Questions and Answers About Procurement Reform in British Columbia

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Effective March 31, 2002 the procurement provisions under the Agreement on Internal Trade (AIT) extend to Crown corporations and MASH entities.

For this article, we have shamelessly borrowed the content of various websites (provided at the end, so you can check them out if you’d like) to compile an overview of the AIT and some of the implications for our MASH clients. We also did some ad-libbing of our own. We will leave it to you to sort out which is which!

Q. What is the Agreement on Internal Trade?

A. The Agreement on Internal Trade (AIT) is an agreement between the federal, provincial, and territorial governments to reduce and eliminate, to the extent possible, barriers to the free movement of persons, goods, services, and investment within Canada and to establish an open, efficient, and stable domestic market.

Q. Who are “MASH entities?

A. MASH is a loose acronym for municipalities, academic institutions, schools, social service agencies, and health authorities. On occasion, the label “MASSH entities” is used, and, less frequently, “MUSH entities” (substituting universities for academic institutions).

Q. What is the “MASH Annex?

A. Chapter 5 of the AIT sets out a set of rules respecting procurement that apply to the numerous federal and provincial government ministries, departments, boards and agencies listed in the AIT. A separate set of rules, added later (and set out in Annex 502.4 of the AIT, which is referred to as the “MASH Annex”) applies to “municipalities, municipal organisations, school boards and publicly-funded academic, health and social service entities”.

Q. Why have I not heard of the MASH Annex until recently?

A. Procurement reform in BC was one of the Government’s New Era commitments. The Government’s commitment on procurement reform was to “restore open tendering on government contracts to allow for fair competition for businesses and provide better value to taxpayer”. The AIT stipulates that Annex 502.4 only applies to those Provinces who subscribe to the Annex. The Province of B.C. subscribed only recently, as one step towards procurement reform.

Q. How does the AIT or the MASH Annex affect my organisation?

A. If applicable to your organisation, then for procurement you will have to comply with the rules respecting openness and transparency, notifications and non-discrimination set out in Chapter 5 of the AIT or in the MASH Annex. For example, the MASH Annex states that tender documents must clearly identify the requirements of the procurement, the criteria that will be used in the evaluation of bids and the methods of weighting and evaluating the criteria. The last part (setting out the “methods of weighting and evaluating the criteria”) is something to reflect upon. Your RFP and tender documents may have to be revised (if they have not been already).

Q. What happens if I fail to comply?

A. Aside from the impact on federal entities (which I won’t get into here), there are not a lot of teeth behind the AIT. But then, you wouldn’t want to be embarrassed by not complying, and if you have failed to comply then you might not obtain the internal approvals, funding, orders in council, etc., that you may need. There is no direct legal remedy in favour of a disgruntled bidder to recover damages.

Q. I am a bidder on public entity contracts. What is the impact to me?

A. One consequence of the existence of these rules is that it will reinforce your ability to insist on fair dealing. If it came to a court case, you could point to the rules in the AIT and say “by the way, internally the public entity is supposed to adhere to this standard”, which might help persuade the Judge in your favour.

Q. Where can I learn more?

A. Check out these websites. You can find out more about the Agreement on Internal Trade at the website of the “Internal Trade Secretariat”, www.ait-aci.ca/en/main_intro.htm. For information on B.C. Government procurement policy, go to www.gov.bc.ca/fin/. For background reading, look through the February 2002 “Procurement Reform Discussion Paper” issued by the Procurement and Supply Services Division, Ministry of Management Service. This paper is available at the BC Purchasing Commission’s website, www.pss.gov.bc.ca/psb.

Q. Tell me about the proposed Fair and Open Procurement Act.

A. The proposed Act is a further step in the New Era procurement reform. It is discussed in the February 2002 “Procurement Reform Discussion Paper” referred to above. The introduction to this paper states “The purpose of this paper is to initiate discussion and invite feedback from public sector bodies and the business community on the future of procurement in this province. This is about creating partnerships and working with non-government organisations and the private sector to maximize the value of every tax dollar. The proposed legislation and policies will establish and enable a competitive, accountable framework promoting fair and open procurement throughout British Columbia. The legislation is tentatively titled the Fair and Open Procurement Act. It is anticipated that contents of this paper will form the basis of new legislation slated for the fall of 2002. One of the main products of this paper will be drafting instructions for legislative counsel for the Fair and Open Procurement Act. Consultations with the public and private sector will continue in 2002 and the Crown corporations and MASSH sector will be invited to voice their thoughts and opinions.