Socially Responsible Purchasing by Canada’s Federal Government

(Disponible en français : Approvisionnement socioresponsable du gouvernement du Canada)

Introduction

Every year, the Government of Canada spends tens of billions of dollars on procurement—that is, its purchase of goods and services. These expenses cover the needs that the federal government cannot meet with its existing employees, goods or property, and can include anything from waste management to icebreaker ships.

While procurement’s main goal is to ensure that the federal government has the goods and services needed for its operations, it can also improve social wellbeing. For example, a government might use procurement to minimize harm to the environment, give economic opportunities to certain groups, and help to uphold rights and freedoms.

Government procurement that is designed to improve social wellbeing is commonly called “responsible procurement” (RP). This HillNote describes federal RP efforts in Canada and how they compare to those in other countries.

A Brief Overview of Federal Procurement

When the federal government needs goods or services, it can choose a sole supplier (e.g., if its needs are low cost or if only one supplier exists). However, in most cases, it launches a competitive procurement process, which helps ensure fairness and value for money.

There are different types of competition, but a common type involves asking for bids from interested businesses. The government awards a contract based on factors such as proposed cost, quality and, sometimes, RP criteria. The federal Supply Manual describes the procurement process.

Responsible Procurement in Canada

Many federal laws, regulations and policies, and some of Canada’s modern treaties with Indigenous peoples, impose RP obligations. Canada’s trade agreements—which are legally binding once ratified—do not prevent Canada from practising RP, with some exceptions (e.g., preventing Canada from buying only local products). However, trade agreements have indirect effects on RP. For example, they may allow foreign businesses that are not subject to Canadian industries’ social responsibility standards to compete for federal contracts.

The following measures help ensure that Canadian federal procurement is fair, improves social wellbeing, and upholds rights and freedoms in Canada and abroad:

  • The Code of Conduct for Procurement [accessible via Internet Explorer] summarizes the laws, regulations and agreements that govern public servants’ and suppliers’ activities. It promotes fair, open and transparent procurement through the prevention of fraud, conflict of interest and other such activities.
  • The Policy on Green Procurement requires departments to consider suppliers’ environmental impact when measuring value for money. Environmental considerations include all processes from resource extraction to disposal. Departments must also set and measure progress toward green procurement targets.
  • As of December 2019, 22 of Canada’s modern treaties with Indigenous peoples contain procurement obligations. These obligations vary, but may include using the directories of treaty businesses, establishing competition criteria that favour treaty groups, and allowing “set-asides” (exclusive bidding rights) for treaty groups in certain procurements.
  • The Procurement Strategy for Aboriginal Business allows—and, in some situations, requires— departments to set aside procurements for qualified Indigenous businesses.
  • The Federal Contractors Program requires large contractors who are awarded a contract of at least $1 million to “make reasonable efforts” to hire people from employment equity groups (women, Aboriginal persons, persons with disabilities and members of visible minorities). These efforts include creating diversity goals and monitoring and reporting on its workforce.
  • The Policy on the Ethical Procurement of Apparel requires certain clothing suppliers to self-certify that they comply with eight human rights–based labour standards. Standards include “freedom from child labour, forced labour, discrimination and abuse, and access to fair wages and safe working conditions.”
  • The National Strategy to Combat Human Trafficking 2019-2024 includes plans to introduce human and labour rights requirements for suppliers, including related compliance tools for their supply chains.

Responsible Procurement Internationally

The measures listed above are consistent with international standards for RP. For example, the United Nations’ Guiding Principles on Business and Human Rights oblige governments to uphold human rights in their supply chains, the International Organization for Standardization’s sustainable procurement guidance document supports environmental, social and rights-based procurement practices, and the Organization for Security and Co-operation in Europe’s Guidelines on Government Measures to Prevent Trafficking for Labour Exploitation in Supply Chains include best practices for public procurement.

Virtually all Global North (highly developed) countries have public procurement laws that promote integrity and transparency, give economic opportunities to specific groups and/or protect the environment. Although many have measures that uphold human rights, fewer require mandatory steps that would lead to their active protection or promotion.

Table 1 compares Canada’s federal, public RP laws to those in selected Organisation for Economic Co-operation and Development (OECD) countries.

Table 1 – International Comparison of Responsible Procurement Laws

Country Integrity and Transparency Targets or Set-asidesa Environment Human Rightsb
Australia

X

X

X

X

Canada

X

X

X

X

United Kingdom

X

X

X

United States

X

X

X

X

Notes: a: A target is a minimum dollar value or number of contracts that the government must sign with specific businesses (e.g., small businesses). Set-asides allow only specific businesses (e.g., women-owned businesses) to bid on a contract.
b: This category includes procurement laws that are designed to protect or promote human rights beyond requiring contractors to comply with other civil and criminal laws.

Source: Table prepared by the author using data obtained from: Australian Government Department of Finance, Policy Framework; Canadian Department of Public Works and Government Services, Supply Manual; United Kingdom Crown Commercial Service, Guidance: Public procurement policy; and United States Office of Management and Budget, Federal Procurement Policy.

Challenges for Responsible Procurement

Canada’s efforts to practice RP pose certain challenges, including:

  • Value for money: Some RP measures could increase the cost of government procurement. RP measures may also create “red tape” for suppliers, which can make them less likely to do business with the government. Canadians may disagree about whether the added costs are worth the social benefits.
  • Inclusion: There is debate about which groups, if any, should benefit from RP measures. Since modern treaties have force of law, their procurement measures for Indigenous businesses must be upheld. However, other business owners, including women, racialized people, people with disabilities and small business owners, have argued that they too should benefit from measures such as set-asides and targets. Some measures affect many suppliers but are most likely to improve outcomes for certain groups. For example, the Policy on the Ethical Procurement of Apparel is most likely to benefit women in the Global South.
  • Compliance: Some RP measures are difficult to monitor and enforce. For instance, self-certifications may not be verified by procurement authorities and they place due diligence responsibilities on businesses rather than the government. Many businesses do not or cannot monitor their entire supply chain.
  • Application: Some RP measures, such as the Procurement Strategy for Aboriginal Businesses, apply only in specific situations or are voluntary. Since public servants have discretion about when to apply certain measures, there can be uneven application of measures across departments. In addition, some measures (e.g., the Policy on Green Procurement) require technical expertise to employ.

Author: Ryan van den Berg, Library of Parliament