MERX -- a new, electronic tendering system -- is an electronic covenant that bonds the Canadian federal government and 7 of 10 provinces. In the United States, that's the equivalent of having the federal government and 35 states agree to do something important, do it the same way, do it using the latest technology, and do it using the same external supplier!

On Oct. 27, 1997, the Canadian government instituted MERX, which has tremendous potential for electronic commerce and facilitating procurement reform -- a hot item in the United States. MERX is a Web-based system used by buyers to post opportunities (requests for proposals, requests for quotations, etc.) and used by vendors to identify business opportunities that match their capabilities.

WHAT DOES IT DO?

Like other electronic tendering systems, MERX connects suppliers of goods and services to purchasers. Many states have these systems, but MERX is a private-sector business serving most of the public sector, not simply one state or city. It is the latest in an evolving system that began with the Canadian federal government and was first outsourced in 1991.

From the buyers' perspective, MERX is a system designed to manage opportunities. Using the system, a buyer can post procurement announcements to the Web site, electronically transfer documents from the buyer's computer to MERX, update bid and award information, view all of the posted opportunities and see which suppliers have requested documents.

From the suppliers' perspective, new marketing opportunities can be quickly and easily located by browsing or specifying selection criteria. They can then electronically order and pay for documents and have the documents downloaded or have them sent from a regional distribution center if -- like blueprints, for example -- not available in electronic form. They can also be notified by e-mail or fax when new documents are added to the system, if these opportunities match their predefined selection criteria.

From the perspective of the participating governments, the system improves access to government business, increases competition and provides a level playing field for all businesses competing for government work.

A LITTLE HISTORY ...

In 1991, the Canadian government contracted out the notification and distribution of procurement documents through a centralized procurement service, called the Open Bidding Service (OBS). While this earlier system provided value, it had some shortcomings.

In April 1997, a report was issued by the Standing Committee on Government Operations, House of Commons, on the topic of government contracting. This report states, "witnesses from the private sector told our committee they did not use the OBS because they found it too expensive in terms of time and cost; it was not 'user friendly' ... it lacked transparency, feedback and responsiveness to unsuccessful bidders; it did not meet the needs of the construction industry; and in some business sectors, it was not readily or directly accessible."

The committee went on to conclude that OBS "[did] not adequately serve the needs of both private and public sectors; for issuing firms, there are difficulties of access, cost, transparency and fairness. There is a clear need to revamp the current open-bidding system to ensure its universal application, and furthermore, [that] it obtains best value for the Crown."

In May 1996, an RFP was issued for a new service provider. This RFP was prepared by a committee established under a trade agreement among the federal, provincial and territorial governments. Cebra -- a company dedicated to electronic commerce and owned by the Bank of Montreal -- was selected from eight proposals as the company with the best solution. The Cebra proposal addressed the shortcomings of the Open Bidding System and was a Web-based solution. It incorporated the use of powerful search tools, Internet technology, national marketing initiatives, regionalization of the service offering and low overall cost.

WHO USES IT?

Currently, the entire federal government and seven