GFOA takes ERP procurement methodology to Canada.

• Author: Burger, Patrice Sutton
• Position: Solutions - Enterprise resource planning system, Government Finance Officers Association

The GFOA Research and Consulting Center recently assisted its first Canadian client with the procurement of an enterprise resource planning system (ERP). Each of GFOA's government clients is subject to a unique set of policies, procedures, and regulations that affects the way they do business. However, this project gave GFOA its first look at the implications of Canadian law on the procurement of enterprise technology systems.

LEGAL UNDERPINNINGS

In the U.S., requests for proposals for ERP systems generally fall under regular contract law, whereby the purchaser (the government) negotiates cost as well as terms and conditions with any or all of the bidders. Often, purchasers are not obligated to select any of the bidders.

By contrast, the Supreme Court of Canada ruled in 1981 that there is a distinction between regular contract law and competitive contract law. Two contracts are involved in the competitive contracting process. The first is the automatic, implied contractual obligations between the purchaser and the bidders as expressed in the RFP (referred to as "Contract A"). The second is the actual contract between the purchaser and the winning bidder (referred to as "Contract B"). Thus, the purchaser enters into a Contract A with each vendor that submits a bid, obligating both parties to comply with the terms of the RFP. Only one Contract B, the performance contract, is formed between the purchaser and the winning bidder. Essentially, the final contract award should not differ in material terms from the contractual structure envisioned by the RFP, as this was the "good faith" doctrine put forth by the purchaser and agreed to by the bidder.

The underlying purpose of this ruling was to ensure fair and equal treatment of all bidders by requiring a structured and objective procurement process that is disclosed upfront in the RFP. This does not mean that all bidders must be treated the same, but rather that all bidders must be given an equal opportunity to win the work.

THE SAME, BUT DIFFERENT

Organizations in Canada must therefore ensure that they develop thorough and detailed RFP documents, such that the desired performance contract drives the procurement process from the beginning. It is essential that the desired terms and conditions are clearly written and well understood by the bidders. After all, the more detailed the RFP, the lower the risk of a court having to interpret "implied" terms. This is why our Canadian client sought GFOA's...