Q4 | Torys QuarterlyFall 2022

Bidder beware: the stakes are rising in government procurements

Governments at all levels across the country are increasingly moving towards a “centralized procurement” model, in which one agency, department or organization manages the purchasing of goods and services for multiple government entities.

As governments look to take advantage of the benefits of group purchasing and shared services, the scope, value and duration of resulting contracts have increased, and this has raised the stakes for suppliers on every procurement. Losing out on a particular procurement may lock a supplier out of a large market for a significant period of time. This is particularly true in the life sciences sector, where shared services organizations already play a significant role in aggregating purchases of medical devices and off-patent and generic pharmaceuticals.

Learn more about the procurement of medical devices in Canada. Watch the video.

Trade treaty expansion

We have also seen the scope of Canada’s trade treaties expand in recent years, extending procurement rules to a broader portion of the public sector at the same time that those entities are centralizing their procurement activities.

In the case of the Canadian Free Trade Agreement (CFTA) and Canada-European Union free trade agreement (CETA), this includes municipalities, schools and hospitals. Among other goals, these trade treaty rules are designed to ensure equal access to government contracts for suppliers from Canada’s trading partners. The expanded trade treaty rules are in addition to the contracting rules adopted by various Canadian government entities.

Supplier rights: critical for agencies and suppliers alike

Procuring agencies and suppliers alike need to be keenly aware of supplier rights under the applicable trade treaties and other government procurement rules. Key rights include the need for unbiased requirements and specifications that are disclosed to all bidders, clear evaluation rules and a timely and transparent procedure through which a supplier may challenge decisions.

Awareness of supplier rights under the trade treaty and procurement rules can even be important where a contract is sole-sourced or issued through a standing solicitation. For example, the trade treaties set out specific rules and requirements which limit the ability of the government authority to enter into a contract without a competitive process (i.e., limited tendering).

Common exemptions from the need for a competitive process include an absence of competition for technical reasons, to ensure compatibility with existing goods, and for reasons of extreme urgency brought about by events unforeseeable by the procuring entity. In such circumstances, the government authority is required to post an advance contract award notice (ACAN) explaining its rationale for limited tendering. Failure to comply with the limited tendering requirements could provide an opportunity for potential suppliers to challenge the procurement.

How suppliers can adapt to a high-stakes procurement climate

Suppliers can adapt and succeed with a few strategies. They should keep apprised of all procurements in their relevant sector (including ACANs) and the applicable procurement rules. They should be thorough in their review of any procurement process they participate in. And they should move quickly and use any Q&A or protest process to seek clarification or flag issues as soon as possible and not wait until a contract is awarded. While bid dispute mechanisms vary slightly across Canada, certain tribunals such as the Canadian International Trade Tribunal (which hears disputes relating to federal procurements) require that suppliers bring a complaint within 10 days of becoming aware of the issue.

If you identify an issue or are preparing to challenge a decision, answer these key strategic questions as you prepare your protest:

  • Who should submit the complaint: a member of your organization or outside legal counsel or consultants? If you are continuing to pursue other avenues, such as requesting a debrief, you may want to use a different voice to advocate on your behalf.
  • What remedy or relief are you requesting? You may want the tender or RFP to be amended, or perhaps you want your bid to be re-evaluated, or maybe you want the procurement to be cancelled and re-issued.

Assessment of the issues and understanding your rights as a supplier are highly fact specific. After becoming aware of a potential procurement issue, success could depend on how quickly and completely you understand your rights and how well you can map those rights to your specific procurement situation.

To discuss these issues, please contact the author(s).

This publication is a general discussion of certain legal and related developments and should not be relied upon as legal advice. If you require legal advice, we would be pleased to discuss the issues in this publication with you, in the context of your particular circumstances.

For permission to republish this or any other publication, contact Janelle Weed.

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