Photo by Markus Spiske, published on Unsplash
Canada’s trade deal with the European Union, CETA (Comprehensive Economic Trade Agreement), came into force provisionally in 2017 as it awaited further ratification by its member states. Since then, CETA has cleared the way for Canadian companies to pursue new business opportunities in Europe, eliminated tariffs and duties on approximately 98% of goods traded between Canada and the EU, and established more flexible worker mobility provisions. Apart from this, CETA is also making procurement more accessible to Canadian tech startups by breaking down regional silos in municipal procurement. Read on to find out how.
What Is Public Procurement and Why Is It Important?
Public procurement, or government procurement, is the purchase of goods and services by publicly owned government organizations. This includes procurement by government organizations of all sizes and the procurement of goods and services of all kinds. Depending on the context, it can include everything from the purchase of construction services by a local municipal government to the purchase of new computers by the European Commission. In Canada, public procurement accounts for about 32% of all government expenditure and 13% of gross domestic product. With such a large financial footprint, public procurement is an important driver of economic activity.
“One of the hardest parts about being a small company that sells to cities is obviously the procurement process.”
– Tara Pham, Cofounder of Numina, CityTalk Canada
Canadian public procurement is not without its challenges. As detailed in Procurement Office or “Living Lab?” (a recent ICTC study on the topic) a traditional request-for-proposal process has many advantages, such as transparency, accountability, and familiarity for public bodies. However, it is also a lengthy and unfamiliar process for many applicants, particularly startups and under-resourced companies. Bids-and-tenders websites often differ between provinces, territories, and local municipal governments. While provinces like Saskatchewan and Québec have centralized procurement websites, other provinces like Ontario, Alberta, and British Columbia do not. Ontario alone has around 450 municipalities, two-thirds of which use their own separate sites. Because of this, a new, small, or under-resourced company would have to rely on third-party aggregators and/or follow each individual municipality website for relevant opportunities, expending time, money, and expertise. In Procurement Office or “Living Lab?” one interviewee told ICTC that small companies and startups with niche product offerings might not “have the experience and time to enter into the traditional procurement environment.”
Similarly, some local governments use paywalled bids-and-tenders sites, which may discourage companies from accessing relevant business opportunities or preclude researchers, watchdogs, and other members of the public from monitoring public procurement activity. Given the scale of public spending, it is important for procurement to be as transparent, open, and accessible as possible.
CETA’s Role in Improving Accessibility in Canadian Procurement
Public procurement is a crucial part of CETA, and Chapter 19 describes the trade deal’s procurement provisions in great detail. While most commentaries have focused on the business opportunities that CETA makes available to Canadian businesses (CETA is estimated to open $3.3 trillion worth of procurement opportunities to Canadian companies annually), there are other impactful government procurement provisions in CETA. For example, Canada is required to create a free single point of access (SPA) for qualifying public procurement opportunities at the municipal, provincial/territorial, and national levels. The European Union has had an SPA for their procurement market for some time: called Tenders Electronic Daily, or TED, this SPA aggregates all qualifying public procurement opportunities at the municipal, regional, national, and subnational levels for all 28 member states. To qualify, procurement opportunities must meet several criteria, including a minimum contract value.
Canada’s SPA is currently being designed by the federal government in consultation with the provinces and territories and other local governments. The project entered the testing phase in the first few months of 2021. The federal government will work with other jurisdictions until 2022 to integrate sub-national procurement opportunities into the SPA.
To what extent Canada’s SPA addresses current accessibility challenges remains to be seen. CETA only requires contracts above a certain value to be included in the SPA (approximately CAD $340,600 for goods and services procured by cities and around CAD $8.5 million for construction services). Ultimately, it is the provinces and territories that will decide whether the scope of the SPA is expanded to include all sub-national procurement opportunities. The path that is ultimately chosen will have a direct impact on Canadian startups and small to medium sized enterprises.