Procurement
June 20, 2014

The Europeans are coming! The Koreans are coming!

The early May annual workshop of the Canadian Institute of Procurement and Materiel Management covered many topics that could have been the impetus for an article. I chose trade agreements because the environment is clearly changing. There are three new agreements here or on the horizon: the updated and already in place World Trade Organization Government Procurement Agreement (GPA), and the upcoming European Community and South Korea agreements.

Together they appear to promise few practical difficulties for federal procurement, since Europe and South Korea are built on the GPA foundation. And to the extent that the new GPA reflects enhancements rather than earthshaking changes to existing obligations, the federal procurement community should be ready to handle covered procurements without issue.

Hopefully, this is demonstrated by government actions to communicate the updated GPA. Its text was apparently set at the end of 2011, but came into force this past April 6 in time for procurement specialists to “kick the tires” and identify potential challenges. When Treasury Board advised the federal community on April 17 that the new agreement was in effect, though, it did not highlight any identified potentially problematic provisions and, as of May 5, Public Works and Government Services Canada had not (that I could find) issued its own policy update.

One might assume that this silence implies no significant changes. Nevertheless, I have been doing a clause by clause comparison of the new GPA to the old. With the devil in the details, my just-expressed hope may prove over-optimistic and, of course, there is always the Law of Unintended Consequences.

The 1966 movie that inspired the title for this article was about non-hostile intentions. We can reasonably expect, of course, vigorous competition from European and South Korean suppliers for higher value public contracts, but competition is good. Given that, and apparently easy implementation, why would the current environment be article-worthy?

I suggest that we may be facing a different procurement culture.

It is likely not one of litigation. This is something we feared when we signed the NAFTA with the U.S., but did not see. Canadian International Trade Tribunal (CITT) complaints have come largely from Canadian suppliers. A quick look at Europe, where there have been formal redress mechanisms in place for many years, yielded statistics indicating that European suppliers may, if anything, be less inclined to seek redress than our Canadian experience. Also, the issues that drive such demands for redress seem quite similar to those we already deal with. A 2012 review by the European Commission noted issues such as the proper use of negotiated procedure, discrimination, improper direct (non-competitive) contract awards, lack of transparency, and illegal amendment of contracts – familiar to our federal procurement.

I do see cultural impact relating to the sophistication of European and South Korean procurement practices. Those countries share a common characteristic: advanced academic backgrounds. Unlike Canada, internationally there is an abundance of higher education options relating to procurement up to and including doctorates. People are used to developing and dealing with exotic topics, from the symbolic importance of public bid openings to questioning what “procurement” actually is.

Admittedly, I do not know the extent to which this sophistication extends beyond academia and government procurement professionals into the supplier community. It seems reasonable to assume, though, that it is reflected in procurement approaches and practices in those countries, and as we increasingly open the doors to the international community, the likelihood increases that Canadian procurement specialists will find themselves dealing with suppliers that operate from a different perspective.

That could influence many areas, whether supplier suggestions for improvements in the design of individual procurements, adopting new bid evaluation techniques, different approaches to redress actions, or increased use of e-procurement systems.

European suppliers, in particular, will also come to our procurement table with the broad experience of having dealt with some or many of the procurement systems in place in the 28 members of the European Community. Although operating within the common European Community framework of procurement rules, each jurisdiction is different: suppliers will have learned from those experiences and probably be better informed about global public procurement than we are.

In response we must not, as in that 1966 film, go into a tizzy and raise barriers. Rather we should take advantage of this opportunity to learn and improve. This means finding and taking advantage of occasions to interact with this “new” community, to understand and take advantage of their knowledge and experience.

The government says it is committed to innovation…will we listen with an open mind?

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