By Paul Emanuelli

This article is an excerpt from The Art of Tendering: A Global Due Diligence Guide, which is available for purchase.

Depending on the level of formal harmonization, between one-half and three-quarters of the rules that apply to a public procurement process within any jurisdiction flow from common core global standards. These global standards come in the form of international trade treaties, international model laws and procurement guidelines, and common law precedents and audit findings.

These sources all play a role in influencing jurisdiction-level statutory standards, guidelines, and directives, and in informing local case law and audit standards. The remaining quarter of the rules and standards that apply to a procurement project flow out of the industry practices that apply to the specific goods, services, or construction contracts, many of which are also harmonized with global commercial practices.

Navigating the specific challenges at the institutional and project levels requires a better understanding of the core global standards that drive the public procurement processes at the local level. Different jurisdictions enjoy a higher or lower degree of formal harmonization with these global standards.

Some public institutions operate in highly regulated environments with international procurement treaties and directives formally enacted through national and sub-national statutory structures that are, in turn, further bolstered by formal bid protest enforcement mechanisms and the development of local case law precedents and public audit findings.

Deeper jurisdictional integration tends to drive a higher degree of procurement process standardization across those jurisdictions, since global standards have already been formally implemented into local rules, leaving fewer grey zones open to institutional-level improvisation. This tends to support the creation of more consistent internal governance frameworks across institutions within harmonized jurisdictions.

However, jurisdictions that are less formally harmonized with global standards tend to leave more of the governance work to each specific institution to implement its own internal operating system to comply with global standards. A lower degree of formal harmonization with global standards tends to expose institutions within those jurisdictions to greater litigation and audit uncertainty as the courts and public audit offices tend to fill the vacuum left by the lack of a formal regulatory spine with ad-hoc case law precedents and audit findings.

Public procurement in Canada has largely evolved without a strong statutory spine. While Canada’s federal procurement regime includes trade treaty enforcement mechanisms through the Canadian International Trade Tribunal that are similar to the UK system in recognizing both monetary and procedural remedies, and while Canada’s federal system also includes, more generally, court-based commercial and administrative law remedies, the federal system does not include a statutory framework comparable to the EU Directive, the UK regulations, or the US Federal Acquisition Regulation.

Furthermore, Canada’s sub-federal systems, which operate at the provincial and territorial levels to govern provincial, territorial, and local institutions, including agencies, municipalities, universities, colleges, school boards, and the health sector, remain a work-in-progress. While Atlantic Canada recently underwent a round of statutory reforms that helped modernize those provincial operating systems and harmonize them with global standards, the statutory code in Quebec remains outdated, and the rest of Canada west and north of Quebec operates largely without any meaningful statutory regulation of government procurement.

The paradoxical result sees US institutions at the federal, state, and local levels subject to far more statutory regulation than their Canadian counterparts, but at the same time subject to far less litigation since the Contract A lost profit remedy first recognized by the Canadian courts and later adopted by other Commonwealth jurisdictions is generally not recognized in the US, or, for that matter, in India or across Africa. The low level of formal harmonization with global standards, coupled with the commercial lost profit remedy and rise of judicial review remedies, increases uncertainty and risk within the Canadian context.

Notwithstanding a highly challenging domestic operating system and relatively weak levels of formal harmonization with international standards, in recent years, public institutions across Canada have, in practice, been adopting those common global standards at an accelerating rate. This has resulted in the slow-but-steady decrease in overall government procurement litigation and has provided a series of turnaround stories in procurement governance that serve as leading case studies on how to successfully navigate global procurement standards and achieve strategic execution at the institutional and project level.