Memorandum of Understanding (MOU)

A Memorandum of Understanding (MOU) is a written arrangement or understanding between governments and/or international agencies. It sets out the terms under which the parties will cooperate in performing specified work, such as research, development, production or use. NATO archival terminology uses this definition: NATO archives.

MOUs are flexible instruments. They record cooperation between states, governments, international organizations and other entities, and they can establish objectives, the work assigned to each participant, financing, and rights concerning technical data and patents. In Canada, federal organizations also use MOUs to record how they will work together. An MOU is not a solicitation or a contract, so suppliers need to read each one for what it actually says.

How NATO defines and uses an MOU

NATO legal materials note that MOUs are often used for arrangements that are unsuitable for inclusion in treaties, or where a less formal instrument is more convenient. They generally do not require ratification, although domestic law and the content of the instrument can affect that requirement. See the NATO legal gazette for this commentary.

Binding or non-binding: what NATO sources say

The legal effect of an MOU depends on its wording, the parties and the applicable legal framework. NATO sources are not uniform on the point. One NATO factsheet describes an MOU as a legally binding document specifying details of cooperation. NATO legal commentary, in a separate legal gazette issue, describes MOUs in the NATO community as generally non-binding instruments. That commentary adds that they can still have legal effects and create expectations based on good faith.

MOUs in NATO defence and cyber cooperation

NATO uses MOUs for practical cooperation on defence and security matters. Examples include logistics cooperation, the exchange of cyber-defence information and assistance, and arrangements governing Centres of Excellence.

• Centres of Excellence: a Functional MOU governs the relationship between a Centre of Excellence and the Alliance, while an Operational MOU governs the relationship between participating countries and the Centre. See NATO Allied Command Transformation.
• Cyber defence: NATO uses an MOU for arrangements on exchanging cyber-defence information and assistance, including cyber-incident prevention, resilience and response. See NATO cyber defence.

MOUs between Canadian federal organizations

Two Government of Canada examples show how an MOU works in practice.

• OPO and CITT: the Office of the Procurement Ombudsman and the Canadian International Trade Tribunal use an MOU to establish cooperation intended to give federal suppliers easier and more timely access to both organizations. It lets a supplier's complaint summary be sent to the other organization for triage, so the appropriate body can determine whether it has jurisdiction. See the Office of the Procurement Ombudsman.
• CNSC and DND: the Canadian Nuclear Safety Commission and the Department of National Defence state in their MOU that it is not a contract and does not create contractual obligations. It also states that it is not a procurement instrument. Any procurement required to implement it must follow applicable contracting laws, regulations and spending authorities. See the CNSC and DND MOU.

What an MOU means for a supplier bidding on Canadian public contracts

An MOU is not automatically a solicitation, a contract or a source of payment. If an MOU is referenced in a tender, check the document itself. Determine whether you are being asked to acknowledge it, to comply with requirements drawn from it, or to take part in a separate procurement run under ordinary contracting authorities.

The CNSC and DND example draws the line clearly: the MOU records the cooperation between the two organizations, and any buying that follows is done through the normal contracting process. Bid teams should respond to the solicitation and its terms, not to the MOU alone. If a dispute arises over a federal procurement, the OPO and CITT arrangement gives you a route for having a complaint triaged to the right organization.