encore presentation - treaty myths and compliance...
TRANSCRIPT
Treaty Myths and Compliance Strategies
Encore Presentation
Paul EmanuelliGeneral Counsel and Managing Director
Procurement Law [email protected]
416‐700‐8528
www.procurementoffice.com
Copyright Notice
The following excerpts from GovernmentProcurement (copyright LexisNexis Butterworths2005, 2008, 2012 and 2017), The Laws ofPrecision Drafting (copyright Northern StandardPublishing 2009), Accelerating the Tendering Cycle(copyright Northern Standard Publishing 2012) andthe Procurement Law Update newsletter (copyrightPaul Emanuelli 2006-17) are reproduced withpermission. The further reproduction of thesematerials without the express written permission ofthe author is prohibited.
© Paul Emanuelli, 2017
For further information please contact:[email protected]
About the AuthorPaul Emanuelli is the General Counsel andManaging Director of the Procurement Office. Hewas recognized by Who’s Who Legal as one of thetop ten public procurement lawyers in the world.His portfolio includes advising on strategicgovernance in public purchasing and onnegotiating high-profile major procurementprojects. Paul has an extensive track record ofpublic speaking, publishing and training. He is theauthor of Government Procurement, The Laws ofPrecision Drafting, Accelerating the TenderingCycle and the Procurement Law Updatenewsletter. Paul hosts a monthly webinar seriesand has trained and presented to thousands ofprocurement professionals from hundreds ofinstitutions across North America through theProcurement Office and in collaboration withleading industry organizations including NIGP,SCMA, the University of the West Indies andOsgoode Hall Law School.
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Treaty Myths and Compliance StrategiesCharting Your Course Forward
This presentation on Treaty Myths and Compliance Strategieswill debunk emerging myths and misconceptions regardingCanada’s new trade treaties and provide a rapid action plan forachieving compliance with the new procurement rules. Thefollowing materials will explain who is covered, how the new biddispute rules impact you and how you should be prioritizing theupdates to your tendering templates, procurement policies,major project governance practices and staff training strategies.
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As evidenced by nearly thirty years of Canadian InternationalTrade Tribunal case law, Canada’s procurement trade treaties,including the domestic Agreement on Internal Trade (“AIT”),have long been legally enforceable at the federal level.However, some have maintained that the AIT was merely policyand was not legally binding on provincial and territorialinstitutions.
Treaty Myths and Compliance StrategiesMyth #1: The Treaties Are Not Legally Enforceable
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This may have been technically accurate in the 1990s when theAIT was new and the scope of impacted institutions wasexpanding. However, most public institutions have long sinceadopted policies and procedures to comply with their tradetreaty open competition duties. To now say that those duties arenot legally binding is inaccurate.
Treaty Myths and Compliance StrategiesMyth #1: The Treaties Are Not Legally Enforceable
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Treaty Myths and Compliance StrategiesMyth #1: The Treaties Are Not Legally Enforceable
Effective July 1, 2017, the AIT has been renamed the CanadianFree Trade Agreement (“CFTA”) and new requirements havebeen added to the treaty rules to harmonize our domestic ruleswith the international standards contained in the Canada-Europe Comprehensive Economic and Trade Agreement(“CETA”).
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Treaty Myths and Compliance StrategiesMyth #1: The Treaties Are Not Legally Enforceable
While the new trade treaties create new requirements that needto be added to a public institution’s updated policies andprocedures, they do not alter the fact that the existing policiesand procedures of most public institutions already require opencompetition. The failure to follow those rules remains legallychallengeable under administrative law at all levels ofgovernment across Canada.
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Treaty Myths and Compliance StrategiesMyth #1: The Treaties Are Not Legally Enforceable
Furthermore, separate from the trade treaties, when publicinstitutions seek bids from the marketplace, the courts willcontinue to regulate how those bids are evaluated andcontracts are awarded. In addition to existing court-based legalchallenges, the new trade treaties have added new bid disputemechanisms for suppliers to challenge breaches of open andfair government procurement practices.
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Treaty Myths and Compliance StrategiesMyth #2: There is a General Two-Year Grace Period
Rumours of a general two-year grace period for treatycompliance have been greatly exaggerated. While thepiecemeal implementation of the CETA has createdconsiderable confusion, most of CETA will come into effectpursuant to a pending official announcement after its ratificationby the European Parliament and Canadian Parliament.
*Latest reports state that the initial July 1, 2017 implementation date has now been amended to September 21, 2017. See http://www.cbc.ca/news/politics/ceta‐september‐provisionally‐1.4196210.
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Treaty Myths and Compliance StrategiesMyth #2: There is a General Two-Year Grace Period
However, certain aspects, including the implementation offormal bid protest procedures, will require downstreamenactment by the constituent jurisdictions. This means thatthere will be no single full implementation date for CETA andthat it will proceed in stages as different jurisdictions ratify therules and implement new review mechanisms in theirrespective spheres.
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Treaty Myths and Compliance StrategiesMyth #2: There is a General Two-Year Grace Period
Regardless of this, most of the substantive requirements in theCETA are already contained in the CFTA, which applies atlower contract values and has already come into force effectiveJuly 1, 2017. The complexities of the CETA implementationprocess does not provide public institutions with a grace periodfor complying with the new open competition rules that, for themost part, are essentially the same under the CFTA. Delays inCETA ratification are therefore largely academic and have noreal impact on the need to be compliant as soon as possible.
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Treaty Myths and Compliance StrategiesMyth #2: There is a General Two-Year Grace Period
Furthermore, while some jurisdictions within Canada were ableto negotiate specific exceptions for compliance, there is nogeneral grace period for compliance with the CFTA. Forexample, Yukon institutions have a two-year grace period forcompliance with certain aspects of their public tendering andreporting requirements. Alberta also negotiated certaintemporary buy-Alberta preferences. However, those sameexceptions do not apply, for example, to Ontario institutions.Public institutions should carefully review their jurisdiction-specific exceptions and not assume that a specific exceptionthat applies in one jurisdiction applies across all of Canada.
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Treaty Myths and Compliance StrategiesMyth #3: It’s Business as Usual for Bid Protests
Unlike the AIT, which only had a formal legally binding bidprotest mechanism at the federal level through the CanadianInternational Trade Tribunal, the CFTA and CETA require anindependent administrative or judicial bid review process for alllevels of government across Canada. These new bid protestrules provide complainants with the right to debriefings,document disclosure, legal representation and public hearings,and provide an avenue to challenge the procurement practicesof public institutions at all levels of government.
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Treaty Myths and Compliance StrategiesMyth #3: It’s Business as Usual for Bid Protests
While the Canadian International Trade Tribunal’s existingprocedures may, for the most part, satisfy the new bid protestrequirements for federal government entities, the existing bidprotest procedures established by provincial and territorialgovernments to comply with the AIT and other regional tradetreaties do not satisfy the more onerous CFTA or CETA bidprotest standards. It is the responsibility of senior-levelgovernments (federal, provincial and territorial), who are theofficial “parties” to these treaties, to establish the bid reviewprocesses contemplated under the CFTA and CETA.
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Treaty Myths and Compliance StrategiesMyth #3: It’s Business as Usual for Bid Protests
While other public institutions are subject to the treaties, theyare not responsible for establishing their own CFTA and CETAbid review processes. Rather, they will be subject to the bidreview regimes created by senior governments. However,public institutions should not remain idle while they wait forsenior governments to formalize the bid review regimes. In theinterim, those institutions remain subject to the treaties and toadministrative law challenges. They should therefore updatetheir local bid protest protocols to align them with the newmandatory debriefing duties and to ensure that their first-stepprotocols are designed to contain bid disputes before theyescalate to the more formal bid review regimes.
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Treaty Myths and Compliance StrategiesMyth #4: It’s Business as Usual for Debriefings
Apart from federal procurements that are subject to the NorthAmerican Free Trade Agreement’s mandatory debriefing duties,debriefings have always been voluntary under the tradetreaties. While most institutions have decided to implement theirown debriefing procedures, those voluntary procedures attracta far lower level of disclosure than the requirements imposedby the Canadian International Trade Tribunal in its enforcementof the mandatory trade treaty debriefing standards.
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Treaty Myths and Compliance StrategiesMyth #4: It’s Business as Usual for Debriefings
Now that both the CFTA and CETA have expanded mandatorydebriefing duties to institutions at all levels of government, thefailure to provide sufficient disclosures will be challengeableunder the new trade treaty rules. This will require institutions toupdate their debriefing procedures since suppliers will no longerneed to file public access requests to be entitled to higherlevels of disclosure and will have the right to legally challengeinsufficient debriefing disclosures as trade treaty breaches.
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The new trade treaty rules create very specific standards andrequirements that must be followed when organizations want toseek the debarment of problematic suppliers. To better protectany future debarment decisions from bid protest challenges orcourt-based administrative law challenges, debarment protocolsshould be updated to comply with the specific due processstandards contained in the new trade treaties.
Treaty Myths and Compliance StrategiesMyth #5: It’s Business as Usual for Debarments
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The days of engaging in non-transparent contract awardpractices under supplier lists, prequalification rosters andvendor-of-record arrangements are coming to an end. Thesearrangements have been widely recognized as a source of non-competitive contracting and the new trade treaties create farmore onerous rules around standing arrangements. These newrules significantly restrict the length of time that an institutioncan maintain a “closed shop” to limit their suppliers lists. Movingforward, public entities should implement open frameworks thatpermit permanent prequalification lists but require regularrefreshes to allow new suppliers onto existing rosters.
Treaty Myths and Compliance StrategiesMyth #6: It’s Business as Usual for Rosters and VORs
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Treaty Myths and Compliance StrategiesMyth #7: Paywalls Are Now Prohibited
The new trade treaty rules prohibit the practice of makingsuppliers pay to access the information required in bidopportunity notices; however, this does not mean that theposting platforms that require suppliers to pay to downloadsolicitation documents are now prohibited. While the practice ofonly providing the required posting information within asolicitation document hidden behind a paywall is nowprohibited, public institutions can still require suppliers to pay todownload documents as long as they also post the required bidopportunity information in a notice that can be reviewed by allsuppliers for free.
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Treaty Myths and Compliance StrategiesMyth #8: The New Treaties Prohibit Contract A
The new trade treaties expressly recognize the use of newerand more advanced tendering formats, including consecutiveand concurrent negotiated RFPs and electronic auctions, butfail to mention the more outdated “Contract A” invitation totender format. However, this does not mean that Contract Aformats are no longer permitted under the new treaties.
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Treaty Myths and Compliance StrategiesMyth #8: The New Treaties Prohibit Contract A
While a growing percentage of public institutions acrossCanada are phasing out Contract A formats in favour of themore advanced international standards that are now formallyadopted under the new trade treaties, the new rules do notspecifically prohibit the use of Contract A formats. While, as ageneral rule, institutions should continue phasing out theirContract A formats, if they choose to still use those higher riskand less flexible procedures, they should update thosetemplates, along with their other templates, to ensure that theyare compliant with the new treaty rules.
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Treaty Myths and Compliance StrategiesMyth #9: Senior Governments Will Ensure Compliance
All public institutions will remain responsible for their ownprocurement practices and for compliance with all applicableprocurement rules. While the senior level governments acrossCanada have agreed to implement the new trade treaties, it willremain the responsibility of each independent institution todevelop, implement and fund its own trade treaty complianceinitiatives as part of its general responsibility to properlymanage the administration of public funds. In the event of alegal challenge, the failure to obtain senior level governmentassistance will not serve as a defence for non-compliance.
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Treaty Compliance Rapid Action PlanA Roadmap Forward
With the new Canadian Free Trade Agreement and Canada-Europe Comprehensive Economic and Trade Agreement takingeffect on July 1, 2017, the Procurement Office has developed aTreaty Compliance Rapid Action Plan to help public institutionstransition to the new trade treaty regime. This plan focuses on:(i) updating tendering templates and procurement procedures;(ii) offering direct support for high-risk major projects; and (iii)delivering treaty compliance training.
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Treaty Compliance Rapid Action PlanTemplate Updates – Upgrade to 3.0 Series
For those institutions that recently updated their templatesbased on our 2.0 series (2015 to the present), we are offering aspot-repair service to quickly incorporate the revisionscontained in our new treaty-compliant 3.0 series. Thoseinstitutions that are either still using our 1.0 series templates(2009-14) or have not yet had their templates updated by ouroffice, should migrate directly to our new 3.0 series.
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Treaty Compliance Rapid Action PlanTemplate Updates – Implement with Orbidder
For all template users, we also recommend a rapid deploymentusing our Orbidder drafting system since this is the mostefficient route to training your organization on the use of treaty-compliant templates.
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Treaty Compliance Rapid Action PlanProcurement Procedures – Governance Overhaul
The new trade treaties will require significant updates to youroperating rules and procedures, including new bid solicitationand contract award posting rules, mandatory debriefings withmore detailed disclosure, and a far more extensive bid protestregime for all levels of government.
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Treaty Compliance Rapid Action PlanProcurement Procedures – Governance Overhaul
Those organizations that have worked with us in recent years toupdate their internal procedures are in a good position toachieve compliance with an internal governance spot repair forspecific updates to certain procedures and protocols.
Those organizations that have not updated their procurementpolicies and practices in recent years will likely require a moreextensive overhaul of their procurement procedures.
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Treaty Compliance Rapid Action PlanProcurement Procedures – Take the Test
To get a better picture of how you measure up, please take ourquick Treaty Compliance Test for a free assessment of whereyour organization currently stands in complying with the newtrade treaty requirements.
Treaty Compliance Rapid Action PlanMajor Projects – Risk Mitigation
While major projects are always subject to a higher risk of legalchallenge, the new trade treaty regime, with its stricterstandards and more onerous debriefing and bid protestmechanisms, significantly increases the risk of major projectchallenges for all levels of government.
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Treaty Compliance Rapid Action PlanMajor Projects – Project Hot Launch Services
While you are updating your overall procurement practices,your organization should also be implementing specific duediligence procedures to ensure that its high-risk major projectsreceive special screening for treaty compliance.
Whether you need help drafting your solicitation documents,using negotiated RFP formats under the new trade treatiesrules, or implementing Enhanced Consensus Scoring to bolsteryour debriefing defensibility, please feel free to contact us if youneed project support for your major projects during thistransition period.
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Treaty Compliance Rapid Action PlanTreaty Compliance Training
To better ensure compliance with the new procurement treaties,your organization should be implementing a treaty awarenessprogram to train staff on the new treaty rules. Our Live OnlineLearning program includes the new Canadian Law Series, witha specific Treaty Compliance stream featuring four 90-minutemodules that will help bring your team up to speed on the newtrade treaty rules. Please contact us today for more informationor to book your online training sessions.
Upcoming Seminars and Conferences
Osgoode Certificate in Public Procurement Law and PracticeSeptember 11, 2017 - September 15, 2017, Victoria, BC
April 9, 2018 - April 13, 2018, Toronto, ON
Osgoode Certificate in Advanced Procurement Law and Practice: Major Projects and TenderingNovember 20, 2017 – November 24, 2017, Toronto, ON
Upcoming Seminars and Conferences
Complying with New Trade Treaties: Rebooting Public Sector Procurement
With SCMA Ontario September 27, 2017 - September 28, 2017, Toronto, ON
At the APPA Conference October 18, 2017 - October 19, 2017, Saint John, NB
With SCMA British Columbia January 11, 2018 - January 18, 2017, Richmond, BC
www.procurementoffice.com
For more information please contact:
Paul EmanuelliManaging Director and General Counsel
Procurement [email protected]
416‐700‐8528
Marilyn BrownSenior Counsel
Procurement [email protected]
416‐700‐8531
Jennifer MarstonLegal Counsel
Procurement [email protected]
416‐700‐8537
Heather BakerSenior Procurement Advisor
Procurement [email protected]
416‐700‐8535