Canada Overhauls Procurement Process with New Contract Policies

The Canadian federal government is set to implement significant changes to its procurement process, aiming to enhance accountability and support domestic industries. Prime Minister Mark Carney announced a new strategy over the summer, introducing a “Buy Canadian” approach designed to prioritize Canadian suppliers in federal contracts. These reforms are intended to address long-standing criticisms regarding the complexity and lack of oversight in the federal procurement system.

The federal government is a major player in the national economy, executing over 500,000 contracts annually and spending nearly $37 billion on goods and services, according to Public Services and Procurement Canada (PSPC). Despite this substantial investment, the procurement process has faced scrutiny, particularly following the controversial awarding of a $19 million contract to GC Strategies for the ArriveCan app, which raised concerns about transparency and effectiveness.

In response to these issues, Alexander Jeglic, Canada’s procurement ombud, has called for five essential changes to improve the federal procurement landscape. Jeglic emphasizes that the existing system is too fragmented and needs a centralized approach to enhance data collection on contract performance. As he stated, “What we want to be doing is looking at solutions to address those issues, rather than make what I would describe as band aid solutions to fix a one-off problem.”

One of Jeglic’s key recommendations includes appointing a chief procurement officer who would be accountable for implementing these reforms. He pointed to the United Kingdom, where a similar role was established to streamline procurement processes.

The government has already announced three pivotal changes. First, the “Buy Canadian” policy will mandate that federal contracts prioritize Canadian materials, beginning with the steel and softwood lumber sectors, which have been adversely affected by U.S. tariffs. This policy will expand over time to include additional domestic materials.

Secondly, a reciprocal procurement policy will restrict access to government contracts for companies from nations without trade agreements with Canada. This move is intended to level the playing field for Canadian businesses and bolster national industry.

Lastly, a review of existing procurement rules aims to consolidate them into a single document, simplifying processes that currently span various legal frameworks and trade agreements. This change is part of the government’s broader effort to reduce red tape and enhance efficiency.

Despite these announcements, some experts remain cautious. Marcia Mills, a lawyer with Fasken, has expressed concerns about the reciprocal procurement policy, questioning its robustness and the implications for defense procurement, which was initially excluded from the interim guidelines. Mills highlighted the importance of maintaining oversight amidst a swift reform process, warning that a rush to implement changes could compromise quality and accountability.

Mills also raised questions regarding the preparedness of suppliers for the shift towards the “Buy Canadian” policy, particularly concerning the re-establishment of supply chains. She asked, “Has the government surveyed the Canadian supply base, Canadian suppliers and their supply chains?”

In response to these concerns, PSPC spokesperson Michèle LaRose stated that the new policy is based on feedback gathered from previous engagements with Canadian suppliers. LaRose noted that the department is consulting with key industry associations and stakeholders and is exploring options for structured feedback, including targeted surveys.

As the government moves forward, many are watching closely to see how these policies will impact the digital transformation of procurement within the federal bureaucracy. The push for enhanced digital capabilities is viewed as a critical next step for modernization.

Benjamin Bergen, of the Council of Canadian Innovators, articulated the need for a strategic approach, likening policy implementation to “eating an elephant—one bite at a time.” He emphasized the importance of moving up the value chain to enhance productivity.

The success of these procurement reforms will ultimately depend on their implementation and the infrastructure established to support them. Mills cautioned that without solid structures in place, new policies risk becoming ineffective.

Further details regarding these measures are expected to be announced in the upcoming budget, scheduled for November 4, 2023. The “Buy Canadian” policy is projected to be fully operational by spring 2024. The federal government has indicated that additional domestic materials will be identified in the months ahead, aiming to bolster the Canadian economy through a more focused procurement strategy.