Regulatory: The legal landscape for procurement in Canada has changed significantly

Purchasing authorities and bidders must now consider more than just Contract A as a relevant legal issue in procurement

Contract A is no longer the only relevant legal issue in procurement. All purchasing authorities and bidders must now consider two streams of obligation (or, for bidders, two potential streams for challenging procurement decisions): first, what are the organization’s contractual obligations under Contract A (if it exists) and, second, what are the organization's procurement governance or regulatory obligations?

Make no mistake, these new developments are not just relevant for public sector entities. They affect all purchasing authorities and understanding these rules is the foundation on which all bidder challenges should be based.

This governance or regulatory stream has three components: procurement restrictions in trade agreements (for example NAFTA, WTO agreements, Agreement on Internal Trade, etc.); the introduction of statutes, regulations and directives (for example, the Broader Public Sector Accountability Act (Ontario) and the Management Board of Cabinet Procurement Directive (Ontario); and internal "corporate" procurement guidelines. Each of these regulatory/governance instruments imposes a required framework for procurement including rules as to when (and if) competitive procurements are required, how “open” the procurement must be (depending on thresholds of price/cost), acceptable approaches to competitive procurement and basic requirements of fairness and transparency.

What is most interesting about this new stream of procurement law is that the means of enforcement of these obligations by bidders is not yet clear. It is likely that judicial review is one option, but the relationship between judicial review and the enforcement of Contract A rights and obligations has not been tested in any significant way. It is also likely that the procurement governance framework of an organization will establish a standard of fairness against which the organization will be measured, even in a dispute based on Contract A principles. The relative importance of these standards versus the explicit terms and conditions of Contract A is a matter that is likely to be before the courts in the near future.

Contributing Author

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Judy Wilson

Judy Wilson is a partner in the Toronto office of Blakes, where she advises clients across the globe on the full spectrum of infrastructure...

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