recreation, sport and education, among others.

Trade Commitments

Covered entities, including in the Education Sector, are responsible for ensuring that they are compliant with the procurement-related commitments in the trade agreements, including compliance with provisions related to information and reporting, procurement practices and bid disputes.

With respect to obligations regarding information and reporting, the Education Sector will be required to adopt new rules, standards and procedures to ensure transparency of procurements, enabled through a Canada-wide single point of access (SPA). The SPA derives from CETA but is available for use by parties covered by the CFTA and will allow vendors to quickly retrieve information about all Canadian opportunities. The SPA is to be created by the federal government within 5 years of the date that CETA came into force. Education Sector organizations will be required to make procurement available on the SPA.

Procurement practices will need to be revised and/or expanded to comply with procurement rules regarding evaluation criteria, debriefings and the duration of postings. It is also important to note that invitational and non-competitive procurements (referred to as "Limited Tendering" in the trade agreements) are possible under both the CFTA and CETA, but the criteria will vary in each. For example, CFTA explicitly permits invitational and non-competitive procurements for expert witnesses, but CETA does not.

With respect to the approach to bid disputes, Education Sector organizations are to implement an independent and impartial process to allow a vendor to challenge a procurement if the vendor believes it was not conducted in accordance with the applicable trade commitments. Bid disputes and administrative or judicial review procedures are addressed in Article 19.17 of CETA and Article 518 of the CFTA.

Conclusion

The Education Sector is encouraged to review the Directive as well as its obligations under Chapter 5 of the CFTA. CETA is applicable only in high value procurements, but the Education Sector is still encouraged to review Chapter 19 of CETA to familiarize itself with when, and under what circumstances, it applies.

On September 28, 2017, our Morning Recess webinar series Principals' 201 addressed the issue of procurement.

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.