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A case for provincial trade tribunals

by Paul M. Lalonde

Imagine that you are bidder on a provincial procurement being carried out in breach of the Agreement on Internal Trade (AIT). Suppose your objection to the purchasing officer, your complaints to the Minister and your letters to elected representatives fall on deaf ears. What can you do? Well, not much.

At the federal level, the Canadian International Trade Tribunal (CITT) provides quick, neutral recourse. However, at the provincial level compliance with the AIT remains, in effect, at the whim of bureaucratic and political discretion.

True, the AIT does provide recourse. This normally involves getting the bidder's home province to drag the procuring province before an AIT Panel. If the home province refuses or fails to act, there is the possibility - following a screening process - for the bidder to act directly. But assuming a bidder gets before an AIT Panel, the panel can do little more than observe that a breach has occurred. If the bidder's home province refuses to implement a panel decision, there is really no sanction - so in the six years since the AIT came into force, very few bidders bothered to seek panels.

After explaining this procedure often to dejected clients, I was delighted to see the study recently published by the Certified General Accountants Association of Canada, Canada's Agreement on Internal Trade: It Can Work If We Want It To. The author, Robert Knox, reviews the experience of the AIT to date. He concludes that the AIT has a serious credibility problem and that it is time to reinvigorate intergovernmental discussions about the agreement. Knox suggests officials concentrate their efforts on a number of recommendations, including some aimed at improving dispute settlement and establishing consequences for non-compliance. In particular, he suggests that when a province fails to implement a panel report, those injured by the non-compliance should be able to seek damages in the courts and that the bid protest procedure for the provinces should operate on the same basis as the federal bid protest system. I agree.

But, when I mention the CITT to provincial procurement officials, their reactions are invariably negative. Perhaps their view of the CITT process is coloured by stories from their federal counterparts who likely highlight the stress, disruption to operations and cost of the process.

However, the issue is not whether the process makes life difficult. Rather, the question is whether the tribunal's bid challenge process serves the greater public interest. In other words: Is the tribunal making federal procurement better, fairer, more transparent, more credible or more thoughtfully designed? In my experience, I believe it is advancing the public interest.

Objections to CITT-like bid challenge procedures generally fail to take into account that the tribunal often vindicates the approach of the procurement officials and confirms that they are on the right track; it does not just serve disgruntled bidders. Indeed, procurement officials often suggest that bidders take their complaints to the CITT. A quick, third party arbiter can be an effective way to stop supplier bellyaching. Similarly, procurement officials can effectively deal with bidder complaints if the relevant term of their solicitation has received CITT approval in a past case. Also, opponents of CITT-like processes appear to forget that disruptions caused by the bid challenge process are very small in relation to overall federal procurement.

Provincial officials also argue that they already have a perfectly good bid review procedure. This argument usually evaporates with a few simple questions: Is the reviewing body independent? Can it reverse the procurement decision under review? Can it order compensation? Can it award the complainant its complaint costs? Is it an open, transparent process? Will the decision be enforceable? Will the reviewing body check for compliance with the trade agreements? Almost invariably, the answer to these questions is no. Without these basic elements, a bid challenge process has little credibility.

At the federal level, there are several years of experience with the bid challenge mechanism of the CITT. Despite recent press coverage, which regularly reminds us that there is much to do, with each tribunal decision lessons are learned and small, incremental steps are taken towards more fair, competitive and thoughtful procurement behaviour.

The tribunal also enhances public confidence, and that of the supplier community, in the work and professionalism of procurement officials - thus serving the interest of the federal procurement community as a whole. Given this, it strikes me that provincial procurement officials should embrace the idea of provincial procurement tribunals, not only because it is in the public interest, but also because it is in their own interest. In fact, establishing CITT-like institutions at the provincial level would probably be the single most effective way to enhance public confidence in provincial procurement and the credibility of the purchasing profession. But, old habits die hard. Shame, really.

Paul M. Lalonde practices international trade and procurement law with the firm Heenan Blaikie in Ottawa and Toronto.



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