Procurement essentials: Working with governments on projects

Thomas Yeo (00:07): Thanks for taking a few minutes to join us today to talk about government involvement in large projects and transactions. I'm Tom Yeo, Corporate Partner at Torys, and I frequently act for governments at all levels: federal, provincial, municipal, as well as Crown corporations on a wide variety of corporate commercial matters including procurement. And joining me today is my partner, Phil Symmonds, who co-heads Torys' Procurement Group with me.

Phil Symmonds (00:32): Hi there. I'm Phil Symmonds. I'm a Partner in the Corporate Group at Torys. I've spent most of my career in transactions with a significant government component to them, including financing, M&A, a variety of transactions in the energy and infrastructure space, as well as procurement.

Thomas Yeo (00:50): So, Phil, when we talk about government involvement in projects and transactions, there's obviously many different forms that can take. Can you take a minute to talk about those different forms of involvement?

Phil Symmonds (01:01): Yes. Well, governments can be involved in a variety of different ways. Funding, as in funding from various funds. Financing, as in the emergency lending program that we saw during the pandemic. Seller, as in privatization transactions or electricity de-control transactions. Contract counterparty, as in the credit-worthy counterparty that might underpin an infrastructure transaction as regulator, obviously. And lastly, as procurement authority. So, Tom, you work with government authorities a lot. What are some of the things that private sector proponents should be cognizant of when dealing with the government?

Thomas Yeo (01:39): Well, working with government is obviously different than working with private sector partners. A government may have a variety of different objectives with a particular project or transaction. It could be a social need or objective, economic development, national defence, or meeting a government's own administrative need. And in most cases, a project will represent a combination of these objectives. For example, more and more governments are looking to make sure projects that may have a particular primary objective are also being used to advance other social objectives, such as Indigenous reconciliation and green procurement. It's important for private sector proponents to understand those objectives. Usually, they'll be very apparent from the outset of the project and the government will be upfront about them, but don't lose sight of them as the transaction proceeds because those are the factors that will inform the government decision making along the way. In that decision making, governments will have all sorts of different pressures and constituents to consider. You need to be patient with that and appreciate that they have a mandate to look at everything from a public interest lens. And you can't necessarily look at the government as a single point of contact. "Who is the government?" Is a critical question on every project or transaction. There's the political side and the public service. You often have multiple ministries involved, all with different mandates and objectives, and you may have other Crown corporations or different levels of government involved in different capacities in a transaction. Don't assume that they're all speaking with one voice and all have the same interests or mandates. And so, Phil, with that backdrop, where can private sector partners add value to the process?

Phil Symmonds (03:26): Well, Tom, I might start with a couple of don'ts. Don't focus on improving the government. Don't see the exercise as one of making the governments more like the private sector. Clients often have a project or a concept in mind, and they come to the government with a communications solution wrapped around it. Communications are critical, but governments rarely need the private sector to provide a communications solution. Governments are very, very good at communications. Private sector proponents do, however, have a deep knowledge of markets and often bringing an element of private sector project management is helpful. Governments often work very well within ministries, but not as well across multiple agencies, bringing organizations, scheduling, organizing meetings to brief up issues, making sure effective decisions are being made—all of that can be extremely helpful. And Tom, do you have any tips for dealing with government decision-making?

Thomas Yeo (04:26): Well, in all honesty, the decision-making process can be somewhat slow and bureaucratic in government, but it's all part of the accountability framework that's been put in place to protect the public interest and protect the public purse strings. So you have to be patient with it and realistic about government timing. Often governments don't move at the same pace as in a private sector deal. That's not because they're not working hard—in our experience, the people working in government on transactions are extraordinarily hard working—but it's a function of the many controls and checks and balances that are in place within the government framework. And you also have to be aware that a crisis on another file can arise at any moment, and your project can go from mission critical, to down the priority list, and then back up to mission critical in a matter of hours or days. And I'd say, finally, be respectful of the internal processes of government. You generally won't have direct access to the responsible minister or the minister's staff, but the people in government you're dealing with know how to manage that process. The way you can help them is by arming them with the information they need for briefings, rather than getting directly involved in that process.

Phil Symmonds (05:41): So I would sum that up, Tom, by saying let's recognize the differences, be respectful of those differences, bring the private sector perspective and skill set to bear, and all of that will significantly enhance your prospects for success. So thanks to everyone for joining us today. To learn more about our projects practice, you can go to www.torys.com. Thank you.