Archived Content
Information identified as archived is provided for reference, research or recordkeeping purposes. It is not subject to the Government of Canada Web Standards and has not been altered or updated since it was archived. Please contact us to request a format other than those available.
Introduction
The goal of the Vendor Performance Policy is to improve client
service, by preventing problems with vendors from arising. While
it is never possible to ensure that there is no poor performance,
we can improve suppliers' performance by instituting the appropriate
measures in the event of non-performance.
Principles
Public Works and Government Services Canada (PWGSC) has the authority
and the duty to take reasonable measures to ensure that it can
rely on its contractors to perform their obligations. The Department,within
the framework of its policy that procurement be open, accessible
and fair, has the same right as other purchasers in the market
to assess a vendor's performance, and may take action to prevent
future problems, based on the vendor's past performance. The discretion
to take such action must be exercised in a fair and reasonable
manner within the policy. Any measure taken must rationally relate
to the nature and severity of the problem for which it is applied.
Definitions
"poor performance": means anything less than
full performance of a contract by a vendor.
Note: While even minor instances of poor performance may be
noted, action would normally only be taken against a vendor as
the result of a major instance of poor performance on a contract,
or a cumulative record of poor performance.
"vendor": includes subcontractors, owners, directors,
officers, employees, agents, parent corporation or subsidiary of
a vendor, which may be responsible for a vendor's poor performance.
Note: while persons other than a contractor may be treated
as "vendors" under the Policy, action against them can only be
taken where they have been notified of the poor performance and
of any proposed measures and given the same opportunity to respond
that a contractor would have.
"Vendor Performance Corrective Measure (VPCM)":
means a condition or limitation placed on a vendor's ability to
contract with PWGSC on the basis of PWGSC's assessment of their
reliability. A Vendor Performance Corrective Measure can be applied
to a vendor overall or only in respect of certain products or services.
There are three types:
Debarment is the refusal by PWGSC to do business
with a vendor for a specified period, which may be expressed in
terms of a number of relevant procurements, and is generally not
to exceed 3 years;
Suspension is the refusal by PWGSC to do business
with a vendor pending the outcome of an investigation into serious
or multiple instances of poor performance, or until the vendor
meets conditions set for re-instatement, such as remedying a problem;
Conditions can be imposed on vendors seeking
to do business with PWGSC, for a specified period, which may be
expressed in terms of a number of relevant procurements, and is
generally not to exceed 3 years, or until the vendor meets conditions
set for re-instatement, such as remedying a problem.
As part of a VPCM, the vendor may also be subject to probation
when the Measure ends. In such a case, if further instances of
poor performance occur, the VPCM may be extended, or another applied.
Process
Monitoring
Contracting officers must enforce the terms of contracts wherever
possible and appropriate. The same incident may support both enforcement
of the remedies available under the contract and a VPCM. The contracting
officer will document events that may be instances of poor vendor
performance in the contract file.
Where the terms of the contract are enforced by notice to the
contractor of its poor performance, but no further action is taken,
this must be noted in the contract and vendor files, together with
the facts which justify it. That the contracting officer intends
to commence an action to impose a VPCM on the vendor is not a reason
to decline to enforce the contract.
The approval of the relevant Director is required for noting an
instance of poor performance on the vendor file for the vendor
on the Vendor Information Management system (VIM). A notation of
poor performance on VIM will include the contract number, the subject
of the contract, the nature of the poor performance, any remedial
action taken by the vendor, its effects and the status or disposition
of the problem.
The vendor must be informed of each instance of poor performance
by the relevant Director and will have ten days to respond before
the notation will appear on VIM.
A vendor, which may be someone other than the contractor, who
is responsible for the contractor's failure to fulfil the contract,
must be notified each time a poor performance notation is made
on VIM, and be informed that PWGSC will take past performance into
account in its future dealings with vendors.
A vendor may respond to notification of the Director's intention
to have an instance of Poor performance noted on VIM. The Director
will consider the input of the vendor in deciding whether to enter
the information.
Outstanding performance of a vendor should also be noted, as it
may be useful in making an overall assessment of a contractor's
performance in the event corrective measures are required.
A performance notation will generally remain on VIM for 7 years.
After that time, a vendor may request that it be removed. Performance,
good or bad, more than 7 years in the past will not ordinarily
be relevant to a decision whether to impose a corrective measure.
Since the VPP limits itself to consideration of poor performance,
being failure to fulfil a contract, contracting officers should
make sure that their contracts cover all aspects of performance
which they would want to consider in evaluating the vendor's performance
on the contract.
Investigation for Vendor Performance Corrective Measures
Formal corrective measures should be considered where there is
evidence that continued contracting with a vendor may pose a greater
risk to the Crown than is acceptable. This may be as the result
of a major instance of poor performance on a contract, or a cumulative
record of poor performance. Sectors and Regions may also set general
or commodity-based standards, as the basis for consideration of
Vendor Performance Corrective Measures (see also Sector Programs,
below).
In investigating whether corrective measures should be applied,
the Sector or Region will:
- ensure a full review of contract file(s), and the record of
the vendor in general; - notify all other Sectors or Regions and consult those which
have a particular interest in the matter; - consult clients which have a particular interest in the matter,
either as major purchasers of the vendor's product or as the
initiator of the complaint; and, - consult Legal Services, as to what evidence should be sought,
and what process should be used, to ensure fairness in light
of all the circumstances.
All components of an investigation and subsequent decision must
be fully documented, with the disposition being noted on the vendor
file in VIM.
Decision on Application of Vendor Performance Corrective Measures
A decision to apply Vendor Performance Corrective Measures (VPCM)
should be made where, on the basis of the vendor's performance
history, a prudent person acting on their own behalf would not
continue to deal with the vendor, or would not continue to deal
with the vendor without special conditions being attached.
A VPCM may take one of the following forms:
Debarment is the refusal by PWGSC to do business with
a vendor for a specified period, which may be expressed in terms
of a number of relevant procurements. Debarment would be used
for problems of a criminal nature, or where there is poor performance
which demonstrates a lack of good faith effort on the part of
the contractor to perform its various obligations. Since the
vendor has demonstrated a lack of good faith effort, it would
not be realistic to allow re-instatement on the satisfaction
of some requirement. Debarment would not generally be for a period
exceeding 3 years.
Suspension is the refusal by PWGSC to do business
with a vendor pending the outcome of an investigation into serious
or multiple instances of poor performance, or until the vendor
meets conditions set for re-instatement, such as remedying a
problem. Suspension would be imposed where doing business with
a vendor before an investigation is complete or before the vendor
has made changes would pose too great a risk that the vendor
would not carry out its obligations under future contracts.
Conditions can be imposed on vendors seeking to do
business with PWGSC. Conditions would be used in the case of
problems which could be prevented by a less onerous means than
a refusal to do business. Conditions would not generally be applied
for a period exceeding 3 years.
When investigating to determine if a VPCM should be imposed, consideration
must be given to the extent to which the VPCM will apply to the
various elements of a vendor's organization and to related organizations.
As the objective of this Policy is to prevent problems with vendors
from arising, the breadth of the VPCM will depend on the nature
and source of the poor performance for which the VPCM is being
considered.
Note: Examples: (1) Where the source of the poor performance
is dishonesty within the highest management of a vendor, then
imposing the VPCM on the vendor as a whole would likely be appropriate.
(2) Where the poor performance relates to problems with product
quality in one of the vendor's several product lines, where there
is no element of wilful failure to produce a suitable product,
this would likely be more appropriately dealt with by a VPCM
limited to the product line with which problems have been experienced.
(3) Where the poor performance was the result of safety problems
that were the result of policy set for the subsidiary vendor
by its parent corporation, it may be appropriate, provided proper
notice has been given, to apply a VPCM to the parent corporation
and all its subsidiaries with which similar safety issues might
arise. These examples are provided solely for illustration. Actual
cases will depend on their particular situations.
When, on the basis of the investigation, a Director General believes
that one of these measures should be applied, the Sector or Region
will notify the vendor of the Vendor Performance Corrective Measure
proposed together with the reasons for it, and give the vendor
a reasonable opportunity (including a reasonable period of time)
to respond.
What constitutes a 'reasonable opportunity' will vary with the
circumstances, and could range from an exchange of correspondence,
to formal consultations. A vendor will be given access to documents
relevant to its performance on the same basis as these would be
available in a contract dispute. In determining whether to provide
a particular document to the vendor, it should be borne in mind
that if absence of that document means the vendor is not in a position
to address the allegations made against it, this may allow successful
court challenge of a subsequent decision to impose a VPCM.
The notice to the Vendor will include, in addition to the type
of Measure:
- a list of the instances of poor performance which form the
basis for the proposed VPCM sufficient to identify them; - the reasons why the vendor's performance record merits the
proposed VPCM; - whether the VPCM will be across-the-board (that is, affecting
all aspects of the vendor's operations) or limited by product,
division, geographic division, type of contract (such as urgent
delivery requirement) or some other factor; - when and how the VPCM will end;
- whether the vendor will be subject to a formal period of probation
following the end of the VPCM, and who will determine if the
probation has been breached; - in the case of a VPCM that can end when the vendor satisfies
conditions, who will decide if the conditions have been satisfied.
If, after considering the vendor's response, the Director General
still believes the proposed VPCM, or some less severe Measure,
should be applied, that Measure will be applied. If it is intended,
after reviewing the vendor's response, to apply a more severe Measure
than originally proposed, the vendor must be notified, and given
a reasonable opportunity to respond to that change.
The decision to apply a VPCM will include, in addition to the
type of Measure:
- the procurements for which the vendor is ineligible to bid
or contract, that is, whether the VPCM will be across-the-board
(affecting all aspects of the vendor's operations), or limited
by product, division, geographic division, type of contract (such
as urgent delivery requirement) or some other factor; - when and how the VPCM will end;
- whether the vendor will be subject to a formal period of probation
following the end of the VPCM, and who will determine if the
probation has been breached; - in the case of a VPCM that can end when the vendor satisfies
conditions, who will decide if the conditions have been satisfied.
Review
Except where there is an approved Sector Program (see below),
the ADM/SOSB will review all decisions to apply a VPCM, and any
additional representations made by the vendor, and may decide to
vary the decision. If the ADM/SOSB intends to apply a more severe
VPCM, the vendor must be notified, and given a reasonable opportunity
to respond to that change.
Enforcement
When a VPCM is applied, the ADM/SOSB (or appropriate Director
General, where there is a Sector Program) will inform the vendor
of the decision. All Sectors and Regions, and clients which have
a particular interest in the matter, will also be informed.
The fact that a vendor is subject to a measure under the VPP will
be published on the OBS and in the GBO, together with the particulars
of the measure, but not the reasons. This notice will continue
to be published while the measure is in effect.
A debarment or suspension renders a vendor ineligible to bid on
or receive contracts related to certain types of procurements.
Where a vendor is subject to Conditions and the vendor does not
meet those conditions for a particular procurement, the vendor
is ineligible.
A debarred or suspended vendor will be removed from relevant source
lists, automated vendor rotation systems, and standing offers.
Bids received from vendors debarred or suspended from doing any
business with PWGSC will not be considered for evaluation. Bids
from vendors who are debarred or suspended in part will not be
considered for evaluation, if the bids pertain to procurements
from which the vendor has been debarred or suspended. Where a vendor
is subject to special conditions, any bid from that vendor which
does not conform to the conditions will not be considered for evaluation.
A VPCM does not affect existing contracts, though it does affect
amendments. If a current VPCM imposed on a vendor would have been
relevant to the award of the contract had the VPCM been in effect
at the time, or is relevant to the subject matter of the amendment,
then the amendment requires the approval of the relevant Director
General as an exception to the VPCM.
Information on a VPCM will only be entered into VIM by SPMS, which
will be responsible for maintenance of the information (including
removal of notice where a Vendor Performance Corrective Measure
has ended). This information will be accessible to anyone who has
access to ABE.
When a Measure ends, the Sector or Region that initiated it is
responsible for promptly notifying the vendor.
Role of the Contracting Officer
The contracting officer must ascertain whether a bidder, or a
vendor being considered for a sole source contract, is subject
to any VPCM, and for determining if that Measure affects the procurement
the contracting officer is working on.
When accessing the VIM file on a vendor, the contracting officer
will have a clear notice of any VPCM. ABE will not interfere with
the issuing of a contract to a vendor subject to a VPCM. As the
Vendor Performance Corrective Measure details area is limited to
about 250 characters, additional information may be contained on
Vendor Performance Corrective Measure type comments, which should
also be consulted.
Suspensions in Cases of Urgency
Where a problem with a vendor is particularly serious (e.g., involving
negligence or wilful misconduct, or carrying health or safety implications),
the ADM/SOSB may apply an immediate suspension on the advice of
a Director General, prior to a complete investigation. The suspension
will remain in effect until measures have been taken to remove
any unacceptable risk to the Crown or public. The vendor will immediately
be notified, and given the same opportunity to respond as in a
normal Vendor Performance Corrective Measures action.
Exceptions
In cases of emergency, or great urgency in a procurement, an exception
may be made to a VPCM, by a Director General. In such cases, special
care must be taken to protect the Crown. Where an exception is
made, the reason must be recorded on the contract file and the
vendor file. The fact that a vendor subject to a VPCM is low bidder
is not enough reason to make an exception.
Sector Programs
A Sector or Region may establish a Program for evaluating vendor
performance and determining appropriate Vendor Performance Corrective
Measures to apply within that Sector or Region. Where such a program
has the approval of the ADM/SOSB, it is not necessary that the
ADM/SOSB review each case. The decision can be made by the persons
delegated that authority under the Program.
The performance standards and the Vendor Performance Corrective
Measures to be applied must be established on a commodity basis,
and other areas of the department which may be affected by the
proposed Program must be consulted. This is to prevent differing
standards for the same commodities, in different Sectors or Regions.
Once established, a Program is administered by the Sector or Region,
in accordance with the provisions of this Policy.
Annex A
BACKGROUNDER
Vendor Performance Policy and Clause
On September 1, 1996, Public Works and Government Services Canada
(PWGSC) will implement the Vendor Performance Policy and the Vendor
Performance Clause. In doing so, PWGSC's objective is to improve
service to federal departments by establishing an improved system
for preventing problems with suppliers that have poor records of
performance.
The Vendor Performance Policy establishes a framework which allows
PWGSC to assess supplier performance and, where appropriate, to
apply measures to suppliers that fail to meet their contractual
obligations. These measures can take the form of debarment or suspension
from doing business with PWGSC, or conditions on transacting future
business with PWGSC.
The Vendor Performance Clause, which will be incorporated in all
competitive Requests for Proposals issued by PWGSC's Supply Operations
Service, details situations (related to past supplier performance
or criminal activity) in which PWGSC will have the authority to
reject suppliers' bids and proposals.
The policy and clause update previous policy, bringing it into
line with today's procurement environment, which includes more
open bidding practices and new trade agreements. In addition, they
supplement previously available remedies for dealing with suppliers
that fail to fulfil their contractual obligations. For example,
PWGSC has always been able to pursue contractual remedies, up to
and including contract termination, and it will continue to take
such action, based on the specific circumstances of a particular
contract. What the policy and clause do is prevent future problems
in dealing with suppliers with a history of poor performance.
The policy and clause, which were developed in consultation with
major Canadian industry associations, will be applied by the headquarters
and regional elements of PWGSC's Supply Operations Service, which
are responsible for the procurement of goods, and most services.
The policy and clause will complement the Contractor Performance
Evaluation System already used by PWGSC's real property contracting
arm for construction and architectural and engineering services.
The policy will not apply to the three Special Operating Agencies
within the Department: Consulting and Audit Canada; Translation
Bureau; Canada Communication Group.
The application of the measures available under the policy or
the clause will be exercised in a fair and reasonable manner, and
will relate only to the contractual performance of the supplier.
Under the Vendor Performance Policy, action can only be taken where
a contractor has failed to fulfil its contractual obligations.
As such, the policy provides an objective standard for assessment.
It should be emphasized that a recommendation to apply any measures
would not go forward until there had been a thorough investigation
and the supplier had had a reasonable opportunity, including a
reasonable period of time, to respond to the alleged problems with
the local PWGSC office responsible for the specific contract.
Recognizing the seriousness of a decision to apply measures, the
Assistant Deputy Minister, Supply Operations Service Branch, will
review all decisions to apply a measure. Placing this responsibility
at a high level will help ensure consistent application of the
policy and clause within the department.
When a measure is applied to a supplier, the supplier will be
informed, in writing, of the reasons for and consequences of this
action. This notice will include the duration of the measure applied
and any conditions to be met for reinstatement.
The Vendor Performance Policy and Vendor Performance Clause only
apply to suppliers doing business with PWGSC's Supply Operations
Service, not to suppliers doing business directly with other departments
and agencies. Other departments and agencies, however, will have
access to PWGSC's supplier performance data.
The effectiveness of the Vendor Performance Policy/Clause will
depend on input from departments and agencies. These organizations
can help make the policy/clause an effective tool for dealing with
unsatisfactory suppliers by immediately alerting PWGSC when they
are having problems with suppliers. The more thorough and accurate
the information provided, the more likely it is that PWGSC can
take effective action under the Vendor Performance Policy/Clause.
Departments and agencies that are significant users of a supplier's
products or services will be contacted as part of the investigation
process before any measures are applied. They will also be informed
of any measures applied to a supplier. Depending on the measure
applied, departments and agencies in general will be kept informed
of decisions to apply measures under the policy or the clause.
A department or agency that proposes to sole source a requirement
to a vendor against whom a measure has been applied, will be informed
of the measure applied and the reason for its application. As well,
PWGSC contracting staff will work with the department or agency
to provide an alternative or to seek an exception to allow the
requirement to go ahead, with proper precautions taken to safeguard
the Crown's interests.
For more information, contact Susan Sheehan, Supply Policy Directorate,
Public Works and Government Services Canada, 819-956-0867.
Annex B
VENDOR PERFORMANCE CLAUSE
Use of Vendor Performance Clause
Authority to Reject a Bid
Authority to reject a bid under the Vendor Performance Clause
(A9100T) rests with the officer responsible for evaluating bids;
except that in the case of bids being considered for rejection
pursuant to 1(d)(2), 1(d)(3) or 1(d)(4), the authority to reject
a bid rests with the appropriate Director General.
Notice to the Bidder
Notice of intent to reject a bid pursuant to this Clause will
be given by telephone, and followed by confirming facsimile or
letter, except that a bidder excluded under 1(b) will not be notified.
The call must be made to an employee of the bidder, with clear
and directly related management responsibilities. Notice is considered
to have been received by the rejected supplier at the time of the
telephone call. The person making the call must note on the file
the date and time of the call, and the person spoken to.
Contents of Notice:
The notice must set out the facts and the reasons for the decision
to reject the bid. For example: Where a supplier with a record
of persistent lateness, but as yet not subject to a VPCM, is excluded
from a procurement where timeliness is critical, the notice would
cite the contracts on which the supplier was late (facts) and state
that this record shows an unacceptable risk in light of the critical
nature of the time requirement in the present procurement (reason).
Where a bid is being rejected under 1(c), it is sufficient to
cite the VPCM.
Review
A bidder, except a bidder excluded under 1(b), may have the decision
to reject reviewed by the Assistant Deputy Minister, Supply Operations
Service Branch. It is entirely in the ADM/SOSB's discretion, whether
the bid evaluation and contract award process will be held up,
to give time to review the decision.
A review by the ADM/SOSB will result in an investigation, and
a decision. Such a decision can have effect beyond the particular
procurement from which the supplier has been rejected. When the
decision has been made, the bidder will be informed of the results,
in writing.
A9100T Vendor Performance
Remarks: This clause is to be used in all bid
solicitations.
1. Canada may reject a bid where any of the following circumstances
is present:
- the Bidder, or any employee or subcontractor included as part
of the bid, has been convicted under section 121 ("Frauds on
the government" & "Contractor subscribing to election fund"),
124 ("Selling or purchasing office"), or 418 ("Selling defective
stores to Her Majesty") of the Criminal Code; orAuthority: evaluator - the Bidder is subject to a Vendor Performance Corrective Measure,
under the Vendor Performance Policy, which renders the Bidder
ineligible to bid on the Work;Authority: evaluator - an employee or subcontractor included as part of the bid, is
subject to a Vendor Performance Corrective Measure, under the
Vendor Performance Policy, which would render that employee or
subcontractor ineligible to bid on the Work, or the portion of
the Work the employee or subcontractor is to perform;Authority: evaluator - with respect to current or prior transactions with the Government
of Canada- the Bidder is bankrupt or where, for whatever reason, its
activities are rendered inoperable for an extended period;Authority: evaluator - evidence, satisfactory to Canada, of fraud, bribery, fraudulent
misrepresentation or failure to comply with any law protecting
individuals against any manner of discrimination, has been
received with respect to the Bidder, any of its employees
or any subcontractor included as part of its bid;Authority: Director General - Canada has exercised its contractual remedies of suspension
or termination for default with respect to a Contract with
the Bidder, any of its employees or any subcontractor included
as part of its bid; orAuthority: Director General - Canada determines that the Bidder's performance on other
contracts, including the efficiency and workmanship as well
as the extent to which the Bidder executed the work in accordance
with contractual terms and conditions, is sufficiently poor
to jeopardize the successful completion of the requirement
being bid on.Authority: Director General
- the Bidder is bankrupt or where, for whatever reason, its
2. Where Canada intends to reject a bid pursuant to a provision
of paragraph 1, other than 1(b), the Contracting Authority will
so inform the Bidder and provide the Bidder ten (10) days within
which to make representations, prior to making a final decision
on the bid rejection.
A9100T Vendor Performance
Remarks: This clause is to be used in all bid
solicitations.
1. Canada may reject a bid where any of the following circumstances
is present:
- the Bidder, or any employee or subcontractor included as part
of the bid, has been convicted under section 121 ("Frauds on
the government" & "Contractor subscribing to election fund"),
124 ("Selling or purchasing office"), or 418 ("Selling defective
stores to Her Majesty") of the Criminal Code; or - the Bidder is subject to a Vendor Performance Corrective Measure,
under the Vendor Performance Policy, which renders the Bidder
ineligible to bid on the Work; - an employee or subcontractor included as part of the bid, is
subject to a Vendor Performance Corrective Measure, under the
Vendor Performance Policy, which would render that employee or
subcontractor ineligible to bid on the Work, or the portion of
the Work the employee or subcontractor is to perform; - with respect to current or prior transactions with the Government
of Canada- the Bidder is bankrupt or where, for whatever reason, its
activities are rendered inoperable for an extended period; - evidence, satisfactory to Canada, of fraud, bribery, fraudulent
misrepresentation or failure to comply with any law protecting
individuals against any manner of discrimination, has been
received with respect to the Bidder, any of its employees
or any subcontractor included as part of its bid; - Canada has exercised its contractual remedies of suspension
or termination for default with respect to a Contract with
the Bidder, any of its employees or any subcontractor included
as part of its bid; or - Canada determines that the Bidder's performance on other
contracts, including the efficiency and workmanship as well
as the extent to which the Bidder executed the work in accordance
with contractual terms and conditions, is sufficiently poor
to jeopardize the successful completion of the requirement
being bid on.
- the Bidder is bankrupt or where, for whatever reason, its
2. Where Canada intends to reject a bid pursuant to a provision
of paragraph 1, other than 1(b), the Contracting Authority will
so inform the Bidder and provide the Bidder ten (10) days within
which to make representations, prior to making a final decision
on the bid rejection.
Annex C
VENDOR PERFORMANCE POLICY VENDOR PERFORMANCE CLAUSE QUESTIONS
AND ANSWERS
Q.1 - Q.17 The Vendor Performance
Policy and Clause
Q.18 - Q.33 Application of Measures
Q.35 - Q.37 Non-application of
policy/clause to procurement by other departments
Q.38 - Q.39 Consistency with Treasury
Board policy and trade agreements
Q.40 Informing industry of policy/clause
implementation
Q.41 - Q.43 Role of other departments
Q.45 - Q.52 Types of measures available
Q.53 - Q.59 Documenting problems
Q.60 Not a performance measurement
system
Q.61 Relationship to Federal Contactors'
Program and international trade sanctions
THE VENDOR PERFORMANCE POLICY AND CLAUSE
Q.1 What is the Vendor Performance Policy?
A.1 The Vendor Performance Policy is a policy aimed at making
a major improvement in PWGSC's service to departments, by providing
an effective way to deal with suppliers that have a poor performance
record. It does this by setting out a framework which will allow
PWGSC to assess supplier performance and, where appropriate, to
apply measures to suppliers that have poor performance records.
These measures can take the form of debarment or suspension from
doing business with PWGSC, or conditions on transacting business
with PWGSC.
Q.2 Why was such a policy not already in place in SOS?
A.2 A policy does exist [Supply Manual 11.220 (23/06/94)] for
removing suppliers from source lists, but it required updating
to function effectively in today's environment of open bidding
and trade agreements.The lack of an automated system for tracking
and documenting problems with vendors had prevented establishment
of a more comprehensive policy.
With PWGSC's recent roll-out of the Automated Buyer Environment,
the capability is now available to systematically document and
track problems with suppliers required for an effective vendor
performance policy.
Q.3 How will the Automated Buyer Environment work with
the Vendor Performance Policy?
A.3 The Automated Buyer Environment (ABE) includes a Vendor Information
Management system (VIM) -- a database of vendor information accessible
by PWGSC procurement officers. VIM will allow directors of procurement
to record comments about vendors and have this information shared
across PWGSC procurement groups. Senior supply portfolio management,
with advice from Legal Services, will use this documentation in
determining whether measures available under the Vendor Performance
Policy should be applied to a supplier.
Q.4 Establishment of such a policy was recommended by
the Auditor General in 1991 -- why has it taken until now to
implement the recommendation?
A.4 The lack of an automated system for tracking and documenting
problems with vendors had prevented establishment of a more comprehensive
policy, which would accomplish what the Auditor General was recommending.
With PWGSC's recent roll-out of the Automated Buyer Environment,
the capability is now available to systematically document and
track problems with suppliers required for an effective vendor
performance policy.
The Automated Buyer Environment (ABE) includes a Vendor Information
Management system (VIM) -- a database of vendor information accessible
by PWGSC procurement officers. VIM will allow directors of procurement
to record comments about vendors and have this information shared
across PWGSC procurement groups. Senior supply portfolio management,
with advice from Legal Services, will use this documentation in
determining whether measures available under the Vendor Performance
Policy should be applied to a supplier.
Q.5 Can suppliers have access to the information kept
on file about them by PWGSC?
A.5 Yes. This information will routinely be made available to
vendors when they make a request.
Q.6 Will suppliers be informed before comments about their
alleged poor performance are entered in VIM?
A.6 Yes, a supplier will be informed of each instance of poor
performance. The supplier will have 10 days to respond before the
notation appears on VIM. The supplier's response will be taken
into consideration before a decision is made on whether to enter
the information
Similarly, during the transition to the new system, a supplier
will be informed of any comments entered in VIM about problems
with that supplier's performance that occurred before implementation
of the updated policy.
A performance notation will generally remain on VIM for seven years. After that time, a vendor may request that it be removed.
Q.7 Will a decision to apply measures against a supplier
only consider problems noted in VIM?
A.7 Yes. During the transition to the new system comments about
suppliers' past performance will be transferred from existing files
to VIM. This information and comments about suppliers' performance
entered in VIM after the updated policy's implementation will both
be taken into account in future dealings with these suppliers.
A supplier will be informed of each instance of poor performance.
The supplier will have 10 days to respond before the notation appears
on VIM. The supplier's response will be taken into consideration
before a decision is made on whether to enter the information.
Similarly, during the transition to the new system, a supplier
will be informed of any comments entered in VIM about problems
with that supplier's performance that occurred before implementation
of the updated policy.
Q.8 What is the Vendor Performance Clause?
A.8 The Vendor Performance Clause details situations related to
a supplier's past performance (for example, a previous contract's
termination for default) or criminal activity (for example, fraud
and bribery) in which PWGSC will have the authority to reject suppliers'
bids and proposals.
The clause, which will be incorporated in all Request for Proposals
issued by PWGSC's Supply Operations Service (SOS), is closely modelled
on a clause used by the construction contracting arm of PWGSC.
The process for applying measures under the clause is the same
as the process under the Vendor Performance Policy.
Q.9 What is the distinction between the clause and the
policy?
A.9 The distinction between the clause and the policy is that
the clause is incorporated directly in RFPs. It thereby serves
notice with every RFP issued that PWGSC expects suppliers to perform
their contractual obligations, and that PWGSC will, as appropriate,
take measures to deal with suppliers that have poor records of
performance.
Under the clause, a vendor's bid may be rejected where the vendor's
performance on other contracts, including the efficiency and workmanship
as well as the extent to which the Bidder executed the work in
accordance with contractual terms and conditions is, sufficiently
poor to jeopardize the successful completion of the requirement
being bid on.
The policy sets out a framework which will allow PWGSC to assess
supplier performance and, where appropriate, to apply measures
to suppliers that have a poor performance record. These measures
can take the form of debarment or suspension from doing business
with PWGSC, or conditions on transacting business with PWGSC.
Q.10 Do the policy and clause represent the federal government's
new "get tough" approach to dealing with suppliers?
A.10 We have always been able to pursue contractual remedies,
up to and including contract termination, when suppliers fail to
perform their contractual obligations, and we will continue to
take such action, as appropriate, based on the specific circumstances
of a particular contract. What the Vendor Performance Policy and
the Vendor Performance Clause do is update previous policy, bringing
it into line with today's procurement environment, which includes
more open bidding practices and new trade agreements.
Q.11 When will the policy and clause be implemented?
A.11 September 1, 1996.
Q.12 Will this new policy and clause be used by all parts
of PWGSC?
A.12 No. The policy and clause will be applied by the headquarters
and regional elements of the Supply Operations Service. It will
complement the Contractor Performance Evaluation System already
used by PWGSC's real property contracting arm for construction
and architectural and engineering services. The policy will not
apply to the three Special Operating Agencies within the Department:
Consulting and Audit Canada; Translation Bureau; and Canada Communication
Group.
Q.13 How do the new policy and clause relate to the existing
performance evaluation system (Contractor Performance Evaluation
System) in use for construction and architectural and engineering
services?
A.13 The evaluation system in place for construction and architectural
and engineering services -- the Contractor Performance Evaluation
System (CPES) -- will remain in place. CPES is an illustration
of the type of commodity-specific performance evaluation program
provided for under the VPP. The VPP is a general framework for
making decisions on vendor performance, while CPES is a fully elaborated
performance evaluation system, complete with performance rating
guidelines, embodied in the Contractor Performance Evaluation Report
Form (CPERF) and linked to specific measures. CPES is an example
of what is expected to be other such commodity-specific performance
evaluation systems that can be developed under the general aegis
of the VPP.
Q.14 Are the policy and clause a substitute for enforcement
of remedies available under a contract?
A.14 No. The policy and clause supplement currently available
remedies for dealing with suppliers that fail to fulfil their contractual
obligations. We have always been able to pursue contractual remedies,
up to and including contract termination, when suppliers fail to
perform their contractual obligations, and we will continue to
take such action, as appropriate, based on the specific circumstances
of a particular contract. What the Vendor Performance Policy and
the Vendor Performance Clause do is prevent future problems in
dealing with suppliers with a history of poor performance.
Q.15 Will PWGSC apply measures in relation to instances
of poor performance by suppliers that took place prior to implementation
of the policy/clause?
A.15 PWGSC has always had the ability to take measures to ensure
that contractors will perform their obligations. The Vendor Performance
Policy and the Vendor Performance Clause update previous policy,
bringing it into line with today's procurement environment, which
includes more open bidding practices and new trade agreements.
In applying the updated policy, PWGSC will continue to take into
account past performance of suppliers.
Q.16 Does PWGSC have any immediate plans for applying
measures against a particular supplier?
A.16 No, however, PWGSC will continue to take into account the
complete performance record of suppliers, and it will use this
information in making decisions regarding suppliers that fail to
perform their contractual obligations.
Q.17 How will the department deal with companies which
change their name to avoid being subject to corrective measures?
A.17 It is possible that by changing its name a company could
avoid the application of measures, temporarily. However, the industry
knowledge of PWGSC commodity specialists is such that this would
be infrequent. In addition, the policy's provision that individual
employees of a company may be subject to measures will minimize
the possibility.
APPLICATION OF MEASURES
Q.18 What are the steps that would be
taken leading to the application of measures under the policy
or clause?
A.18 The application of measures available under the Vendor Performance
Policy and the Vendor Performance Clause can be initiated in two
ways:
1. Where a supplier has a history of poor performance, a contracting
officer seeking to prevent future problems with that supplier may
recommend to her or his Director General or Regional Director General
that measures available under the policy or the clause be applied
to that supplier.
2. PWGSC procurement Sectors/Regions may set standards for the
Sector/Region or for particular product areas so a type of problem
or a certain number of problems or a rating falling below a set
value will trigger consideration for applying measures available
under the Vendor Performance Policy or the Vendor Performance Clause.
In investigating whether a supplier should be subject to the measures
available under the policy and the clause, the Sector or Region
will:
- ensure a full review of contract file(s), the record of the
supplier in general; - notify all other Sectors or Regions and consult those which
have a particular interest in the matter; and, - consult other departments which have a particular interest
in the matter, either as major purchasers of the supplier's product
or as the initiator of a complaint.
As well, PWGSC Sectors and Regions will consult the department's
Legal Services, as to what evidence should be sought and what process
should be used, to ensure fairness in light of all the circumstances.
If an investigation indicates that measures should be applied,
the supplier will be notified, and given a reasonable time and
opportunity to respond before any measures are applied.
Under the Vendor Performance Policy, what constitutes a reasonable
time and opportunity for a supplier to respond will depend on the
allegations, the evidence, the urgency of the situation and the
severity of the proposed measure to be applied.
In the case of the Vendor Performance Clause, a bidder will have
10 days within which to make representations, prior to PWGSC's
making a final decision on a bid rejection. While the bid evaluation
process will continue, no contract will be awarded until the complaint
process has been completed.
Thus, both the policy and the clause provide an opportunity for
a supplier to respond to the allegations and to have the process
stopped, where that is appropriate.
The steps taken in an investigation will be documented on the
vendor file in VIM as comments.
Following the investigation, the Director General or RDG then
makes the decision whether or not to the apply the measures available
under the policy or the clause, based on the report of the investigation,
and a consideration of what measure would best protect the government
from further problems with the supplier.
The ADM/SOSB will review all decisions to apply a measure, and
may decide to vary the decision. If the ADM/SOSB intends to apply
a more severe measure, the vendor will be notified, and given a
reasonable opportunity to respond to that change.
Q.19 How will the supplier be informed of the application
of any measures?
A.19 When a measure is applied to a supplier, the supplier will
be informed, in writing, of the reasons for and consequences of
this action. This notice will include the duration of the measure
applied and any conditions to be met for reinstatement.
Q.20 Why does the Vendor Performance Policy/Clause place
authority for applying measures to suppliers at the DG/RDG level?
A.20 This authority is placed with the DG/RDG because these are
the officials that have access to all the pertinent information
from the contacting officers and the vendor.
In addition, placing the authority at a high level recognizes
the seriousness of a decision to apply the measures available under
the Vendor Performance Policy/Clause.
The ADM/SOSB will review all decisions to apply a measure, and
may decide to vary the decision. If the ADM/SOSB intends to apply
a more severe measure, the vendor will be notified, and given a
reasonable opportunity to respond to that change. The ADM/SOSB's
review function will help ensure consistent application of the
policy/clause across the Supply Portfolio.
Q.21 Doesn't this place an inordinate amount of power
in the hands of senior bureaucrats, thereby creating a potential
for abuse?
A.21 The discretion to apply the measures available under the
policy or the clause will be exercised in a fair and reasonable
manner, and will relate only to the contractual performance of
the supplier. Under the Vendor Performance Policy, action can only
be taken where a contractor has failed to fulfil its contractual
obligations. As such, the policy provides an objective standard
for assessment.
It should be emphasized that a recommendation to apply any measures
will not go forward until there has been a thorough investigation
and the supplier has had a reasonable opportunity, including a
reasonable period of time, to respond to the alleged problems.
Q.22 Will it be possible for the Vendor Performance Policy
or the Vendor Performance Clause to be used to "punish" companies
that are not in political favour?
A.22 Absolutely not. The discretion to apply the measures available
under the policy and the clause will be exercised in a fair and
reasonable manner, and will relate only to the contractual performance
of the supplier. Under the Vendor Performance Policy, action can
only be taken where a contractor has failed to fulfil its contractual
obligations. As such, the policy provides an objective standard
for assessment.
It should be emphasized that a recommendation to apply any measures
will not go forward until there has been a thorough investigation,
and the supplier has had a reasonable opportunity, including a
reasonable period of time, to respond to the alleged problems.
Q.23 What checks are in place and what recourse is open
to suppliers to appeal the application of measures under the
policy and the rejection of a bid under the clause?
A.23 Under the policy, the ADM/SOSB will review all decisions
to apply a measure, and may decide to vary the decision. If the
ADM/SOSB intends to apply a more severe measure, the vendor will
be notified, and given a reasonable opportunity to respond to that
change. The ADM/SOSB's review function will help ensure consistent
application of the policy/clause across the Supply Portfolio.
Under the clause, a vendor can have the ADM/SOSB review the decision
to reject the vendor's bid. The ADM/SOSB may require that the bid
evaluation and contract award process be adjusted to allow time
for the review. When the review is complete, the bidder will be
informed of the results, in writing.
Q.24 Why does VPP not provide an independent third-party,
decision making or appeal process for suppliers?
A.24 VPP does not provide for an independent third-party, decision
making or appeal process for suppliers because the responsibility
to determine which suppliers are reliable is fundamental to the
PWGSC Minister's role as professional purchaser for the government.
Delegating this function to an independent third-party would, therefore,
be inconsistent with the responsibilities assigned to the Minister
by Parliament and delegated, in turn, by the Minister to procurement
officials in PWGSC.
Q.25 Might there ever be cases where the measures available
under the Vendor Performance Policy/Clause would be applied without
the supplier having an opportunity to respond to the allegations?
A.25 Where a problem is particularly serious and involves negligence
or wilful misconduct or carries health or safety implications,
the Assistant Deputy Minister, Supply Operations Services Branch,
may impose an immediate suspension on the advice of a Director
General or Regional Director General, prior to a complete investigation.
The suspension would remain in effect until steps had been taken
to remove any unacceptable risk to the Crown.
In such a case, the supplier would be notified immediately and
given the same opportunity to respond that would apply in the course
of the normal application of measures under the Vendor Performance
Policy.
Q.26 How will the application of measures be enforced?
A.26 Bids received from suppliers debarred or suspended from doing
business with PWGSC will not be considered for evaluation. Where
a supplier is subject to special conditions, any bid from that
supplier which does not conform to the conditions will not be considered
for evaluation.
As well, the necessary steps will be taken to remove a debarred
or suspended supplier from relevant standing offers and source
lists.
Q.27 How will procurement officers know when measures
available under the Vendor Performance Policy/Clause have been
applied to a supplier?
A.27 When a procurement officer accesses a vendor's file in the
Vendor Information Management system, VIM will display a clear
notice when a measure has been applied to that vendor. The officer
can then query VIM for details of the measure. VIM will not enforce
application of the measure. The contracting officer is responsible
for enforcing the application of the measure.
It will be possible to monitor the system for instances where
a supplier has received a contract despite being subject to a measure
under the policy. The comment feature of the system can be used
to record the reason for making any exception. These can be monitored
and then queried in the same way as is done with the Federal Contractor's
Program (for employment equity).
Q.28 Who is responsible for entering information on the
application of any of the measures to a supplier?
A.28 Information about the application of the measures available
under the policy and the clause will only be entered into VIM by
a person from the Supply Systems Directorate specifically designated
for this task. This information will be accessible to anyone who
has access to ABE. The Supply Systems Directorate will be responsible
for maintenance of the information, including removal of the notice
when the time period for application of the measure has ended.
Other persons will not be able to enter or modify the information.
This restriction is necessary given the serious consequences of
the application of the policy measures and the necessity to avoid
errors in the recording of the information.
Q.29 Will suppliers subject to measures under VPP be eligible
to be included in another vendor's bid as a subcontractor?
A.29 Under the policy/clause the Crown may reject a bid when a
subcontractor or employee, included as part of the bid, is subject
to measures under VPP.
Q.30 How will suppliers know which vendors are subject
to measures under VPP?
A.30 PWGSC will inform other vendors of which vendors are subject
to measures by publishing the names of such vendors on the Open
Bidding Service and in the Government Business Opportunities bulletin,
together with the particulars of the measure, but not the reasons.
The notice will continue to be published while the measure is in
effect. This will allow vendors to avoid including vendors subject
to measures as subcontractors or employees in bids and proposals.
Q.31 Is it legal to publicize the names of vendors in
this way?
A.31 Yes. This function is in keeping with PWGSC's responsibilities,
assigned to it by Parliament, as the main procurement arm of the
federal government. Publicizing the names of vendors in this way
will allow vendors to avoid including vendors subject to measures
as subcontractors or employees in bids and proposals. As such,
the notification will help reliable suppliers to safeguard the
eligibility of their bids.
Q.32 Will PWGSC notify a supplier that the time period
for the application of a measure has ended?
A.32 Yes. When the time period for the application of a measure
ends, the Sector or Region that initiated application of the measure
will promptly notify the supplier.
Q.33 Can VPP be used to apply measures to vendors that
break the law?
A.33 The existing Standard Terms and Conditions used in contracts
issued by SOS require conformance with applicable laws by prime
contractors and their subcontractors.
VPP will support the Standard Terms and Conditions by permitting
PWGSC to record information in VIM about problems with contractors
or subcontractors that contravene applicable laws, whether it be
labour, criminal or others forms of law. Where the record is sufficiently
poor, e.g. fraudulent invoicing, discrimination, disposing of toxic
chemicals from a jobsite into a water supply, the vendor could
be subject to measures under VPP.
The severity with which PWGSC would deal with a contravention
of law by a vendor under contract with SOS would depend on the
circumstances of a case. Where the severity warranted, e.g. refusal
of a prime contractor to take any action in the face of a firing
of a sub subcontractor by a subcontractor for discriminatory reasons,
refusal of a contractor to deal with an assault by its employee
on a member of the public on the jobsite, theft of government property
(laptop, PC) by a contractor, etc., contractual measures up to
and including termination could be used.
In addition to contractual remedies and depending on the circumstances
of the case and the vendor's overall record, PWGSC could apply
measures under VPP, such as debarment from future contracts. Under
the Vendor Performance Clause, a vendor could be excluded from
bidding on particular contract, for such contraventions of the
law as fraud, bribery, or failure to comply with any law protecting
individuals against any manner of discrimination.
In less severe cases, the action taken could be the addition of
comments in VIM about problems with vendors that contravene applicable
laws. If there is a recurrence of the problems, such comments will
be taken into account in deciding if more severe measures should
be taken.
COST TO TAXPAYERS
Q.34 What are the costs to taxpayers
for PWGSC's administering the Vendor Performance Policy/Clause?
A.34 There will be no additional allocation of resources to perform
the tasks necessary for the Vendor Performance Policy/Clause, as
the anticipated increase in workload will be minimal.
In the longer term, the policy and clause should save the government
money by preventing future problems with suppliers that have poor
performance records, thus ensuring that taxpayers receive what
they have paid for. The policy and clause may even eventually reduce
contract administration costs associated with addressing problems
caused by poor performance by suppliers
NON-APPLICATION OF POLICY/CLAUSE TO PROCUREMENT BY OTHER DEPARTMENTS
Q.35 Does the Vendor Performance Policy/Clause
apply to procurement done by other departments and agencies?
A.35 No. The Vendor Performance Policy/Clause applies only to
suppliers doing business with PWGSC's Supply Operations Service,
not to suppliers doing business directly with other departments
and agencies. This means that it applies to approximately 60 percent
of federal procurement. Other departments will have access to PWGSC's
supplier performance data.
Q.36 Is the government being inconsistent, and putting
at risk taxpayers' money, if other departments can continue to
do business with suppliers with whom PWGSC has taken measures
to stop or limit doing business because they have poor performance
records?
A.36 No. PWGSC is leading in this area. We expect that once the
policy and clause are implemented, other federal department and
agencies may consider taking similar action with regards to their
own procurement. In addition, we are making this information available
to other departments and agencies which carry out the remaining
40 percent of federal procurement.
Q.37 Do other federal department and agencies have similar
policies or clauses?
A.37 PWGSC is not aware of other departments or agencies having
any similar policies or clauses.
CONSISTENCY WITH TREASURY BOARD POLICY AND TRADE AGREEMENTS
Q.38 Does Treasury Board Policy permit
the implementation of the Vendor Performance Policy and the Vendor
Performance Clause?
A.38 Yes. Treasury Board contracting policy requires that procurement
activities be carried out in a manner that demonstrates prudence
and probity. Thus, PWGSC has a duty to exercise diligence in ensuring
that PWGSC deals with reliable suppliers. PWGSC's Vendor Performance
Policy and Vendor Performance Clause provide an effective way to
deal with suppliers that have poor performance records.
Q.39 Is the Vendor Performance Policy/Clause consistent
with the North American Free Trade Agreement?
A.39 Yes, the policy is consistent with all of Canada's trade
agreements. Under the policy, Canadian and foreign suppliers will
be treated the same.
INFORMING INDUSTRY OF POLICY/CLAUSE IMPLEMENTATION
Q.40 How does PWGSC intend to inform
suppliers of the implementation of the Vendor Performance Policy/Clause?
A.40 Suppliers will be informed about the implementation of the
Vendor Performance Policy and the Vendor Performance Clause through
the national distribution of a news release to major media outlets,
and through the distribution of a fact sheet on the policy and
clause at supplier seminars, in information kits, at Canada Business
Service Centres, to major industry associations, on the Open Bidding
Service, and on PWGSC's Internet site.
Also, through their day-to-day contact with suppliers, PWGSC procurement
officers will be able to provide information to suppliers about
the policy and clause. Questions and answers will be distributed
to procurement officers to assist them in responding to supplier
enquiries.
ROLE OF OTHER DEPARTMENTS
Q.41 What role will other departments
play in making the Vendor Performance Policy/Clause an effective
tool for dealing with suppliers that perform poorly?
A.41 The effectiveness of the Vendor Performance Policy/Clause
will depend on client input. Clients can help make the policy/clause
an effective tool for dealing with unsatisfactory suppliers by
immediately alerting PWGSC when they are having problems with suppliers.
The more thorough and accurate the information, the more likely
it is that PWGSC can take effective action under the Vendor Performance
Policy/Clause.
Q.42 Will it be possible for measures available under
the policy or the clause to be applied by virtue of a single
complaint from a department?
A.42 It is unlikely that measures would be applied by virtue of
a single complaint or one problem with a supplier. This would only
happen if the problem was extremely serious or involved dishonesty
or fraud by the supplier.
Usually a variety of factors will be considered, including the
supplier's overall track record. It should be emphasized that a
recommendation to apply any of the measures available under the
policy or the clause would not go forward until there had been
a thorough investigation, and the supplier has had a reasonable
opportunity, including a reasonable period of time, to respond
to the alleged problems.
Q.43 Will PWGSC let other departments know when any of
the measures available under the policy or the clause have been
applied to a supplier?
A.43 Other departments which are significant users of a supplier's
products or services will be contacted as part of the investigation
process before any measures are applied. They will also be informed
of any measures applied to a supplier. Depending on the measure
applied, departments generally will be kept informed of decisions
to apply measures under the policy or the clause.
A department that proposes to sole source a requirement to a vendor
against whom a measures has been applied, will be informed of the
measure applied and the reason for its application. As well, PWGSC
contracting staff will work to provide an alternative or to seek
an exception to allow the requirement to go ahead, with proper
precautions taken to safeguard the Crown's interests.
THE PRINCIPLES
Q.44 What are the principles behind
the Vendor Performance Policy/Clause?
A.44 The policy has four principles.
- PWGSC has the authority and the duty to take reasonable measures
to ensure that it can rely on its contractors to perform their
obligations. - PWGSC, generally, has the same right as other purchasers in
the market to assess a vendor's performance, and may take action
to prevent future problems, based on the vendor's past performance. - The discretion to take such action must be exercised in a fair
and reasonable manner within the policy. - Any measures taken must rationally relate to the nature and
severity of the problem for which it is applied.
TYPES OF MEASURES AVAILABLE
Q.45 What type of measures could be
applied to suppliers?
A.45 The measures available under the Vendor Performance Policy
can be conditions on the supplier when doing business with PWGSC,
or debarment or suspension from doing business with PWGSC, either
entirely or in part.
Under the Vendor Performance Clause, which will be incorporated
in all Request for Proposals issued by PWGSC's Supply Operations
Service, the department has the authority to reject bids submitted
by suppliers where there is evidence of past poor performance or
criminal activity.
Vendors may also be subject to probation when the application
of a measure ends. In such cases, if further instances of poor
performance occur, the measure may be extended, or another applied.
Q.46 What is debarment?
A.46 Debarment is the refusal by PWGSC to do business with a vendor
for a specified period, generally not to exceed three years. Debarment
would be used for problems of a criminal nature or where there
is poor performance which demonstrates a lack of good faith on
the part of the contractor to perform its various obligations.
The length of the period of debarment would correspond to the seriousness
of the problem.
Q.47 What is suspension?
A.47 Suspension is the refusal by PWGSC to do business with a
vendor pending the outcome of an investigation into serious or
multiple problems or until the vendor meets conditions set for
re-instatement or remedies a problem.
Suspension would be imposed where doing business with a supplier
before an investigation is complete or before the supplier has
made changes, would pose too great a risk that the supplier would
not carry out its obligations under future contracts.
The suspension will be lifted if the investigation does not substantiate
the allegations against the supplier. If the investigation does
substantiate the allegations, then some other measure may be applied.
Q.48 What is meant by having conditions attached to future
contracting with PWGSC?
A.48 In the case of poor performance which could be prevented
by a less onerous means than a refusal to do business, conditions
-- generally not to exceed three years -- can be imposed on suppliers
seeking to do business with PWGSC. For example, there could be
a requirement to post some form of contract security.
Conditions can be imposed on vendors for a specified period or
until the vendor meets requirements set for reinstatement, such
as remedying a problem.
Q.49 How will PWGSC ensure there is consistency in the
application of measures from one case to the next?
A.49 The ADM/SOSB will review all decisions to apply a measure
in order to ensure consistency in the application of the policy/clause
across the Supply Portfolio.
Q.50 Does the Vendor Performance Policy allow for the
application of measures to a supplier in relation to a particular
subsidiary, geographic region or product line?
A.50 Yes. Depending on the problem, it may be reasonable to limit
the application of a measure to a particular subsidiary, geographic
region or product line of a supplier. Any such limitation will
be made clear to the supplier. PWGSC could then continue to contract
with the supplier, just not in the restricted areas. As well, the
application of a measure could be limited to allow the purchase
of goods which are critical, scarce or subject to patent protection.
Q.51 Could there be situations where PWGSC would continue
to do business with a supplier, despite the application of one
of the policy's measures?
A.51 Yes. Despite the application of one of the policy measures,
there may be compelling reasons to continue to conduct business
with a supplier such as: unique capabilities; urgency; or, national
security.
In such cases, the supplier would be told under what conditions
and on whose authority an exception may be made.
In addition, the Vendor Performance Policy allows PWGSC to limit
the application of a measure to a particular subsidiary, geographical
region or product line. Such limitations could be used to allow
the purchase of goods which are critical, scarce or subject to
patent protection.
Q.52 Under the Vendor Performance Policy/Clause, what
constitutes poor performance by suppliers?
A.52 Under the Vendor Performance Policy/Clause, poor performance
means anything less than full performance of a contractor's obligations
under a specific contract. Examples of this include, but are not
limited to: default; late delivery; inadequate warranty service;
failure to perform the contract in accordance with specifications;
and practices, whether or not intentionally fraudulent, such as
unauthorized substitution, billing for services not performed,
inflating invoices and short counting.
Specific actions or omissions constituting poor performance will
often vary. What is a trivial matter in one procurement might be
critical in another. For this reason, the Vendor Performance Policy
will not set out performance standards. These will have to be determined
by the PWGSC Sectors that deal with specific product areas.
While minor instances of poor performance may be noted, action
would normally only be taken against a vendor as the result of
a major instance of poor performance on a contract, or a cumulative
record of poor performance.
DOCUMENTING PROBLEMS
Q.53 What should a PWGSC procurement
officer do when problems arise with a supplier?
A.53 At the first sign of difficulties, such as late delivery
or customer complaint, the supplier should be contacted. Where
appropriate, the supplier should be given the opportunity to explain
its side of the story and propose remedial action.
The Vendor Performance Policy supplements, but is not a substitute
for, contract enforcement. Contracting officers will enforce the
remedies available under a contract in addition to recommending
that measures be applied to a supplier, in accordance with the
policy.
Sectors and Regions may wish to instruct contracting staff to
specifically warn the supplier of the possibility of the application
of measures if the same sort of problem reoccurs or if the problem
is particularly severe.
Documentation of these situations and actions should be recorded
in VIM or, where that is not possible, in the appropriate contractor
or vendor files.
Q.54 What should a PWGSC procurement officer do if the
problems persist?
A.54 If the poor performance continues, the contracting officer
will note it in the contract file and include any documentation
necessary to support the observation or indicate where that information
is or who can provide it.
Directors are responsible for entering a description of the problem,
including the contract number, the subject of the contract, and
the nature of the problem encountered as a comment on the relevant
vendor file in the Vendor Information Management system (VIM).
These comments will be identified by a code and a description,
both of which can be searched.
The more thorough and accurate the information, the more likely
it is that PWGSC can take effective action under the policy or
the clause. This applies equally to information provided by PWGSC's
procurement officers and information provided by other departments.
A supplier must be notified each time a poor performance comment
is entered on VIM, a contract file or vendor file, and be informed
that PWGSC will take past performance into account in its future
dealings with suppliers.
Q.55 Some directors of procurement may not yet have access
to VIM -- how will they document information about suppliers
that perform poorly?
A.55 As an interim measure, directors of procurement who may not
yet have access to VIM can continue to document information about
suppliers that perform poorly in their vendor and contract files.
The VIM roll-out is expected to completed by the fall of 1996.
Q.56 Once they have access to VIM, will it be necessary
for directors of procurement to transfer information about problems
with vendors from the vendor and contract files onto VIM?
A.56 Individual Sectors and Regions will make their own determination
in this regard.
Q.57 What sort of information about suppliers should procurement
officers document?
A.57 Documentation should include the nature of a complaint, the
circumstances surrounding it, and the remedial action, if any,
taken by the supplier. The contract file number should also be
noted. Directors are responsible for entering any comments on poor
performance.
Outstanding performance of a vendor should also be noted as it
may be useful in making an overall assessment of a contractor's
performance in the event a decision is made to seek the application
of measures under the policy or the clause.
Q.58 How will procurement officers who do not yet have
access to VIM know when a measure has been applied to a supplier?
A.58 Procurement officers who don't yet have access to VIM will
be informed of the application of any measures under the Vendor
Performance Policy/Clause through their LAN managers, who will
post e-mail notices about the application of measures to specific
suppliers.
Q.59 Through their role in documenting instances of poor
supplier performance, will procurement officers be exposing themselves
to legal action by suppliers?
A.59 Treasury Board policy (TB Manual: Information and Administrative
Management, Materiel, Risk and Common Services, Part 2 -- Risk,
2-2 Policy on the Indemnification of Servants of the Crown, and
2-6 Policy on Provision of Legal Services to Crown Servants) provides
for legal assistance and indemnification for a public servant who
is sued, when the public servant has acted honestly and without
malice in the course of her or his duties.
However, it should be noted that procurement officers acting improperly
could be subject to disciplinary measures even where they are given
legal assistance or are indemnified.
NOT A PERFORMANCE MEASUREMENT SYSTEM
Q.60 Is the Vendor Performance Policy a performance measurement
system?
A.60 The Vendor Performance Policy does not itself measure performance,
but it has the flexibility to accommodate formal performance measurement
systems, developed by Sectors and Regions on a commodity-specific
basis.
Information entered as comments on VIM for the purposes of the
Vendor Performance Policy or the Vendor Performance Clause should
not replace information to be used in performance measurement systems
which may be set up in a commodity area.
RELATIONSHIP TO FEDERAL CONTACTORS' PROGRAM AND INTERNATIONAL
TRADE SANCTIONS
Q.61 Does the Vendor Performance Policy deal with sanctions
related to the Federal Contractors Program (Employment Equity)
and international trade sanctions?
A.61 No. Sanctions relating to the Federal Contractors Program
and to international trade are dealt with outside the Vendor Performance
Policy. However, the sanctions notice feature in VIM will inform
buyers of companies that have not complied with international trade
sanctions.
Although a supplier may be barred from business for failure to
carry out its obligations under the Federal Contractors Program,
that program will continue to be dealt with through a process separate
from that used with the Vendor Performance Policy.