Trade Agreement Scrabble – achieving a triple word score!

Trade Agreements afford lots of room for social outcomes; they’re not as daunting as they seem!

 

Public sector institutions are increasingly pursuing social and indigenous procurement opportunities that improve the lives of disadvantaged individuals and communities. Like the dreaded ‘X’ in a hand of Scrabble, Procurement professionals often point to trade agreements as a barrier to pursuing social and indigenous outcomes.  While there are some trade agreement no-no’s, there is plenty of room for triple bottom line results.

Public sector organizations such as municipalities and academic institutions must follow trade agreements which establish rules ensuring fair and open access to government contracts for all suppliers. While they do add increased requirements, trade agreements are based on principles such as no obstacles and non-discrimination, which everyone would agree are necessary to fair procurement. They have financial thresholds above which certain rules apply, such as following a competitive bidding process, posting bids publicly, and including evaluation criteria and weighting.

For procurement professionals wanting to take sustainable procurement to the next level, it’s important to understand what is and isn’t allowed.

 

Trade Agreements and their Thresholds

Canada has hundreds of trade agreements in effect. We will discuss two that are particularly relevant for social and indigenous procurement strategies:

  • New West Partnership Trade Agreement (NWPTA) which applies to BC, AB, SK, and MB
  • Canada Free Trade Agreement (CFTA)

 

G

The Exception or the Rule

The good news is that trade agreements provide exceptions to the rules that enable institutions to achieve broader social policy objectives.  There are at least two exceptions that provide room for the supplier diversity component of social procurement:

      1. Procurements from philanthropic institutions, non-profit organizations, or persons with disabilities.
      2. Measures adopted or maintained “relating to Aboriginal peoples”.

So, what does this mean in practice? Below the thresholds (identified in the table above) the trade agreement rules do not apply; contracts can be set aside for social enterprises and indigenous businesses indiscriminately though to ensure value for money, buyers should still follow sound contract management practices. Above trade agreement thresholds, you need to be more nuanced.

When contracting above a threshold, you can’t restrict competition but you can seek positive social outcomes from all bidders. Nor can you give preference to local goods, services or businesses but you can require bidders to provide community benefits such as subcontracting to social enterprises or hiring people with barriers to employment.

And for Indigenous businesses and social enterprises, exceptions can apply; contracts can be set aside for social enterprises and Indigenous businesses.

C

Put it into Practice

Manitoba Housing owns and manages thousands of housing units that experience high turnover, necessitating a steady stream of repairs. This type of steady, recurring work is ideal for social enterprises. Manitoba Housing uses the exception for non-profit organizations to set aside over $1M annually in maintenance and repair work and contracts directly with five different social enterprises. Full report here.

Trade Agreements are often cited as barriers to social procurement, but they’re not. There are one or two no-no’s but there is lots of room for action.  As a procurement professional, you can set aside contracts for social enterprises and indigenous businesses below and above thresholds; and you can include community benefit requirements that all suppliers must meet. It’s time to play your hand and achieve your triple-word score: can you spell ‘xylophone’?