The Government Procurement Review: Canada

Introduction

Canada's legal framework for government procurement is based on a number of bodies of rules, including trade agreements, statutes, regulations, case law, policies and custom. The legal framework does not apply uniformly across Canada. As a federation, Canada has two distinct jurisdictions of political authority: the nationwide federal government and the 10 provincial governments. Canada also has three territories (Yukon, Northwest Territories and Nunavut) that are not discussed in this chapter. The legal rules that apply to government procurement at the federal level are different from those that apply to the provinces and the rules that apply to public bodies at the provincial level differ from province to province.

At the federal level, the central piece of legislation regulating government procurement is the Government Contracts Regulations (GCRs)2 issued pursuant to the Financial Administration Act (FAA).3 The FAA contains general provisions applicable to federal government procurement, while the GCRs contain more detailed provisions. The federal government is also subject to binding and enforceable commitments made pursuant to trade agreements with other nations, such as the World Trade Organization's Agreement on Government Procurement (GPA), the Canada–United States–Mexico Agreement (CUSMA)4, the Comprehensive Economic and Trade Agreement (CETA), the Comprehensive and Progressive Agreement for Trans-Pacific Partnership (CPTPP) and the Canada–United Kingdom Trade Continuity Agreement (the Canada–UK TCA). There are also numerous policies and directives that apply to federal government procurement. Public Services and Procurement Canada (PSPC) – the department responsible for the federal government's internal servicing and administration – develops, implements and maintains the Supply Manual,5 which specifies the procedures of procurement and includes standard clauses for the procurement process. The Supply Manual does not have the force of law and procuring authorities have no legal obligation to include the standard clauses contained therein. In addition to these and other statutes, policies and trade agreements, there is a compendious volume of case law that serves to define the rules and principles applicable to federal government procurement.

Different provinces have taken alternative approaches to procurement. Most provinces have enacted little legislation regarding government procurement and leave it largely up to public agencies to develop internal policies by which public purchasing will take place. Some provinces have enacted more comprehensive legislation. For instance, Quebec has enacted the Act respecting Contracting by Public Bodies6 that, along with its regulations, prescribes specific rules that apply to public purchasing by all public agencies in Quebec. In the same vein but to a lesser extent, Nova Scotia, New Brunswick, Saskatchewan, and Newfoundland and Labrador have enacted government procurement legislation of broad provincial application. Ontario has taken something of a hybrid approach. The Broader Public Sector Accountability Act 20107 authorises an Ontario executive committee to issue directives governing public procurement, which resulted in the Broader Public Sector Procurement Directive being issued in 2011. This directive does not have the force of law, but nevertheless applies as general best practice to all designated public agencies in Ontario. The international trade agreements to which Canada is a signatory do not have the force of law in the provinces. That said, the provinces have entered into domestic treaties among themselves, which are binding and subject to dispute resolution processes. As is the case federally, each province has its own body of case law regarding government procurement.

One of the most significant contributions that the judiciary has made to the procurement framework for tenders in Canada relates to what is generally referred to as 'Contract A/Contract B'.8 Under this analytical framework, which applies to competitive procurement for tenders throughout Canada, a bidder enters into Contract A with the procuring authority when it has submitted a compliant bid in response to a request for bids (or similar document) as part of a legal tender process. Contract B refers to the contract to be awarded to the successful bidder. Public agencies enjoy a significant amount of freedom to establish criteria that bidders must satisfy to be eligible to bid on a contract, which correspond roughly with the 'terms and conditions' of Contract A. By the same token, pursuant to the tender process, public agencies are bound to the terms of Contract A and are therefore generally prohibited from, inter alia, awarding the contract to a non-compliant bidder, awarding a contract that differs materially from the one offered through Contract A and evaluating bidders based on criteria that differ from those set out in Contract A. These obligations, which will be discussed in further detail below, flow from the fundamental principle that government procurement in Canada is to be open, fair and transparent, which is generally considered to support the principle of value for money. Accordingly, while other means of procurement are technically open and available to the government, the tender process, which supports transparency and fairness, is how the government most typically undertakes procurement.

Year in review

i CPTPP

On 8 March 2018, Canada and 10 other nations in the Asia-Pacific region signed the CPTPP, a free trade agreement that superseded the Trans-Pacific Partnership.9 The Comprehensive and Progressive Agreement for Trans-Pacific Partnership Implementation Act implements the CPTPP in Canada.10 The CPTPP aims to provide parties with improved access to each other's government procurement markets. The government procurement provisions of the CPTPP are largely based on the GPA, and include core commitments relating to national treatment and non-discrimination, access to information about procurement opportunities, and fair and transparent procurement procedures. The CPTPP Commission reviews implementation of the agreement and examines ways to further advance trade and investment between CPTPP members. On 2 June 2021, during the fourth meeting of the CPTPP Commission, the CPTPP parties reached a decision to commence an accession process with the United Kingdom and established an accession working group to negotiate the terms of accession.11

ii Canada–UK TCA

With effect from 1 April 2021, the Canada–UK TCA is an interim agreement that includes government procurement obligations.12 This agreement will remain in force until Canada and the United Kingdom have negotiated and implemented a comprehensive free trade agreement. As the Canada–UK TCA incorporates CETA by reference, there is minimal impact on the federal procurement process. The government procurement obligations of the Canada–UK TCA – including procedural obligations such as rules on notices, bid periods and market access obligations (e.g., thresholds, covered entities, covered commodities) – are the same as those under CETA. The only substantive difference between the two agreements is that CETA applies to government procurement obligations between Canada and the European Union, whereas the Canada–UK TCA applies to government procurement obligations between Canada and the United Kingdom.13

iii Directive on the Management of Procurement

On 13 May 2021, the Directive on the Management of Procurement came into effect, providing a 12-month transition period for government departments to comply with the new requirements. This directive aims to modernise the government-wide policies that govern the management of federal assets and acquired services. Following the end of the transition period on 13 May 2022, the Contracting Policy and the Policy on Decision Making in Limiting Contractor Liability in Crown Procurement Contracts are rescinded, and departments will be required to implement the requirements of the new directive.

The objectives of the Directive on the Management of Procurement are to:

  1. ensure that procurements continue to be conducted in a fair, open and transparent manner;
  2. establish standards for enhanced collaboration with industry;
  3. encourage a flexible approach to procurement;
  4. ensure that procurement decisions are based on risk management practices, performance information and an assessment of full life cycle costs whenever possible;
  5. ensure that effective governance and oversight mechanisms are in place to support the management of procurement; and
  6. improve the process for departments to leverage procurements to support environmental, indigenous and socio-economic considerations.14

iv Policy on Social Procurement

On 3 May 2021, the Policy on Social Procurement entered into force. This policy facilitates and supports the inclusion of socio-economic measures and aims to improve supplier diversity in the Public Works and Government Services Canada (PWGSC) Acquisitions Program procurements. In accordance with this policy, PWGSC will create social procurement programmes, policy instruments, guidelines on social procurement, and social procurement small business set-aside programmes for underrepresented and disadvantaged groups.15

Over the course of 2022, the PSPC will develop a programme on social procurement to outline how this policy will be implemented by:

  1. leveraging existing opportunities within existing legislative, regulatory and policy frameworks to enable and encourage the inclusion of socio-economic objectives;
  2. determining the appropriate procurement strategy;
  3. determining how and when to use relevant set-aside provisions in trade agreements; and
  4. addressing data collection and subcontracting issues.

The PSPC, through its Better Buying initiative, is improving procurement both for government purchasers and businesses supplying goods and services. Through the Supplier Diversity Action Plan, the PSPC seeks to provide increased access to suppliers from underrepresented groups to federal procurement opportunities.16

The government is also transitioning, in stages, the Buyandsell government electronic tendering system to CanadaBuys, the new electronic procurement solution, which will make it easier for potential suppliers to bid on federal procurements.17

v Provincial government procurement legislation

On 3 February 2021, the Quebec government introduced Bill 12 – an act mainly to promote Quebec-sourced and responsible procurement by public bodies – that seeks to amend Quebec's Act respecting Contracting by Public Bodies. This bill provides that public bodies must, when tendering or awarding a contract not subject to an agreement, favour procurement of Quebec goods or services, or construction work from enterprises in the region concerned by such procurement. Bill 12 also seeks to provide a public procurement innovation space to foster the development of contract rules, reinforce the integrity regime of enterprises under the Act respecting Contracting by Public Bodies,18 and impose enhanced monetary administrative penalties and new penal sanctions.19

Ontario's supply chain agency, Supply Ontario, is provided with broad data collection authority. However, the current regulations do not explicitly allow this agency to collect data directly from vendors on behalf of covered entities. On 14 March 2022, the Ministry of Government and Consumer Services proposed to amend Ontario Regulation 612/20 Centralized Supply Chain Ontario under the Supply Chain Management Act (Government, Broader Public Sector and Health Sector Entities) 2019 (SCMA) to clarify Supply Ontario's authority to request data directly from vendors on behalf of entities covered under the SCMA. If passed, this amendment would allow Supply Ontario collect information in an efficient manner by eliminating the need to request authorisation from each individual entity. This proposal does not seek to compel vendors to provide this information.20

vi Covid-19 impact on government procurement

In light of the covid-19 pandemic, different approaches have been introduced by public procurement authorities in an effort to acquire essential goods and services. At the federal level, the government of Canada initiated a coordinated response to purchasing equipment and supplies, collaborating with provinces and territories on an ongoing basis to identify their needs and purchase required equipment, supplies and services to combat covid-19.21 On 20 December 2021, the Treasury Board of Canada Secretariat published Contracting Policy Notice 2021-5: Continued Response to COVID-19 Limited Extension of Temporary Amendments to Contracting Limits, which sets out amendments to Appendix A of the Directive on the Management of Procurement. Time-limited increases to certain contracting limits have been extended or amended to assist departments and agencies in responding to this ongoing situation. These amendments are in effect until 31 December 2022 for contracts related to the government's response to the covid-19 pandemic.22

Scope of procurement regulation

i Regulated authorities

At the federal level, government procurement rules generally apply to procurements by federal government departments; corporations that were incorporated under a federal statute; corporations that receive the majority of their funding from the federal government; and their agents. However, federal government entities that are creatures of statute and that are mandated to compete with the private sector are not generally subject to the public procurement laws.

Government procurement rules likewise apply in general to all public bodies at the provincial level. Although the details may differ from province to province, the procurement rules that have been developed by the Supreme Court of Canada apply generally to all public bodies in Canada. This includes the Contract A/Contract B framework described in Section I for tenders and the corresponding duties that are incumbent upon the purchaser, such as the duty to conduct fair competition.

In addition, certain legislative instruments prescribing procurement rules specify the entities to which they apply. For instance, Quebec's Act respecting Contracting by Public Bodies applies to, among other entities:

  1. municipalities;
  2. government departments;
  3. entities such as universities, health institutions and social services agencies that are part of a group commonly referred to as the MASH sector; and
  4. bodies that are wholly or partly funded by the National Assembly of Quebec.

Similarly, Ontario's Broader Public Sector Procurement Directive applies to most entities in the MASH sector as well as publicly funded organisations that received funds of C$10 million or more in the previous fiscal year from the government of Ontario. Markedly, municipalities are not covered by this directive. In provinces where no public procurement legislation has been enacted, courts have stepped in to develop a regulatory public procurement framework that generally applies to all public entities.

ii Regulated contracts

All contracts for the supply of goods, services or works with the above-described public bodies are regulated by government procurement rules. The question of which rules apply depends on the contracting public body at issue and the type of contract at issue. For example, the GCRs apply to federal government entities and set out certain requirements that apply to all federal procurement contracts. However, some contracts – such as National Film Board contracts, Veterans' Land Act construction contracts and legal services contracts – are exempt from the bulk of the requirements in the GCRs.23 These exempt contracts are nevertheless subject to certain core requirements, such as the contractor warranting that it has not been convicted without pardon of prescribed offences that would put into question the integrity of the contractor. Prescribed monetary thresholds regarding the value of the public contract may also determine the extent to which the government procurement rules apply, as will be touched upon below.

The procurement rules applicable to utilities are generally the same as for other procurement processes. Defence contracting, which is the realm of the federal government, is also generally subject to the same rules as those for other procurement processes, although exemptions to the duty of non-discrimination imposed by international trade agreements may apply where issues of national security are at stake. As many as three federal departments will be involved in major procurements of military services and equipment:

  1. Innovation, Science and Economic Development Canada (formerly Industry Canada), which is responsible for industrial and regional benefits (also known as offsets);
  2. the Department of National Defence, which defines the requirements of the acquisition; and
  3. the PSPC, which manages the procurement process, negotiates the contract and then manages the contract once signed.

Major military procurements may be subject to the Industrial and Regional Benefits Programme, which requires successful bidders to make investments in advanced technology in certain sectors and areas of Canada in amounts sometimes equal to the value of the specific contract. Where procurement is deemed to be subject to the federal Defence Production Act,24 the underlying documents will be exempt from the rigorous disclosure requirements applicable under federal laws, which helps to ensure that sensitive technology and information are appropriately protected.

There are no financial thresholds below which public contracts are completely free from regulation. However, there are financial thresholds below which certain free trade obligations do not apply to federal government entities, as explained below.

At the federal level, the GCRs generally require bids to be publicly solicited for all contracts and thereby subject to full competitive public tendering where anyone who complies with the applicable requirements can bid. The exceptions to this are when:

  1. the need is one of pressing emergency in which delay would be injurious to the public interest;
  2. the estimated expenditure in the case of a goods contract that does not exceed:
    • C$25,000 (and it would not be cost-effective to solicit bids);
    • C$100,000 for specific types of contracts, such as architectural or engineering services; or
    • C$40,000 in the case of any other contract;
  3. the nature of the work is such that it would not be in the public interest to solicit bids; or
  4. only one person is capable of performing the contract.25

The rules are generally more flexible on the provincial level, where the circumstances in which public entities are not required to hold a competitive procedure will be governed by applicable trade agreements, legislation and, to a lesser degree, policies and directives.

Any changes to or transfer of the awarded contract must be conducted in accordance with the rules and procedures that the procuring authority established in the rules of the procurement. Generally, bona fide changes to the contract are permitted where the contracting parties mutually agree to them. The policies of public entities usually include rules that restrict the transfer of public contracts. For instance, the PSPC Supply Manual contains clauses that impose limitations on a contractor's capacity to assign contracts without the consent of the purchaser.26 The Canadian International Trade Tribunal (CITT), which adjudicates certain complaints with regard to the procurement process, has suggested that it does not object to contracts being assumed by a third party.27

Special contractual forms

i Framework agreements and central purchasing

Framework agreements and central purchasing on behalf of other public authorities are viable and, in some cases, encouraged methods of procurement in Canada. In practice, government entities in Canada employ procurement practices that run the gamut between centralisation and decentralisation. For example, New Brunswick's Procurement Act requires all provincial government departments and various other public bodies to purchase services and supplies through the Ministry of Government Services unless certain narrow exceptions apply.28 On the other hand, public procurement at the federal level is conducted in a relatively decentralised manner. Provided that the procurement processes conducted through arrangements of this kind comply with the obligations referred to in this chapter – such as the duty to conduct a fair competition, the duty to disclose all material evaluation criteria and the duty to reject non-compliant tenders – as well as all applicable international trade obligations, procuring authorities and teams are free to establish framework and central purchasing agreements among themselves.

ii Joint ventures

Structural and cooperative or contractual public–public joint ventures (JVs) are both viable vehicles for procuring goods and services in Canada. Public bodies entering JVs may be found to be in a fiduciary relationship, which involves legal duties of fidelity and good faith. Public bodies seeking to avoid these duties may seek to structure their relationship as a buying group instead. The common thread among these arrangements is that there are typically one or several parties who are responsible for procuring goods or services on behalf of the other participants. The precise obligations of the parties involved will depend on the form of legal vehicle assumed and the specific procurement framework in which the public bodies operate. Nevertheless, JVs, JV companies and buying groups are all bound by the rules on public contracting outlined in this chapter. Typically, all the public bodies participating in a JV or buying group will be involved in the procurement process for which the JV or buying group was formed, obviating any concerns associated with one public body supplying another public body without a prior procurement process.

Public–private partnerships (PPPs) are subject to the procurement rules outlined in this chapter. Thus, the PPP generally must be competitively tendered by means of a procedure run in accordance with the rules and principles applicable to all public procurements.

Many levels of government in Canada have imposed rules that require procuring authorities to seriously consider PPPs as a delivery mode for proposed projects whose worth is above certain monetary thresholds. P3 Canada is the public body responsible for advancing the use of PPPs on the federal level.

The bidding process

i Notice

Federal government entities advertise contract opportunities electronically on the government electronic tendering system. Public provincial contract opportunities may be advertised electronically on the following websites:

  1. Alberta: Purchasing Connection and COOLNet;29
  2. British Columbia: e-Procurement in BC (BC Bid);30
  3. Manitoba: Government Tenders (MERX);31
  4. Newfoundland and Labrador: the Government Purchasing Agency;32
  5. New Brunswick: e-Procurement in NB (New Brunswick Opportunities Network);33
  6. Nova Scotia: Nova Scotia Tenders;34
  7. Ontario: Supply Chain Ontario;35
  8. Prince Edward Island: Tender Opportunities;36
  9. Quebec: Le système électronique d'appel d'offres;37 and
  10. Saskatchewan: SaskTenders.38

ii Procedures

Public agencies are generally permitted to use a broad range of approaches, provided that they comply with the requirements of Canada's trade agreements, the common law, and the agency's own internal policies and procedures. Typically, a public agency will establish internal policies and procedures governing the circumstances in which procurement may be conducted and the manner in which such procurement is to be conducted. These policies and procedures often provide guidance on the procurement documents and procedures, including:

  1. a request for information, which is used as an information-gathering tool;
  2. a request for expressions of interest, which is commonly used to identify which participants in the market are able and willing to provide goods or services;
  3. a request for qualifications, which is used to pre-screen bidders based on a set of qualification criteria established by the public agency;
  4. a request for proposals (RFP), which typically prescribes the outcome desired but not how the successful bidder will deliver the goods or services; the terms and conditions of the RFP typically vary significantly, depending on the needs of the public agency, and the proposals may be legally binding or non-binding, depending on the intent of the public agency; and
  5. tender, which is normally used when the acquired item is well defined (often a commodity product) and all that matters is price.

Electronic bidding is permissible and offered on selected tenders.

iii Amending bids

As public entities enjoy a significant amount of freedom to define the rules of the bidding process, bidders should review the terms set out in the tender documents to determine whether there are any limits on amending submitted bids during the bidding process.

Purchasers are generally not permitted to allow a bidder to rectify deficiencies in a bid after the deadline for bid submissions has passed. This flows from the obligation of purchasers to reject non-compliant tenders, which follows from the duty to run a fair competition. Where the rules of the bidding procedure permit suppliers to clarify aspects of their bids, this right should only be used in limited circumstances for the bona fide clarification of a genuine ambiguity in a tender.

Eligibility

i Qualification to bid

Public entities enjoy a significant amount of freedom to stipulate any criteria that bidders must satisfy to be eligible to bid and to define situations in which a bidder will be disqualified. This freedom is subject to certain restrictions. First, under the federal procurement framework and that of certain provinces, bidders are automatically liable to be disqualified if they have committed certain prescribed offences that would call into question their integrity (the offences will be listed in the tender documents). Some levels of government – notably the provincial government in Quebec – also implement a blacklist for suppliers with a track record of questionable conduct.

Second, where the bidder and purchaser have a conflict of interest, the bidder may be liable to be disqualified. Third, the eligibility criteria must comply with any applicable trade agreements. Fourth, purchasers have a duty to run a fair competition and this duty may be breached where purchasers establish eligibility criteria that unduly favour one or more bidders. Finally, there may be additional restrictions specific to certain levels of government. For example, the procurement regime in Quebec generally requires purchasers to specify in their compliance requirements that the filing by a supplier of several bids for the same call for tenders entails automatic rejection of all that supplier's tenders.39

Once public entities have established the requirements with which bidders must comply, they must only consider compliant bids. Any deviation from this principle creates a risk of the procurement process being declared unfair, although some leeway is permitted for bids that may not have strictly complied with all the requirements but that have substantially complied with all material requirements of the tendering process.

ii Conflicts of interest

Purchasers are subject to a duty to avoid any conflict of interest that could compromise the integrity of the tendering process. This obligation flows from the duty of purchasers to conduct a fair competition when soliciting bids. Purchasers will typically specify in the tender materials any circumstances that constitute a conflict of interest sufficient to disqualify a potential supplier. Bidders should review the tender documents carefully to ensure that they do not meet any of these conflict-of-interest criteria. In addition, bidders may be subject to a positive duty to declare any actual, potential or perceived conflict of interest, or else risk adverse consequences upon the discovery of the conflict of interest. Case law suggests that more than the simple appearance of a potential conflict is necessary to establish a conflict of interest at law.

iii Foreign suppliers

Public bodies may open RFPs to foreign suppliers and are required to do so under certain circumstances. The monetary thresholds referenced below are in effect during the period from 1 January 2022 to 31 December 2023 and revised periodically in accordance with their applicable treaties.40

As a signatory to the GPA, Canada has agreed to provide suppliers of more than 40 trading partners in Europe, Asia and North America with the right to bid without discrimination on a broad range of public sector tender calls by federal government entities. The GPA is not applicable to provincial or municipal governments, or to private industry or private individuals. The monetary thresholds applicable to procurements by federal government departments and agencies are C$238,400 for goods or services, or any combination thereof, and C$9.1 million for construction services contracts. With regard to Crown corporations and other federal government enterprises, the monetary thresholds are C$651,000 for goods or services, or any combination thereof, and C$9.1 million for construction services contracts.41

As a signatory to CETA, Canada has agreed to provide suppliers of the European Union with equal opportunity to bid to provide goods and services to a wide range of Canadian government entities at the federal, provincial and municipal levels. For CETA to apply to a given government procurement, the procurement must have a value that is equal to or greater than a certain monetary threshold. With regard to procurements by federal government departments and agencies, the monetary thresholds are C$238,400 for goods or services, or any combination thereof, and C$9.1 million for construction services contracts. With regard to Crown corporations and other federal government enterprises, the monetary thresholds are C$651,000 to C$733,600 for goods or services, or any combination thereof, and C$9.1 million for construction services contracts.42

As a signatory to the CPTPP, Canada has agreed to provide suppliers of Australia, Brunei, Chile, Japan, Malaysia, Mexico, New Zealand, Peru, Singapore and Vietnam with eliminated or significantly reduced tariffs on imported goods.43 With regard to procurements by federal government departments and agencies, the monetary thresholds are C$238,400 for goods or services, or any combination thereof, and C$9.1 million for construction services contracts. With regard to Crown corporations and other federal government enterprises, the monetary thresholds are C$651,000 for goods or services, or any combination thereof, and C$9.1 million for construction services contracts.44

International free trade agreements – such as the Canada–Chile Free Trade Agreement, the Canada–Colombia Free Trade Agreement, the Canada–Honduras Free Trade Agreement, the Canada–Korea Free Trade Agreement, the Canada–Panama Free Trade Agreement, the Canada–Peru Free Trade Agreement, the Canada–Ukraine Free Trade Agreement and the Canada–UK TCA – also prescribe monetary thresholds over which contracts must be offered to Canada's trading partners.45

Other agreements facilitate trade among governments in Canada and their corresponding public entities. These include:

  1. the Canadian Free Trade Agreement (CFTA), to which the federal and all provincial and territorial governments are signatories;
  2. the New West Partnership Trade Agreement, which applies to the British Columbia, Alberta Saskatchewan and Manitoba governments;
  3. the Atlantic Procurement Agreement, which applies to the New Brunswick, Newfoundland and Labrador, Nova Scotia, and Prince Edward Island governments;
  4. the New Brunswick–Quebec Cooperation Agreement; and
  5. the Trade and Cooperation Agreement between Quebec and Ontario.

There is no requirement that foreign suppliers set up a local branch or subsidiary, or have local tax residence to do business with public bodies. Nevertheless, public bodies may choose to establish criteria of this kind during the procurement process if doing so would not breach their free trade obligations or other duties (e.g., duty to conduct a fair competition), if any.

Award

i Evaluating tenders

Public entities issuing a call for tenders must disclose all criteria by which the purchaser will evaluate bidders. Purchasers that use undisclosed criteria to evaluate bidders risk being found liable for doing so. Although purchasers are allowed to include significant reservations in a call for bids, courts may not enforce such reservations if doing so would be at odds with the duty to run a fair competition. Changes made to evaluation criteria during the bidding process can likewise result in a breach of the purchaser's legal duty to run a fair evaluation process.

Public entities are generally free to establish the terms by which they will evaluate bids. Where the estimated price of the contract is likely to be low, public entities typically evaluate bidders based on the lowest-priced bid. Otherwise, public entities generally evaluate bidders based on, inter alia, the best value, which gives them more leeway in taking into account attributes other than just the price of the bid.

It is up to public entities to establish the rules that govern the award of a contract to a selected supplier. Purchasers are under a general duty to award the contract as tendered. Suppliers may be found liable where the awarded contract deviates in a material respect from the contract terms contemplated by the call for tenders. Purchasers are also required to distinguish the selection of one or more preferred bidders from the actual award of the contract in question. If the purchaser stipulates that it will negotiate with a number of preferred bidders before awarding the contract, then it is entitled to do so provided that it also complies with its other obligations, such as its duty to be fair to all bidders.

ii National interest and public policy considerations

As previously noted, procuring authorities enjoy significant freedom to determine which considerations they will take into account when deciding who will be awarded a contract. Procurement authorities have the duty to disclose these considerations in the tender documents and are generally not permitted to take any considerations that have not been disclosed into account when evaluating bids. This duty flows from the general duty of procuring entities to conduct a fair competition. Consequently, national interest, local, social and environmental considerations can be, and often are, taken into account by procuring authorities.

The main restrictions on favouring domestic suppliers during the procurement process are imposed by trade agreements. For example, the GPA, which binds the federal government, imposes an obligation of non-discrimination and transparency on government procurement. Nevertheless, exceptions exist with respect to, inter alia, national security and national defence.

Information flow

Public entities holding a competitive bidding process are subject to a duty to disclose all material information about the contemplated contract to all bidders. In general, what is deemed material for the purposes of the disclosure duty is any information that could influence a bidder's decision to bid or influence the price quoted by the bidder. As noted above, this also includes criteria that the purchaser will be relying on when evaluating bids.

Public entities often provide unsuccessful bidders with the opportunity to learn why they lost a contract and why another bidder won. Pursuant to freedom of information legislation, the federal, provincial and (in some cases) municipal governments and their agents are required to furnish certain information upon request to persons entitled to such information. In many cases, this includes information about why the public entity awarded public contracts to certain parties and not to others. Debriefing unsuccessful bidders gives them an opportunity to improve their bids on future tenders and keeps purchasers accountable with regard to their obligations.

Subject to the specific rules of a particular procurement process, public entities are generally under no obligation to notify unsuccessful bidders of the outcome before signing a contract.

Public entities are required to balance their disclosure obligations with their confidentiality obligations. Bidders are entitled to privacy interests over information disclosed during the procurement process, with the strength of those interests intensifying in proportion to the sensitivity and confidentiality of the information at issue. Courts have recognised that releasing supplier information may impair the willingness of others to participate in public procurement processes. Courts have ordered the disclosure of documents with confidential information redacted from them. Confidentiality obligations are stricter during the bidding process, but a more balanced approach to confidentiality and transparency is taken after the contract has been awarded.

Challenging awards

i Procedures

A supplier that seeks to complain about a federal government procurement process has a number of choices, which can be taken simultaneously, serially or individually. To begin with, it can sue under the common law of Canada (typically for breach of contract and any applicable tort grounds). The supplier can also sue for breach of the GCRs. The supplier can also complain to the CITT for a breach of Canada's obligations under applicable trade agreements such as the GPA, CETA, the CPTPP and the CFTA.46 Under the CFTA, Canadian provinces and territories must also establish or designate an independent administrative or judicial authority to receive and review challenges by suppliers.

The GCRs and Canada's trade agreements all contain different language, meaning that the federal government is subject to a host of obligations that may look similar in substance but that diverge in nuanced ways. Further, the CITT's procedural approach to complaints is significantly less formal than that of the courts. A dissatisfied supplier suing the federal government has at its disposal a range of choices with regard to complaint procedures.

A supplier that seeks to complain about a provincial government procurement process is generally limited to suing under the common law of Canada and pursuant to any specific provincial public contracting regulations. Suppliers looking for redress for a breach of the CFTA may avail themselves of protest procedures set out in provincial regulations, any applicable dispute resolution process that has been established by the particular public body at issue and the courts. Public bodies' internal policies do not have the force of law and so breaches of these policies cannot found a lawsuit. Nevertheless, breaches of policies can be relevant to determining whether some wrongdoing occurred. The rules of the procurement process may also include a dispute resolution process. Awards are challenged primarily by parties who bid on the contract at issue.

The CITT hears complaints regarding procurement involving the federal government covered by the GPA, CETA, the CFTA and certain other international trade agreements. Section 6 of the Canadian International Trade Tribunal Procurement Inquiry Regulations47 provides that a complaint must be filed with the CITT within 10 working days of the date on which the potential supplier first became aware, or reasonably should have become aware, of its grounds of complaint to either object to the contracting authority or file a complaint with the CITT. The CITT provides quick remedies, usually issuing its decision within 90 days of the complaint having been made. Costs vary depending on the complexity of the matter.

Besides communicating directly with the contracting authority, courts are the preferred forum for all other procurement-related complaints. Limitation periods on judicial proceedings differ depending on the court and jurisdiction. Ontario's Limitations Act assigns a basic limitation period of two years.48 Costs vary depending on the complexity of the matter.

ii Grounds for challenge

Challenges may be brought on the grounds of a breach of one or more applicable international trade agreements, statutes, regulations and contracts. Breach of contract encompasses a number of grounds that are unique to the procurement framework, such as breach of the purchaser's duty to conduct a fair competition; to make full disclosure of, inter alia, evaluation criteria; and to reject non-compliant bids. A purchaser's failure to disclose material information and honour the representations made in its tender call can also give rise to concurrent tort claims.

iii Remedies

The CITT has the power to postpone the award of a contract, to order a procurement to be undertaken again or to award damages to a complainant. Courts have more sweeping powers that include the granting of injunctions, setting aside contracts, ordering procurements to be undertaken again and awarding damages to the complainant.

Apart from civil liability for breaching government procurement rules, bid rigging is a criminal offence under Canada's Competition Act.49 Bid rigging occurs when two or more persons agree that, in response to a call for bids, one or more will not submit a bid, withdraw a bid or submit a bid arrived at by agreement, and the person requesting the bids is not informed beforehand about the agreement made between the parties. Parties found guilty of bid rigging may be liable to a fine in the discretion of the court, imprisonment for a term of up to 14 years, or both.50

Outlook

The public procurement landscape in Canada continues to be impacted by the covid-19 pandemic, with federal and provincial public authorities updating different measures in relation to the acquisition of essential goods and services. Canada continues to update and modernise its public procurement regulatory framework at both the federal and provincial levels. The federal government has issued policy directions and regulatory guidance for the management of federal assets and acquired services, social procurement, supplier diversity and the transition to a new electronic procurement solution. Quebec has proposed legislation to update the province's public procurement regime through introducing a public procurement innovation space and reinforcing the integrity regime by proposing enhanced monetary administrative penalties and new penal sanctions. Due to Brexit, Canada and the United Kingdom have entered into a trade continuity agreement to ensure continued access to each other's markets, signalling their commitment to maintaining strong economic and trade ties. The CPTPP Committee has decided to commence the accession process with the United Kingdom and established a working group to negotiate terms of the accession.

Footnotes

1 Theo Ling is a partner, Conrad Flaczyk is an associate and Nadia Rauf is a research lawyer at Baker McKenzie.

2 SOR/87-402.

3 RSC 1985, c F-11.

4 Canada is not a party to the government procurement chapter in CUSMA, which pertains only to Mexico and the United States. Canada maintains government procurement commitments with the United States through the GPA and with Mexico through the CPTPP.

5 Public Works and Government Services Canada, 'Supply Manual': https://buyandsell.gc.ca/policy-and-guidelines/Supply-Manual (last updated 16 December 2021; last accessed 30 March 2022).

6 CQLR c C-65.1.

7 SO 2010, c 25.

8 R (Ont) v. Ron Engineering and Construction (Eastern) Ltd [1981] 1 SCR 111.

9 Global Affairs Canada, 'Comprehensive and Progressive Agreement for Trans-Pacific Partnership (CPTPP)': https://www.international.gc.ca/trade-commerce/trade-agreements-accords-commerciaux/agr-acc/cptpp-ptpgp/index.aspx?lang=eng (last updated 31 December 2020; last accessed 30 March 2022). The 11 parties to the CPTPP are Australia, Brunei, Canada, Chile, Japan, Malaysia, Mexico, New Zealand, Peru, Singapore and Vietnam.

10 RSC 2018, c 23.

11 Government of Canada, 'Backgrounder - Comprehensive and Progressive Agreement for Trans-Pacific Partnership Commission (CPTPP)': https://www.international.gc.ca/trade-commerce/trade-agreements-accords-commerciaux/agr-acc/cptpp-ptpgp/backgrounder_commission-document_information_commission.aspx?lang=eng#fourth (last updated 2 June 2021; last accessed 30 March 2022).

12 Government of Canada, 'Canada-UK Trade Continuity Agreement (Canada-UK TCA) - Agreement on Trade Continuity': https://www.international.gc.ca/trade-commerce/trade-agreements-accords-commerciaux/agr-acc/cuktca-acccru/agreement_trade_continuity-accord_continuite_commerciale.aspx?lang=eng (last updated 9 December 2020; last accessed 30 March 2022).

13 PSCP, 'Policy Notification (PN)-148 - Entry into force of the Canada-United Kingdom Trade Continuity Agreement': https://buyandsell.gc.ca/policy-and-guidelines/policy-notifications/PN-148 (last updated 17 May 2021; last accessed 30 March 2022).

14 Government of Canada, 'Directive on the Management of Procurement': https://www.tbs-sct.gc.ca/pol/doc-eng.aspx?id=32692 (last updated 20 December 2021; last accessed 30 March 2022). PSCP, 'Modernization of government-wide procurement policy – Transition from the Contracting Policy to the Directive on the Management of Procurement': https://buyandsell.gc.ca/modernization-of-government-wide-procurement-policy-transition-from-the-contracting-policy-to-the-directive-on-the-management-of-procurement (last updated 9 March 2022; last accessed 30 March 2022).

15 PSCP, 'Policy on Social Procurement': https://www.tpsgc-pwgsc.gc.ca/app-acq/pas-posp-eng.html (last updated 16 March 2022; last accessed 30 March 2022).

16 PSCP, 'Supplier Diversity Action Plan': https://www.tpsgc-pwgsc.gc.ca/app-acq/pda-sdap-eng.html (last updated 26 January 2022; last accessed 30 March 2022).

17 PSCP, 'Transition to electronic procurement': https://buyandsell.gc.ca/for-businesses/selling-to-the-government-of-canada/register-as-a-supplier/transition-to-electronic-procurement (last updated 17 August 2021; last accessed 30 March 2022); Government of Canada, 'CanadaBuys':
https://canadabuys.canada.ca/en/canadabuys (last updated 8 September 2021; last accessed 30 March 2022).

18 Bill 12 provides that any enterprise that is party to a public contract or subcontract must meet the high standards of integrity that the public is entitled to expect from a party to such a contract or subcontract. In addition, such an enterprise is subject to the oversight of the Autorité des marchés publics, which is granted the powers necessary to audit the integrity of any enterprise subject to its oversight, such as the power to require such an enterprise and the persons or entities who control the enterprise to communicate to it any relevant documents or information.

19 National Assembly of Quebec, 'Bill 12, An Act mainly to promote Québec-sourced and responsible procurement by public bodies, to reinforce the integrity regime of enterprises and to increase the powers of the Autorité des marchés publics': http://www.assnat.qc.ca/en/travaux-parlementaires/projets-loi/projet-loi-12-42-2.html (last accessed 30 March 2022).

20 Ontario's Regulatory Registry, 'Amendment to 612/20 Centralized Supply Chain Ontario': https://www.ontariocanada.com/registry//view.do?postingId=41247&language=en (last accessed 30 March 2022).

21 PSCP, 'Supplying Canada's response to COVID-19': https://www.tpsgc-pwgsc.gc.ca/comm/aic-scr/provisions-supplies-eng.html (last updated 10 March 2022; last accessed 30 March 2022).

22 Government of Canada, 'Contracting Policy Notice 2021-5: Continued Response to COVID-19 Limited Extension of Temporary Amendments to Contracting Limits': https://www.canada.ca/en/treasury-board-secretariat/services/policy-notice/contracting-policy-notice-2021-5-continued-response-covid-19-limited-extension-temporary-amendments-contracting-limits.html (last updated 20 December 2021; last accessed 30 March 2022).

23 GCRs, Section 3.

24 RSC 1985, c D-1.

25 GCRs, Section 6.

26 'Standard Acquisition Clauses and Conditions (SACC) Manual', PSPC, General Conditions, Standard Clauses and Conditions, 2010A, 2010B, 2010C, 2029, 2030, 2035 and 2040 under 'Assignment'.

27 Re IBM Canada Ltd (2003).

28 SNB 2012, c 20, Section 2(1).

29 Government of Alberta, 'Alberta Purchasing Connection': www.purchasingconnection.ca (last accessed 23 March 2022); COOLNet Alberta, 'Construction Opportunities Online Network': www.coolnetalberta.com (last accessed 30 March 2022).

30 Government of British Columbia, 'e-Procurement in B.C.: BC Bid': www.bcbid.gov.bc.ca (last accessed 30 March 2022).

31 Government of Manitoba, 'Government Tenders': www.gov.mb.ca/tenders (last accessed 23 March 2022); Merx, merx.com (last accessed 30 March 2022).

32 Government of Newfoundland and Labrador, 'Bidding Opportunities': https://www.gov.nl.ca/ppa/bidding-opportunities/ (last accessed 30 March 2022).

33 Government of New Brunswick, 'eProcurement in NB: NBON (New Brunswick Opportunities Network)': https://nbon-rpanb.gnb.ca (last accessed 30 March 2022).

34 Government of Nova Scotia, 'Nova Scotia Tender Notices': https://procurement.novascotia.ca/ns-tenders.aspx (last accessed 30 March 2022).

35 Government of Ontario, 'Doing business with the Government of Ontario': https://www.ontario.ca/page/doing-business-government-ontario (last accessed 30 March 2022); Government of Ontario, 'Ontario Tenders Portal': https://ontariotenders.app.jaggaer.com/esop/nac-host/public/web/login.html (last accessed 30 March 2022).

36 Prince Edward Island, 'View PEI Tenders and Procurement': https://www.princeedwardisland.ca/en/service/view-pei-tenders-and-procurement (last accessed 30 March 2022).

37 Secrétariat du Conseil du trésor Quebec, 'Système électronique d'appel d'offres': https://www.tresor.gouv.qc.ca/faire-affaire-avec-letat/systeme-electronique-dappel-doffres/ (last accessed 30 March 2022).

38 Government of Saskatchewan, 'SaskTenders': www.sasktenders.ca (last accessed 30 March 2022).

39 See Regulation respecting Certain Supply Contracts of Public Bodies, CQLR c C-65.1, r 2, Section 7; and Regulation respecting Service Contracts of Public Bodies, CQLR c C-65.1, r 4, Section 7.

40 Treasury Board of Canada Secretariat, 'Contracting Policy Notice 2021-6 Trade Agreements: Thresholds Update': https://www.canada.ca/en/treasury-board-secretariat/services/policy-notice/ contracting-policy-notice-2021-6.html (last updated 20 December 2021; last accessed 30 March 2022).

41 ibid.

42 ibid.

43 Government of Canada, 'How to read the Comprehensive and Progressive Agreement for Trans-Pacific Partnership (CPTPP)': https://international.gc.ca/trade-commerce/trade-agreements-accords-commerciaux/agr-acc/cptpp-ptpgp/chapter_summaries-sommaires_chapitres.aspx?lang=eng (last updated 12 February 2020; last accessed 30 March 2022).

44 Treasury Board of Canada Secretariat, 'Contracting Policy Notice 2021-6 Trade Agreements: Thresholds Update': https://www.canada.ca/en/treasury-board-secretariat/services/policy-notice/contracting-policy-notice-2021-6.html (last updated 20 December 2021; last accessed 30 March 2022).

45 ibid.

46 Global Affairs Canada, Information Note on Recourse Mechanisms For Contracting In Support of International Development Assistance: https://www.international.gc.ca/development-developpement/partners-partenaires/bt-oa/recourse_mechanisms-mecanismes_recours.aspx?lang=eng (last updated 28 January 2019; last accessed 30 March 2022).

47 SOR/93-602.

48 Limitations Act 2002, SO 2002, c 24, Schedule B, Section 4.

49 RSC 1985, c C-34.

50 id., Section 47.

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