Plan the Procurement Strategy

Table of Contents

What is a procurement strategy?

A procurement strategy defines in general terms how a good, service, or construction will be procured. It will include, at the highest level, the determination to proceed competitively or non-competitively and applicable details in support of industrial and regional benefits or other national objectives. The strategy could be quite basic, such as the decision to use a standing offer, or could be more detailed, which would be used for major projects.

Thresholds for buying goods

Most goods above $5,000, except for goods purchased through standing offers, are bought through PWGSC's active contracting. This ceiling is now being increased to $25,000 with the offer by the Minister of PWGSC to departments willing to accept certain conditions.

Low dollar value procurements are mainly bought by credit card; cards are gradually replacing the local purchase order as a method of purchase. The credit card is simple and leaves a sufficient audit trail for your client to be able to report such purchases.

A higher procurement ceiling for goods is available through the use of call-ups against standing offers where the ceiling for goods may be a maximum of $40,000, unless otherwise specified in the offer.

International and domestic trade agreements, as well as Comprehensive Land Claims Agreements have a considerable impact on buying goods. Certain goods exceeding the following values are subject to specific agreements:

  • $25,000 - Agreement on Internal Trade (AIT)
  • $25,200 - (Canada/US) - North American Free Trade Agreement (NAFTA)
  • $80,400 - (Canada/Mexico) - North American Free Trade Agreement (NAFTA)
  • $200,900 - World Trade Organization - Agreement on Government Procurement (WTO-AGP)

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Thresholds for buying services

Service purchases in departments have higher ceilings but are also subject to contracting rules and regulations.

For services, departments can generally do their own buying up to the following thresholds:

  • $400,000 for competitive procurements
  • $100,000 where there is no competition (sole sourcing)
  • $2 million by competing services requirements on the Tenders minisite.

Treasury Board approval must be sought when the purchase exceeds $2 million.

Directing services contracts of $25,000 to $100,000 to suppliers without competition (or sole sourcing) must be justified in accordance with the Government Contracts Regulations. Although you should strive as much as possible to buy in open competition, you may buy services valued up to $25,000 from one supplier.

Contracting for services is more complex than buying goods. Where technical specifications or performance specifications are important in the purchase of goods, in contracting for services, you must ensure, as you saw earlier, that the Statement of Work clearly describes the work to be carried out, the objectives to be attained and the time frame during which the work must be carried out.

Competitive procurement

Contracts above $25,000

Many of the federal government’s opportunities valued over $25,000 are published on the Government Electronic Tendering Service (GETS) available through the Tenders minisite.

Various procurement tools (such as ProServices and SELECT) allow the government to purchase up to $80,400 of professional services and real property consulting services and up to $100,000 for construction services without using the Tenders minisite.

Contracts below $25,000

When the value is below this amount, buyers may contact suppliers directly. These contracts are considered by Public Works and Government Services Canada as low dollar value procurements. In this case, buyers will determine the most appropriate procurement strategy for each requirement to obtain best value and ensure the timeliness and cost-effectiveness of each contract. Buyers may use various methods of supply to identify and select a supplier on either a competitive or directed basis.

Your department or division may have created its own official supplier lists that are used to request firms to bid on competitive purchases not publicly advertised. You should use these lists, if available, as a basis for preparing a list of suppliers to be solicited for bids. To supplement these lists, you may also want to use the Supplier Information (SI) service. If your department does not have official lists, SI is a good source to find suppliers. You may also include suppliers suggested by the client in this list.

For more information, please see the PWGSC Supply Manual, Chapter 3: Section 3.30 Methods of Supply.

Standing Offers and Supply Arrangements

Standing offers and supply arrangements are two types of non-binding agreements between the federal government and potential suppliers for the supply of specified goods or services. These agreements outline the terms and conditions that will apply to future requirements to be ordered on an "as and when required" basis.

For more information, please see the PWGSC Supply Manual:

Non-competitive contracting or sole source buying

This refers to a requisition which specifies that a particular supplier is the only one acceptable. The sole source requisition must contain justification for requesting this specific course.

The Government Contracts Regulations require the competitive soliciting of bids before any contract is entered into. However, contracts may be entered into without soliciting bids when:

  • There is a pressing emergency such as natural disasters like earthquakes or floods; or
  • The estimated expenditure is less than;
    • $25,000 for goods and services (buyers are still expected to solicit bids below this value whenever it is cost effective to do so); or
    • $100,000 for architectural and engineering services and other services required in respect of the planning, design, preparation or supervision of the construction, repair, renovation of a work; or
    • $100,000 for the Canadian International Development Agency (CIDA) service contracts related to international development programs or projects; or
  • A competition is not in the public interest; or
  • Only one supplier is capable of performing the work, as in the case of a supplier who owns a copyright or software license.

For more information, please see the PWGSC Supply Manual, Chapter 3: Section 3.15 Non-competitive Contracting Process.

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Trade agreements

For all trade agreements, PWGSC is required to comply with specific procedures when completing certain procurements. Therefore a decision must be made as to whether or not the requisition is subject to a particular agreement, or a combination of agreements.

About the North American Free Trade Agreement (NAFTA)

This agreement was set up between Canada, the USA and Mexico to achieve greater competition in government procurement and to eliminate preference given to domestic products or suppliers.

For more information, please see the PWGSC Supply Manual, Chapter 1: Section 1.25.5
NAFTA

About the World Trade Organization - Agreement on Government Procurement (WTO-AGP)

This is a multi-country agreement set up to foster greater international competition for government procurement. It covers both goods and services.

Coverage and exemptions are similar to NAFTA. To determine whether the WTO-AGP is applicable to your client's requirement, you must consult the agreement.

For more information, please see PWGSC Supply Manual, Chapter 1: Section 1.25.10 WTO-AGP.

About the Agreement on Internal Trade (AIT)

This is a comprehensive agreement on internal trade in Canada which aims to reduce barriers to trade among the provinces. The agreement creates a framework that ensures equal access to procurement for all Canadian suppliers, resulting in a reduction in purchasing costs.

For more information, please see the PWGSC Supply Manual, Chapter 1: Section 1.25.15 AIT.

Aboriginal considerations

The federal government has a duty to consult and, where appropriate, accommodate when it contemplates conduct that might adversely impact potential or established Aboriginal or treaty rights. For more information, departments should refer to the Government of Canada Updated Guidelines for Federal Officials to Fulfill the Duty to Consult. Consultation-related queries can be sent to Aboriginal Affairs and Northern Development Canada (AANDC) at cau-uca@aandc-aadnc.gc.ca.

The federal government has a number of Comprehensive Land Claims Agreements (CLCAs) with Aboriginal peoples. Most of these CLCAs contain obligations related to federal government procurement. These obligations apply when you buy goods and services for delivery into areas of the country that are subject to the agreements. For more information, please see the Supply Manual, Chapter 9: Section 9.35 Comprehensive Land Claims Agreements.

In addition, the Procurement Strategy for Aboriginal Businesses (PSAB) initiative was developed to provide Aboriginal businesses with greater opportunities to sell their goods and services in the federal marketplace. For more information on PSAB, please see AANDC’s website and the Supply Manual, Chapter 9: Section 9.40, Procurement Strategy for Aboriginal Business.

Green procurement

The purchase of green goods and services is an objective for many Canadian government departments and agencies.

There are online resources available to identify green products and services including the following:

For more information, please see the PWGSC Supply Manual, Chapter 3: Section 3.65 Green Procurement Strategy.

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Small and medium enterprises

The Office of Small and Medium Enterprises (OSME), as part of the government of Canada, supports the government agenda to provide value for Canadians by encouraging and assisting small and medium enterprises (SMEs) to participate in the federal government procurement process.

For more information, please see PWGSC Supply Manual, Chapter 3: Section 3.75 Small and Medium Enterprise.

For more information about SMEs and procurement strategies, please see the section entitled: Tips for Developing Inclusive Procurement Strategies.

Security requirements

Requisitions containing a requirement for physical security, information technology security or personnel security screening must include a Security Requirements Check List (SRCL) - Treasury Board of Canada, particularly if the contracting is being done by PWGSC.

For more information, please see the PWGSC Supply Manual, Chapter 3: Section 3.55 Industrial Security Requirements (Personnel or Organization).

Official languages

The policy about the use of the two official languages is that both official languages must be used when you buy goods and services for your clients. The rules are simple:

  • When you open a competition nationally or you buy in a bilingual area, all regular or standard documents for the competition, as well as the contract document, must be prepared in both English and French; this rule applies equally to public notices, statements of terms and conditions, basic forms, bid solicitations, standards, and purchase descriptions.
  • If specifications, for example, are part of your solicitation documents, you must find out if they should be in both official languages to ensure information to contractors is provided in the language of their choice.
  • Such documents may be in only one official language when it is certain that they won't be requested in the other, but must be made available if they are requested in the other official language by a significant number of potential bidders.

For more information, please see the PWGSC Supply Manual, Chapter 4: Section 4.20 Official Languages Obligations in Procurement.

For more information

For more information, please see the PWGSC Supply Manual, Chapter 3: Procurement Strategy.