Canada's legal framework for government procurement comprises trade agreements, statutes, regulations, case law, and policies. The legal framework that applies to government procurement at the federal level differs from the framework that applies in Canada's 10 provinces. Canada also has three territories, Yukon, Northwest Territories and Nunavut, which are not discussed in this chapter.

Federal Procurement

At the federal level, the Government Contract Regulations ("GCRs") is the primarily piece of legislation that regulates procurement by federal government entities. The GCRs set out conditions of contract entry, requirements relating to bid and contract security, and deemed terms for procurement contracts.

Provincial Procurement

A number of Canadian provinces have put in place legislation to regulate procurement procedures:

• Quebec: An Act respecting contracting by public bodies
• Ontario: the Broader Public Sector Procurement Directive
• Newfoundland and Labrador: an Act Respecting Procurement by Public Bodies
• Nova Scotia: the Public Procurement Act
• New Brunswick: the Procurement Act
• Saskatchewan: The Purchasing Regulations

Common Law Procurement Principles (Federal and Provincial Procurement)

Canada's applicable legislation is supplemented by a separate body of common law that is generally referred to as "Contract A/Contract B", which is the law that applies to the bidding contract in a competitive procurement for tenders. The courts have consistently found an "implied term of fairness" in these bidding contracts and have enforced the principle that a bidding contract does not come into effect unless the bidder submits a "compliant bid", namely one that complies with the terms and conditions of the bid call document. The "Contract A/Contract B" framework applies to tenders at the federal and provincial level.

The federal government is subject to binding and enforceable commitments made pursuant to trade agreements with other nations, such as the World Trade Organization's Agreement on Government Procurement ("GPA") and the North American Free Trade Agreement ("NAFTA").

Under the GPA, Canada has agreed to provide suppliers in select countries in Europe, Asia and North America with the right to bid without discrimination on a broad range of public sector tender calls by federal government entities, subject to certain monetary thresholds. Pursuant to NAFTA, Canada has agreed to provide suppliers in the United States and Mexico with equal opportunity to compete for certain contracts involving specified classes of goods and services bought by a prescribed list of federal government entities, subject to certain monetary thresholds.

The GPA and NAFTA are not applicable to provincial or municipal governments, or to private industry or private individuals.

The Canadian procurement process must be "open, fair and transparent" ("open" means that anyone can bid; "fair" means that bidders and prospective bidders are treated equally; and "transparent" means that the rules are known to everyone). The underlying purpose of a procurement process that is open, fair and transparent is to support the principle of "value for money".

The federal procurement rules applicable to aerospace and defence procurement are generally the same as for other procurement processes, except for certain industry-specific rules which apply.

As many as three federal departments are involved in major procurements of military services and equipment: Innovation, Science and Economic Development Canada (formerly Industry Canada), which is responsible for industrial and regional benefits (also known as "offsets"); the Department of National Defence, which defines the budgetary, operational, technical and project management requirements of the acquisition; and Public Works and Government Services Canada ("PWGSC"), which manages the procurement process, negotiates the contract and then manages it once signed.

Canada's offset requirements for major military procurements are reflected in the Industrial and Regional Benefits ("IRB") programme, which requires successful bidders to make investments in advanced technology in select sectors and areas of Canada in amounts sometimes equal to the value of the specific contract. In addition, if a procurement is declared to be subject to the federal Defence Production Act, the underlying documents will be exempt from the rigorous disclosure requirements applicable under federal laws, helping to ensure that sensitive technology and information are appropriately protected.