ARCHIVED Vendor Performance Policy (now the Vendor Performance Corrective Measure Policy)

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Item Information

Policy Notification ID
PN-11R2
Associated SM version
2012-3
Effective date
2011-06-29
Pilot policy
No

Introduction:

This replaces Policy Notification PN-11R1 of November 4, 2010 in its entirety. Policy Notification PN-11R2 updates the 1996 version of the Vendor Performance Policy (VPP) and PN-11R1. These policy notifications clarify the purpose and scope of the policy, and further standardize the processes and procedures pertaining to the application of a Vendor Performance Corrective Measure (VPCM). The fair, open and transparent treatment of vendors will continue to be a fundamental principle of the policy.

The policy name has been changed to the Vendor Performance Corrective Measure Policy (VPCMP). From November 4, 2010 to June 28, 2011, the VPCMP was implemented on an extended trial basis. Under the revised policy, terminations for default and conditional amendments trigger the assessment process and ensuing consequences. However, for any such events that occurred during the trial period there will be no resulting consequences for vendors. As of June 29, 2011, the VPCMP is fully enforced for the following:

  1. sole source contracts awarded on or after November 4, 2010;
  2. contracts awarded pursuant to competitive solicitations (other than those in (iii) and (iv) below) issued on or after November 4, 2010;
  3. call-up contracts under Standing Offers awarded pursuant to a Request for Standing Offers issued on or after November 4, 2010; and
  4. contracts under supply arrangements awarded pursuant to a Request for Supply Arrangements issued on or after November 4, 2010 where PWGSC-AB is the contract authority.

However, for the above transactions, it must be noted that no consequences will be enforced against vendors for terminations for default and/or conditional amendments that occurred between November 4, 2010 and June 28, 2011 inclusive.

Otherwise, the provisions of the applicable previous version remain in effect.

The VPCMP applies only to PWGSC-Acquisitions Branch as a common service provider for transactions under its authority.

Background:

The application of corrective measures against vendors that do not fulfill their contractual obligations was introduced under the 1996 version of the VPP. Such measures have an impact on a vendor’s ability to bid on future opportunities with, or receive contracts from PWGSC. Acquisition Branch’s review of the policy indicated the need for clarification regarding scope, processes, roles and responsibilities in assessing and potentially applying a VPCM. The review also underscored the need to position the role of the VPCMP in the overall context of procurement risk management.

From the review, it was noted that the following elements should be addressed:

  1. a tool to assist the procurement community with VPCM assessment;
  2. the specific circumstances that will result in a note on a vendor in the Vendor Information Management (VIM) system;
  3. the specific VPCM consequences and how the performance history in VIM will be taken into account;
  4. a framework for developing a regional or sector program tailored to a commodity or commodity groupings; and
  5. the specific steps for a VPCM assessment process and a rating approach.

Key revisions and clarifications to the 1996 version of the VPP and PN11-R1 are as follows:

  1. The scope has now been clarified in the introduction of the VPCMP.
  2. A conditional amendment, for the purpose of the VPCMP, is defined as an amendment issued for operational reasons in lieu of a termination for default because of a contractual poor performance issue. When a contracting officer is ready to terminate or partially terminate for default, a conditional amendment is available as an alternative to immediate termination. If the vendor refuses the conditional amendment, then the contract must be terminated for default and no normal amendment can be issued.
  3. As part of the communication on the performance issue, the contracting officer must send a copy of the VPCMP to the vendor.
  4. A note on a vendor in VIM will result from contracts with terminations for default, including partial terminations, and/or conditional amendments. (PWGSC reserves the right to put a note (called Other Performance Records) in VIM for other significant issues pertaining to the performance of a contract. However, this is not used in the generic process that includes the VPCM Assessment form.)
  5. Full or partial terminations for default and conditional amendments trigger the mandatory assessment process at the end of the contract to determine whether a VPCM will be applied.
  6. A VPCM Assessment form has been developed. This form sets out the steps for a VPCM assessment. These steps include rating the impact of the performance issue(s) for the contract where there has been termination(s) for default and/or conditional amendments. The categories of impact are: minor, medium and major. This will become part of the vendor’s history (a note in VIM). If a VPCM is applied, it will also become part of the history. The history will be included in a VPCM Assessment form.
  7. There are now only two types of VPCMs for the purpose of the VPCMP: debarment and conditions. Suspension is no longer available.
  8. The VPCM consequences are now specified as follows. Within the last six years:
    1. for the first VPCM, there will be a 6 month debarment or conditions.
    2. for the second VPCM, there will be a 18 month debarment or conditions.
    3. for the third VPCM, there will be a 36 month debarment or conditions.
  9. A framework has been developed to assist with developing a customized sector or regional program for a commodity or commodity grouping, where applicable.
  10. VIM is now to be checked for VPCMs at bid closing prior to bid evaluation as well as before contract award and certain types of contract amendments to confirm whether any VPCMs exist. Other checks are set out in the policy.
  11. The contents of notes and information on VPCMs will be removed from VIM after six years instead of seven.

Revisions to the Supply Manual

The attached changes to the Supply Manual (Annex A) will be included in a future release of the Supply Manual.

Updated Supply Manual sections 1.5.1, 3.100, 3.110, 5.55, 8.70, and 8.180; and Annexes 8.4, 8.6, 8.6a, 8.7, 8.8, 8.9, 8.10, 8.11 and 8.12 are attached.

Revisions to the Standard Acquisition Clauses and Conditions (SACC) Manual

Contracting officers are to incorporate the changes detailed in Annex B into their procurement documents. The changes to the standard instructions will be reflected in a future SACC Manual release.

Contracting officers must now use revised SACC Manual clauses J1000C and J1001C and General Condition 2020 section 09 (set out in Annex B). These changes will be reflected in a future SACC Manual release.

ELF Documents

The two following documents are available on Electronic Forms ELF:

  • Direction for Adding Notes in VIM and Authorization to Proceed with VPCM Assessment (Form 149)
  • VPCM Assessment (Form 149-1)

Contact Person

For more information, contact Alexandre Tremblay, within the Policy, Risk, Integrity and Strategic Management Sector at 819-956-0171 or by e-mail to: Alexandre.Tremblay@tpsgc-pwgsc.gc.ca.

Annex A - Revisions to the Supply Manual

Changes are effective immediately and will be included in a future release of the Supply Manual.

1.5.1 Organization of the Manual

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(h) Chapter 8, Contract Management, offers information regarding contract management during the contract. Non-exhaustive examples of this information are contract performance, progress payments, subcontracting, warranty work, disputes, terminations and the Vendor Performance Corrective Measure Policy.

3.100 Vendor Performance Corrective Measures

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For more information on the Vendor Performance Corrective Measure Policy, contracting officers should consult 8.180.  For more information on rejection of bids/offers/arrangements based on Vendor Performance Corrective Measures, see 5.55.

3.110  Legal Services

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This section remains unchanged except for the inclusion of (c)(xiii) in the following text:

(c) Contracting officers must seek legal advice:

  • (xiii) for all conditional amendments (See 8.180.)

5.55 Rejection of Bids/Offers/Arrangements

5.55.1 Role of the Contracting Officer

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  1. The contracting officer is not to evaluate bids/offers/arrangements received from a vendor if the vendor is subject to a VPCM relevant to the procurement.  (Bids include bids for contracts under supply arrangements.)
  2. A standing offer must be set aside for a vendor that is subject to a relevant VPCM.
  3. A decision to reject a bid/offer/arrangement because of a VPCM can be made at any time up to the awarding of a contract or the issuance of a standing offer or a supply arrangement. VIM is to be checked for a VPCM at closing for competitive solicitations and prior to contact for sole sourcing. In addition, VIM is to be rechecked prior to the awarding of a contract or the issuance of a standing offer or a supply arrangement.
  4. When accessing the VIM file on a bidder/offeror/supplier, the contracting officer will have a clear notice of any VPCM. The Automated Buyer Environment (ABE) will not interfere with the awarding of a contract or the issuance of a standing offer or a supply arrangement to a bidder/offeror/supplier subject to a VPCM.

5.55.5  Authority to Reject a Bid/Offer/Arrangement

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The authority to reject a bid/offer/arrangement, under the applicable section entitled Rejection of Bid of the Standard Acquisition Clauses and Conditions Manual standard instructions 2003, 2004, 2006, 2007 and 2008, rests with the contracting officer responsible for evaluating the bids/offers/arrangements, except that in the case of bids/offers/arrangements being considered for rejection in accordance with 1.(c)(ii), (iii) or (iv), the authority to reject a bid/offer/arrangement rests with the appropriate director general.

5.55.10 Notice to the Bidder/Offeror/Supplier

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  1. Notice of intent to reject a bid/offer/arrangement under the above-mentioned section should be given by telephone, and followed by confirming facsimile or letter. Notice of intent is considered to have been received by the rejected bidder/offeror/supplier at the time of the telephone call. The person making the call should note on the file the date and time of the call, and the person spoken to.
  2. The notice of intent must set out the facts and the reasons for the decision to reject the bid/offer/arrangement. However, when a bid/offer/arrangement is being rejected in accordance with 1.(a) or (b) of the applicable section  of the SACC Manual standard instructions because of a VPCM that is in place, it is sufficient to reference that VPCM.

5.55.15 Review

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  1. A bidder/offeror/supplier, except a bidder/offeror/supplier excluded in accordance with 1.(b) of the applicable section of the SACC Manual standard instructions, may request that the decision to reject the bid/offer/arrangement be reviewed by the Assistant Deputy Minister, Acquisitions Branch (ADM/AB). It is entirely in the ADM/AB's discretion whether the bid evaluation and contract award process will be held up and give further time to review the decision.
  2. A review by the ADM/AB will result in an investigation, and a decision. Such a decision can have an effect beyond the particular procurement from which the bidder/offeror/supplier has been rejected. When the decision has been made, the bidder/offeror/supplier should be informed of the results, in writing.

8.70.5  Amending Contracts

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  1. Contract amendments are used to formally delete, modify, or introduce new conditions to the original contract. The need for an amendment may arise from continuing negotiations, changes in requirements, or to deal with an unforeseen circumstance. When amending a contract, Canada's best interest should be considered. Amendments are subject to agreement by both parties to the contract. Where the vendor is subject to a relevant VPCM, the length of the contract cannot be extended either by an amendment or through the exercise of an option unless:
    1. there is insufficient time to recompete; or
    2. there are other exceptional circumstances.

      These situations require ADM approval in accordance with 8.180.25 on exceptions.

  2. In addition to the above regarding contract amendment in general, for the purpose of the Vendor Performance Corrective Measure Policy (VPCMP), a conditional amendment is a specific type of contract amendment. It is used for operational reasons in lieu of a full or partial termination for default when there is a performance issue for which the vendor is primarily responsible. When a contracting officer is ready to terminate or partially terminate for default, a conditional amendment is available as an alternative to immediate termination. If the vendor refuses the conditional amendment, then the contract must be terminated for default and no normal amendment can be issued. (See 8.180.10 for more information on conditional amendments and 8.180.15.1(c) for the paragraph to be inserted in a conditional amendment. See also 8.135.15 and Annex 8.4 on termination for default.) As with terminations for default, conditional amendments will trigger a VPCM Assessment process under the VPCMP. (See 8.180.)
  3. The amendment format will follow the form of the original contract. The amendment should identify, by using complete clauses, any changes, additions, conditions or deletions.
  4. A single amendment may contain many individual changes.
  5. To reduce administrative costs, contracting officers and client departments should combine as many individual changes as possible into each amendment. For example, multiple design changes or deviations can be amended together.
  6. Amendments should receive the same distribution as the original contract.

8.70.10 Approval of Contract Amendments

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  1. Amendments, which are making a significant change, must be approved at the appropriate authority level, except for options which are changes pre-approved or allowed for in the existing approval(s).
  2. Legal services must be consulted on conditional amendments before being considered.
  3. For more information on forms of amendment requests and the appropriate approval levels, see Chapter 6.

8.180 Vendor Performance Corrective Measure Policy

8.180.1  Introduction

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  1. The purpose of the Vendor Performance Corrective Measure Policy (VPCMP) is to assist the PWGSC procurement community in mitigating procurement risk for future contracts and improving client service. There are a number of tools to meet this purpose. The VPCMP is just one of those tools. Other tools include the Code of Conduct for Procurement and the Standard Acquisition Clauses and Conditions. Collectively these tools provide a foundation on which the relationship with vendors is established.
  2. The VPCMP is in effect as of November 4, 2010. However, the VPCMP was implemented on an extended trial basis with no consequences for vendors from November 4, 2010 to June 28, 2011 inclusive. There will be no consequences resulting from terminations for default and/or conditional amendments that fall within the scope of the VPCMP and that occurred during that period. Otherwise, the provisions of the applicable previous version remain in effect for transactions issued prior to November 4, 2010.
  3. Vendor performance issues are an important component of procurement risk management. As shown in the Process Chart on the Risk Management Approach to Vendor Performance (See Annex 8.6), those issues have to be considered at all four phases of the contract management process.
  4. The VPCMP applies to PWGSC Acquisitions Branch (PWGSC-AB) as a common service provider for transactions under its authority. The scope of the VPCMP on such transactions is clarified below. The VPCMP focuses on using a vendor’s performance information from closed contracts for:
    1. Rejection of offers for competitive and non-competitive procurements

      Bids/offers/arrangements received from vendors subject to a Vendor Performance Corrective Measure (VPCM) will not be considered for evaluation if the terms of the VPCM are relevant to that procurement. Specifically, with respect to vendors with a VPCM, the following applies:

      1. no negotiation is to be initiated and no offer is to be accepted for a sole source contract;
      2. bids on competitive procurements of goods or services are to be rejected;
      3. offers for standing offers for goods or services are to be rejected; and
      4. arrangements for supply arrangements for goods or services are to be rejected as well as bids for contracts under supply arrangements where PWGSC-AB is the contract authority.
    2. VPCM Assessment

      Terminations and/or partial terminations for default and/or conditional amendments on the following transactions trigger a VPCM assessment:

      1. sole source contracts awarded on or after November 4, 2010;
      2. contracts awarded pursuant to competitive solicitations (other than (ii)(C) and (ii) (D) below) issued on or after November 4, 2010;
      3. call-up contracts under standing offers awarded pursuant to a Request for  Standing Offers issued on or after November 4, 2010; and
      4. contracts under supply arrangements awarded pursuant to a Request for Supply Arrangements issued on or after November 4, 2010 where PWGSC-AB is the contract authority.

      However, for the above transactions, no consequences against vendors under the VPCMP will be enforced for terminations for default and/or conditional amendments that occurred from November 4, 2010 to June 28, 2011 inclusive.

  5. In addition, a relevant VPCM entails the following effects on procurement:
    1. A VPCM does not affect existing contracts.
    2. Where the vendor is subject to a relevant VPCM, the length of the contract cannot be extended either by an amendment or through the exercise of an option unless:
      1. there is insufficient time to recompete; or
      2. there are other exceptional circumstances.
    3. No call-up contracts can be created.
  6. In addition, the general information on the nature and extent of performance problems gained during the contract and post contract phases should be used in the other phases. In the pre-contractual phase this information will assist in the development of the procurement risk strategy. During that phase it will also assist with assessing the need for a customized or tailored program for managing vendor performance on specific commodity or commodity groupings. This information is also important in developing not only performance criteria but also any other risk mitigation terms for both solicitation and contract documents in the contracting phase.

8.180.5 Principles

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  1. PWGSC has the authority and the duty to take reasonable measures to ensure that it can rely on its vendors to perform their obligations. It 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 will be taken in a fair and reasonable manner.
  2. The VPCMP is founded on principles that support PWGSC’s commitment to carrying out contracting in a manner that enhances competition, fairness and transparency.
  3. Any corrective measure taken should rationally relate to the nature and severity of the problem for which it is applied.

8.180.10  Definitions

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For the purpose of the generic process in this policy, the following terms or expressions have the following meaning:

  1. Conditional amendment: refers to an amendment to a contract being made for operational reasons in lieu of a termination for default or a partial termination for default because of poor performance. This type of amendment may only be considered when the contracting officer is ready to terminate (full or partial) for default. It is an alternative to immediate termination for default. If not accepted by the vendor, the termination for default will be issued.
  2. Poor performance: means anything less than full performance of a contract by a vendor that results in either a termination for default or a conditional amendment. In both situations the vendor is primarily responsible for the poor performance. This extends to all aspects of performance that a contracting officer and the client want to consider and specify for evaluating the vendor's performance during the contract. (Terminations for default also include partial terminations for default.)
  3. Vendor Performance Corrective Measure (VPCM): means a condition or limitation placed on a vendor's ability to contract with PWGSC in the future on the basis of PWGSC's assessment of the vendor’s reliability to perform a contract. In other words, it will have an impact on the vendor being able to bid on future opportunities or receive contracts or amendments.
  4. Vendor Information Management System (VIM):  is a database available to the users of the Automated Buyer Environment (ABE). It stores vendor information including VPCMP notes and VPCMs.

8.180.15 Generic Process

8.180.15.1 Conditions that Trigger a VPCM Assessment

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  1. Contracting officers should enforce the terms of contracts wherever possible. The same incident may support: enforcement of the remedies available under the contract; a note to VIM; and a VPCM.
  2. The contracting officer will document in the contract file the following:
    1. Vendor performance issues, i.e., non-compliance with the performance criteria specified in the contract;
    2. Proof of communication with the vendors on the issue(s); and
    3. Proof of having sent a copy of the VPCMP to the vendor as part of the above communication.
  3. When issuing a termination for default or conditional amendment, the vendor is to be notified in writing of performance issues with a copy of the notification in the contract file. The notification must also include the following appropriate text:
    1. For conditional amendments, the contracting officer must include the following text:

      "The parties agree to this amendment on condition that Canada has the right to consider the poor performance, which has led to this conditional amendment, for the purpose of assessing whether a VPCM will be placed against the vendor. The parties agree that this conditional amendment will result in a note in VIM and will trigger a VPCM assessment process at the end of the contract."

    2. For terminations for default, see SACC manual clause J1000C and J1001C for the text that must be inserted.
  4. The procedures on terminations for default are set out in 8.135.15 and Annex 8.4. For conditional amendments see 8.70.5. Legal Services are to be consulted on both actions.
  5. If it is decided to either terminate for default all or any part of the contract and/or issue one or more conditional amendment(s), at the end of the contract the contracting officer will use the form PWGSC–TPSGC 149 to direct the VPCM co-ordinator in the Policy, Risk, Integrity and Strategic Management (PRISM) Sector to put a note in VIM.
  6. A note for a contract in which there was a termination(s) for default and/or a conditional amendment(s) will generally remain on VIM for six years. After that time, the contents will be removed from VIM.
  7. A contract where there has been a termination(s) for default and/or a conditional amendment(s) triggers a mandatory assessment to determine whether a VPCM is to be applied. The contracting officer will follow the generic process set out in 8.180.15.5  before file close-out.
  8. In addition to the above, PWGSC reserves the right to put a note in VIM, called "Other Performance Records", for other significant issues pertaining to the performance of a contract.  Other Performance Records require Assistant Deputy Minister, Acquisitions Branch (ADM/AB) approval to be added to VIM. The provisions of the generic process do not apply in such cases. While such notes may result in the application of a VPCM, they are not considered for the purpose of the generic process.

8.180.15.5  VPCM Assessment

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  1. Formal corrective measures are put in place when there is evidence that continued contracting with a vendor may pose a greater risk to Canada than is acceptable. This will be the case when there is a major instance of poor performance of a contract resulting in a termination for default or conditional amendment, or a cumulative record of terminations for default and/or conditional amendments.
  2. All steps of the VPCM Assessment process set out below must be fully documented in the file. See Annex 8.6a for additional guidance on the required procedure for applying a VPCM using the generic process.
  3. As soon as the contract ends where there has been a termination for default and/or conditional amendment, the contracting officer on behalf of the director will complete the VPCM Assessment form PWGSC-TPSGC 149-1 by:
    1. taking into account the relative importance of the requirement(s) in the overall context;
    2. including VPCM history without considering the notes used as the basis for applying a previous VPCM; and
    3. establishing the ensuing consequence pursuant to the VPCM consequence grid in the form.

    The principal elements of the form are set out in Annex 8.7.

  4. In the case of a joint venture, a VPCM Assessment will be completed for each member. The Current Contract Score will be the same; however, each member will have a distinct history for the purpose of establishing consequences.
  5. The director presents the results of every assessment to the relevant director general/regional director general (DG/RDG).

8.180.15.10 Notice of Intent for Applying a VPCM

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  1. For the purpose of the VPCMP, there are two types of VPCMs:
    1. Debarment is the refusal by PWGSC-AB to do business with a vendor for a specified period. A debarment renders a vendor ineligible to bid on or receive:
      1. contracts;
      2. standing offers and call-ups; and
      3. supply arrangements and contracts under supply arrangements where PWGSC-AB is the contract authority.
    2. Conditions may be applied against vendors in place of debarment, where considered more appropriate. Where a vendor is subject to conditions and has not met those conditions before bid closing date or before commencement of a non-competitive process, the vendor is declared ineligible to bid on or to receive:
      1. contracts;
      2. standing offers and call-ups; and
      3. supply arrangements and contracts under supply arrangements where PWGSC-AB is the contract authority.
  2. Notice to the vendor on the result of a VPCM Assessment:
    1. If the threshold to apply a VPCM is not met, the DG/RDG informs the vendor of the following (See Annex 8.8 for letter template):
      1. No VPCM is applied at this time.
      2. The category of impact and the associated score for the contract on which the VPCM Assessment was completed.
      3. Canada reserves the right to take the history score of all contracts with terminations for default and conditional amendments into consideration if another assessment is triggered by a further termination for default or conditional amendment on other contracts.
      4. The vendor has 15 business days to respond in writing and could include at that time a request to present orally to the DG/RDG.
    2. If the threshold to apply a VPCM is reached, the DG/RDG will notify the vendor of the intent to apply a VPCM (See Annex 8.9 for letter template). The notice of intent for applying a VPCM to the vendor must include, in addition to the corrective measure, the following:
      1. a list of:
        • terminations for default and conditional amendments for the relevant contract including information on the category of impact and the associated score;
        • history of closed contracts with terminations for default and conditional amendments taken into account; and
        • history of VPCMs;
      2. the procurements against which the VPCM would apply, i.e., 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 other factors;
      3. when, and how if applicable, the VPCM will end;
      4. where conditions are recommended, who will determine that they have been satisfied;
      5. a notification that the VPCM extends to any other business arrangements involving the vendor, including subcontracting, partnership and joint venture; and
      6. the vendor has 15 business days to respond in writing and that could include at that time a request to present orally to the DG/RDG.
  3. Review of Vendor’s Response
    1. For both cases in (b) above, if after having reviewed the vendor’s written response and any presentation material, the DG/RDG revises the assessment results, the DG/RDG informs the vendor of the following:
      1. the revised assessment results; and
      2. that Canada reserves the right to take the history score of all contracts with terminations for default and conditional amendments into consideration if another assessment is triggered by a further termination for default or conditional amendment.
  4. A vendor will be given access to documents relevant to its performance including the VPCM Assessment form on the same basis as would be available in a contract dispute.
  5. In the case where the threshold to apply a VPCM has been reached, the DG/RDG informs the DG/RDG committee of the result of the VPCM Assessment.

8.180.15.15 Assistant Deputy Minister Decision

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  1. The DG/RDG submits the assessment results to the ADM/AB in the case where a VPCM is to be applied.
  2. Except where there is an approved Sector/Region Vendor Performance Program, the ADM/AB will review the assessment results, including information provided by the vendor.
  3. The ADM/AB will inform the vendor of the decision whether a VPCM will be applied (See Annex 8.10 and 8.11 for letter template).

8.180.15.20 Actions Pursuant to a Decision to Apply a VPCM

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  1. The contracting officer will send a copy of every completed VPCM Assessment form to the VPCM co-ordinator in PRISM. Information on a VPCM will only be entered into VIM by PRISM.
  2. The VPCM co-ordinator informs the authorities of relevant standing offers and supply arrangements about the imposition of a VPCM.
  3. For the right to reject a bid/offer/arrangement because of a VPCM, see 5.55.5 on Authority to reject Bid/Offer/Arrangement.
  4. A decision to reject a bid/offer/arrangement because of a VPCM can be made at any time up to contract award or issuance of a standing offer or supply arrangement. VIM is to be checked for a VPCM at bid closing for competitive procurements and prior to contact for sole sourcing. With respect to call-ups, standing offers must be set aside for vendors that are subject to relevant VPCMs. In addition, VIM is to be rechecked prior to contract award. Where extending the length of a contract is being considered, VIM is also to be checked before issuing amendments or exercising options.
  5. In accordance with provision on Notification to Unsuccessful Bidders/Offerors/Suppliers contained in the Supply Manual (see 7.35), the vendor must be informed of the decision to reject a bid/offer/arrangement because of a VPCM.
  6. If a member of a joint venture is subject to a VPCM, the bid/offer/arrangement, contract or call-up is to be rejected as a whole.
  7. VPCM information will be relevant and will remain on VIM for six years from the beginning of the debarment or from the date that the conditions are fulfilled. When a VPCM ends, the VPCM co-ordinator will notify the sector/region that initiated it, which is then responsible for promptly notifying the vendor.
  8. For information on the VPCMP and its application, please contact the VPCM co-ordinator by sending an e-mail to the CoordPMCRF.VPCMPCoord@pwgsc-tpsgc.gc.ca

8.180.20 SACC Manual Provisions for Stop Work Orders, Contract Suspensions and Other Reasons for Bid Rejection

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No provisions under the VPCMP will in any way override PWGSC’s rights with respect to stop work orders, contract or supply arrangement suspensions, standing offer set-asides and other reasons for bid/offer/arrangement rejection set out in the SACC Manual.

8.180.25  Exceptions

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In cases of emergency in procurement, a DG/RDG may make a recommendation for an exception to a VPCM .  In such cases, special care should be taken to protect Canada. Where an exception is made, the reason should be recorded on the contract file. Such exception must be approved by the ADM/AB or the approval authority designated in a sector/region vendor performance program

8.180.30  Sector/Region Vendor Performance Programs

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  1. A sector/region may establish a customized or tailored program for evaluating vendor performance and determining appropriate measures to apply for specific commodities or commodity groupings. Where such a program has the approval of the ADM/AB, it is not necessary that the ADM/AB review the cases. The decision can be made by the persons delegated that authority under the program.
  2. The determination to have such a program will be made in the context of the procurement risk management strategy for the specific commodity during the pre-contractual phase of the procurement process. If it is determined that a sector/region program will be developed, until this program is operational, the contracting officer is to apply the generic VPCMP process. Annex 8.12 provides a framework for developing such a program.
  3. The program may incorporate elements from the generic VPCMP process.
  4. Once established, the customized vendor performance program is administered by the sector/region.

Annex 8.4: Termination for Default

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This section remains unchanged except for article (c)(iii)(C).

(c) Canada has the right to terminate all or any part of the contract for default if:

  • (iii) the contractor fails to deliver the goods or perform the services within the time specified in  the contract.
    • (C) when there is reasonable assurance that delivery will be made, even though late, it may be desirable to discuss extension of the delivery time with client. If the delivery date is extended, negotiation for a reduction in the contract may be appropriate. This constitutes a conditional amendment (see 8.70.5), which triggers a note in VIM and a VPCM Assessment form and process.

Risk Management approach to Vendor Performance Process Chart

(2011-06-29)

This chart titled Risk Management Approach to Vendor Performance highlights the process for the application of the Vendor Performance Corrective Measure Policy (formerly called the Revised Vendor Performance Policy). This is done in the context of the following four phases of contract management for procurement: Pre-contractual phase, Contracting phase, Contract administration phase, Post contract phase

Text description of the Flowchart for Vehicle Requirements is available on a separate page.

A larger view of this Chart from Annex 8.6 is available on a separate page. Due to the size of the image, it may not display properly.

PPT Version Annex 8.6 - Risk Management approach to Vendor Performance Process Chart 52KB)

Note 1: For sole source contracts, access VIM to verify if a VPCM applies prior to negotiation of terms and conditions.

Note 2: Until the program is operational, the contracting officer is to follow the generic process.

Note 3: The right to reject also applies to offers and arrangements.

Note 4: No call-up contracts can be issued to a vendor subject to a relevant VPCM .

Note 5: "Other performance records" are added when significant issues require a note as per 8.180.15.1(h).

Note 6: See section 8.180.15.1 (b) on required documentation.

Annex 8.6a:
Required Procedure for Applying a Vendor
Performance Corrective Measure (VPCM)

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This chart titled “Required Procedure for Applying a Vendor Performance Corrective Measure (VPCM)” sets out the procedures to follow for completing a VPCM Assessment and Recommendation Form and applying a VPCM, including necessary approvals.

Text description of the Annex 8.6a: Required Procedure for Applying a Vendor Performance Corrective Measure (VPCM) is available on a separate page.

A larger view of this Diagram from Annex 8.6a is available on a separate page. Due to the size of the image, it may not display properly.

PPT VersionAnnex 8.6a - Required Procedure for Applying a Vendor Performance Corrective Measure (VPCM) ( 47KB)

(*1) See Annex 8.8 for letter template.

(*2) See Annex 8.9 for letter template.

(*3) See Annex 8.10 and 8.11 for letter template.

Annex 8.7:  Principal Elements of the VPCM Assessment

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  1. Current Contract Impact Score

    This refers to the impact of the poor performance issues that resulted in a termination(s) for default and/or conditional amendment(s) in the current contract. This impact score takes into account the relative importance of the requirement(s) in the overall context. There are three categories of performance issues for consideration and the following grid applies:

    1. low impact = 1 to 3
    2. medium impact = 4 to 6
    3. high impact = 7 to 9
  2. Conversion Score

    Where an impact score of 9 points has been given for at least one performance issue, this will have a Conversion Score equivalent to 40 points. This falls under the category of major impact from poor performance. Otherwise, the following will be used:

    This table establishes the category of impact and its associated conversion score based on the Total Current Contract Impact Score.
    Total Current Contract Impact Score Category of Impact Conversion Score
    Equal to or less than 9 Minor 10 points
    Greater than 9 but less than 15 Medium 20 points
    15 or more Major 40 points
  3. History Score

    Contracts with termination(s) for default and/or conditional amendment(s) as well as VPCMs are taken into account to calculate the Total History Score as follows:

    1. 10 points for each case of VPCM
    2. 10 points for each contract case with a minor impact of poor performance
    3. 20 points for each contract case with a medium impact of poor performance
  4. Total Impact Score and VPCM Consequences

    This score is calculated by adding the Conversion Score and the Total History Score. If the Total Impact Score is 40 or more, the consequences are as follows:

    This table establishes of the Vendor Performance Corrective Measure (VPCM) consequences based on the VPCM History.
    VPCM History Consequence
    No case within last six years Debarment of 6 months or, if more appropriate, conditions
    One case within last six years Debarment of 18 months or, if more appropriate, conditions
    Two cases within last six years Debarment of 36 months or, if more appropriate, conditions

Annex 8.8: Letter Template Where No VPCM Will Be Applied At This Time

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(Full or partial terminations for default and conditional amendments trigger the mandatory assessment process at the end of a contract to determine whether a VPCM will be applied. If the threshold to apply a VPCM is not met, the DG/RDG informs the vendor that no VPCM is applied at that time. This template is a reminder of what the VPCMP prescribes. Where italicized bold type is used, the text must be adapted to the specific situation.)

Heading of PWGSC

REGISTERED MAIL AND COURIER

Date: XXXX

Name of the vendor
Address

Attention: XXXXX

Subject:
Result of the VPCM Assessment process
_______Contract number 000, title


Dear Ms, Mr. {insert name here and delete this instruction}

As per the Vendor Performance Corrective Measure Policy (VPCMP), Public Works and Government Services Canada (PWGSC)/Acquisitions Branch (AB) carried out a VPCM Assessment process at the end of the above referenced contract. This VPCM Assessment process was triggered by the following:

  • {List all terminations for default and conditional amendments of the above referenced contract including the date of issuance and delete this instruction}

Based on the result of the assessment, this letter is to inform {insert name of the vendor here and delete this instruction} that:

  • no Vendor Performance Corrective Measure (VPCM) will be applied at this time;
  • {insert category of impact here and delete this instruction} and {insert the corresponding Conversion Score here and delete this instruction} will be recorded in  the Vendor Information Management (VIM) system as the Current Contract Impact Score;
  • the Current Contract Impact Score will become part of your history score;
  • in the event that another assessment is triggered by a further termination for default or conditional amendment, Canada reserves the right to take the history score of all contracts with terminations for default and conditional amendments into consideration, while excluding the notes used as the basis for applying a previous VPCM .

As provided in the policy, {insert name of the vendor here and delete this instruction} may respond in writing regarding the VPCM Assessment. Such written response must be submitted to the undersigned within 15 business days following receipt of this letter. {Insert name of the vendor here and delete this instruction} may also include a request during this 15 business day period to present orally and, to this end, an appointment must be made with the undersigned. Please be advised that, if {insert name of the vendor here and delete this instruction} does not respond within the 15 business day period noted above, PWGSC/AB will proceed to record the Current Contract Impact Score in VIM.

Yours truly,


Name of the DG/RDG
Name of the sector or region
Address
Phone number

Attached: Copy of the VPCM Assessment form

NB: You can view the Vendor Performance Corrective Measure Policy by going to: {insert the Internet address for the appropriate version of the VPCMP and delete this instruction}

Annex 8.9: Letter Template for Notice of Intent to Apply a VPCM

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(Full or partial terminations for default and conditional amendments trigger the mandatory assessment process at the end of a contract to determine whether a VPCM will be applied. If the threshold to apply a VPCM is met, the DG/RDG informs the vendor of the intent to apply a VPCM . This template is a reminder of what the VPCMP prescribes. Where italicized bold type is used, the text must be adapted to the specific situation.)

Heading of PWGSC

REGISTERED MAIL AND COURIER

Date: XXXX

Name of the vendor
Address

Attention: XXXXX

Subject:
Notice of intent to apply a Vendor Performance Corrective Measure
_______Contract number 000, title

Dear Ms, Mr. {insert name here and delete this instruction}

As per the Vendor Performance Corrective Measure Policy (VPCMP), Public Works and Government Services Canada (PWGSC)/Acquisitions Branch (AB) carried out a VPCM Assessment process at the end of the above referenced contract. This VPCM Assessment process was triggered by the following:

  • {List all terminations for default and conditional amendments of the above referenced contract including the date of issuance and delete this instruction}

Based on the result of the assessment, PWGSC/AB intends to apply a Vendor Performance Corrective Measure (VPCM) against {insert name of the vendor here and delete this instruction} pursuant to PWGSC's VPCMP. This letter is to notify {insert name of the vendor here and delete this instruction} of the following:

  • PWGSC/AB intends to apply the following VPCM:
    • a xx month debarment
    • the beginning and the end of the period
    • the scope (See 8.180.15.10 (b)(ii)(B))
    or
  • PWGSC/AB intends to apply the following VPCM :
    • conditions that have to be met
    • the scope (See 8.180.15.10 (b)(ii)(B))
    • when and how the recommended VPCM will end
    • who will determine that conditions have been satisfied

In addition to the above, for commodities within the scope of the VPCM , {insert name of the vendor here and delete this instruction} is advised that the VPCM would extend to any other business arrangements involving {insert name of the vendor here and delete this instruction}, including subcontracting, partnership and joint venture.

As provided in the policy, {insert name of the vendor here and delete this instruction} may respond in writing to this notice of intent to apply a VPCM . Such written response must be submitted to the undersigned within15 business days following receipt of this letter. {Insert name of the vendor here and delete this instruction} may also include a request during this 15 business day period to present orally and, to this end, an appointment must be made with the undersigned. Please be advised that, if {insert name of the vendor here and delete this instruction} does not respond within the 15 business day period noted above, PWGSC/AB will proceed to record the Current Contract Impact Score in VIM and continue the process to apply the VPCM described above.

Yours truly,


Name of the DG/RDG
Name of the sector or region
Address
Phone number

Attached: Copy of the VPCM Assessment form

NB: You can view the Vendor Performance Corrective Measure Policy by going to: {insert the Internet address for the appropriate version of the VPCMP and delete this instruction}

Annex 8.10: Letter Template for Decision to Apply Conditions as a VPCM

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(Full or partial terminations for default and conditional amendments trigger the mandatory assessment process at the end of a contract to determine whether a VPCM will be applied. If, as the result of a VPCM Assessment, a decision is made for applying conditions as a VPCM , the ADM/AB informs the vendor of the decision. This template is a reminder of what the VPCMP prescribes. Where italicized bold type is used, the text must be adapted to the specific situation.)

Heading of PWGSC

REGISTERED MAIL AND COURIER

Date: XXXX

Name of the vendor
Address

Attention: XXXXX

Subject: Decision to apply a Vendor Performance Corrective Measure

Dear Ms, Mr. {insert name here and delete this instruction}

As set out in the notice of intent to apply a Vendor Performance Corrective Measure (VPCM) letter dated XXXX, Public Works and Government Services Canada (PWGSC)/Acquisitions Branch (AB) has decided to apply against {insert name of the vendor here and delete this instruction} the following conditions as a VPCM pursuant to the Vendor Performance Corrective Measure Policy:

  • {Insert the following here and delete this instruction}
    • the conditions that have to be met
    • the effective date
    • the scope (See 8.180.15.10 (b)(ii)(B))
    • when and how the recommended VPCM will end
    • who will determine that conditions have been satisfied

{Insert name of the vendor here and delete this instruction} must supply all information and documentation required by PWGSC/AB in order for it to assess if {insert name of the vendor here and delete this instruction} has met the conditions. Until such time that PWGSC is in a position to confirm that the conditions have been met, the VPCM will apply.

In addition to the above, for commodities within the scope of the VPCM , {insert name of the vendor here and delete this instruction} is advised that the VPCM would extend to any other business arrangements involving {insert name of the vendor here and delete this instruction}, including subcontracting, partnership and joint venture.

While PWGSC regrets any disruption to your business, Canada's paramount concern must be the safeguarding of public monies. Should you require additional information, please contact {insert name of the DG/RDG and delete this instruction}, {insert title (Director General or Regional Director General) and delete this instruction} of {insert name of the sector or region here and delete this instruction} at {insert phone number of the DG/RDG here and delete this instruction}.

Yours truly,


Assistant Deputy Minister
Acquisitions Branch

CC: {Insert name of the DG/RDG and delete this instruction}

NB: You can view the Vendor Performance Corrective Measure Policy by going to: {insert the Internet address for the appropriate version of the VPCMP and delete this instruction}

Annex 8.11: Letter Template for Decision to Apply Debarment as a VPCM

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(Full or partial terminations for default and conditional amendments trigger the mandatory assessment process at the end of a contract to determine whether a VPCM will be applied. If, as the result of a VPCM Assessment, a decision is made for applying a debarment as a VPCM , the ADM/AB informs the vendor of the decision. This template is a reminder of what the VPCMP prescribes. Where italicized bold type is used, the text must be adapted to the specific situation.)

Heading of PWGSC

REGISTERED MAIL AND COURIER

Date: XXXX

Name of the vendor
Address

Attention: XXXXX

Subject: Decision to apply a Vendor Performance Corrective Measure

Dear Ms, Mr. {Insert name here and delete this instruction}

As set out in the notice of intent to apply a Vendor Performance Corrective Measure (VPCM) letter dated XXXX, Public Works and Government Services Canada (PWGSC)/Acquisitions Branch (AB) has decided to apply against {insert name of the vendor here and delete this instruction} the following debarment as a VPCM pursuant to the Vendor Performance Corrective Measure Policy:

  • {Insert the following here and delete this instruction}
    • a xx month debarment
    • the beginning and the end of the period
    • the scope (See 8.180.15.10(b)(ii)(B))

In addition to the above, for commodities within the scope of the VPCM , {insert name of the vendor here and delete this instruction} is advised that the Vendor Performance Corrective Measure would extend to any other business arrangements involving {insert name of the vendor here and delete this instruction}, including subcontracting, partnership and joint venture.

While PWGSC regrets any disruption to your business, Canada's paramount concern must be the safeguarding of public monies. Should you require additional information, please contact {insert name of the DG/RDG and delete this instruction}, {insert title (Director General or Regional Director General) and delete this instruction} of {insert name of the sector or region here and delete this instruction} at {insert phone number of the DG/RDG here and delete this instruction}.

Yours truly,


Assistant Deputy Minister
Acquisitions Branch

CC: {Insert name of the DG/RDG and delete this instruction}

NB: You can view the Vendor Performance Corrective Measure Policy by going to: {insert the Internet address for the appropriate version of the VPCMP and delete this instruction}

Annex 8.12: Framework for Developing a Sector/Region Vendor Performance Program

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Customized past performance programs should address the following as appropriate and applicable to the circumstances:

  1. Scope:

    Under this section the sectors/regions will define the scope of each customized past performance program as it pertains to the commodity or commodities, type of procurement, dollar thresholds and contractual performance risk. This will also identify if the program is incorporated into any strategic procurement initiatives.

  2. How the Customized Program Works:

    This section will describe how the customized program works. The following are to be addressed when developing a program:

  1. Engagement with relevant industry associations and/or vendors/potential vendors
    1. Describe how industry associations and/or vendors/potential vendors will be engaged in the process of developing the customized program.
    2. Describe how the terms of the program will be communicated to vendors/potential vendors.
  2. Performance criteria
    1. Provide a clear definition of performance criteria. Criteria must be objective, measurable and relevant to the commodity or commodity groupings.
    2. Describe the methodology and process for evaluating performance including level of monitoring, client’s responsibility. The methodology must be relevant to the commodity or commodities.
  3. Consequences from past performance
    1. Define what will trigger an action for consequences.
    2. Describe the consequences on opportunities to bid or obtain future contracts including its scope of application, time periods, etc. Justify the nature, severity and relevance of the consequences based on the risk assessment for the program.
  4. Approval level for application of consequences - Establish the level of authority for such approval.
  5. Notification process
    1. Describe how and when vendors will be notified of consequences pursuant to the relevant customized program. This is conditional on having a notification process for each case of poor performance.
    2. The notification will describe the consequences and the extent of their scope in detail.
  6. Recourse mechanism - Establish a mechanism so that vendors have the opportunity to dispute the grounds for ensuing consequences.
  7. Accountability - Outline the roles and responsibilities for the stakeholders in the program.
  8. Documentation revisions - All relevant and necessary documentation, such as solicitation and contract documents, must be revised to set out the application of the customized program.
  9. Tools, forms and systems – List all tools, forms and systems developed for the needs of the program.

Annex B – Revisions to the SACC Manual

1. Revisions to the Standard Instructions

Modifications to Standard Instructions 2003 and 2004:

Effective immediately, section 12 of 2003 and section 07 of 2004 entitled Rejection of Bid are amended as follows:

Replace subsection 1. (a) and (b) with the following:

  1. Canada may reject a bid where any of the following circumstances is present:
    1. the Bidder is subject to a Vendor Performance Corrective Measure, under the Vendor Performance Corrective Measure Policy, which renders the Bidder ineligible to bid on the requirement;
    2. an employee, or subcontractor included as part of the bid, is subject to a Vendor Performance Corrective Measure, under the Vendor Performance Corrective Measure Policy, which would render that employee or subcontractor ineligible to bid on the requirement, or the portion of the requirement the employee or subcontractor is to perform;

    …

Modifications to Standard Instructions 2006 and 2007:

Effective immediately, section 12 of 2006 and section 07 of 2007 entitled Rejection of Offer are amended as follows:

Replace subsection 1. (a) and (b) with the following:

  1. Canada may reject an offer where any of the following circumstances is present:
    1. the Offeror is subject to a Vendor Performance Corrective Measure, under the Vendor Performance Corrective Measure Policy, which renders the Offeror ineligible to submit an offer for the requirement;
    2. an employee, or subcontractor included as part of the offer, is subject to a Vendor Performance Corrective Measure, under the Vendor Performance Corrective Measure Policy, which would render that employee or subcontractor ineligible to submit an offer for the requirement, or the portion of the requirement the employee or subcontractor is to perform;

    …

Modifications to Standard Instructions 2008:

Effective immediately, section 12 entitled Rejection of Arrangement is amended as follows:

Replace subsection 1.(a) and (b) with the following:

  1. Canada may reject an arrangement where any of the following circumstances is present:
    1. the Supplier is subject to a Vendor Performance Corrective Measure, under the Vendor Performance Corrective Measure Policy, which renders the Supplier ineligible to submit an arrangement for the requirement;
    2. an employee, or subcontractor included as part of the arrangement, is subject to a Vendor Performance Corrective Measure, under the Vendor Performance Corrective Measure Policy, which would render that employee or subcontractor ineligible to submit an arrangement for the requirement, or the portion of the requirement the employee or subcontractor is to perform;

    …

2. Revisions to General Condition 2020

Effective immediately, section 09 entitled Suspension or Cancellation of Qualification by Canada is amended as follows:

Replace subsection 1.(c) with the following:

(c) Canada has imposed measures on the Supplier under the Vendor Performance Corrective Measure Policy (or such similar policy that may be in place from time to time).

3. Revisions to SACC Manual Clauses

(REVISED) SACC Manual Clause J1000C - Termination for Default

This is further to the Stop Work Order dated _____ (delete this paragraph if no Stop Work Order was sent by the Contracting Authority).

In accordance with the unrestricted right of Canada to terminate the Contract for default if the Contractor is in default in carrying out any of its obligations under the Contract, the Contracting Authority notifies the Contractor that the Contract is terminated for default pursuant to section _____, Default by the Contractor, of general conditions ________ on the following grounds:

(Insert the grounds for terminating the contract for default.)

Canada reserves its right under the Contract to charge the Contractor for all losses and damages which Canada may suffer by reason of the default, including any amount in excess of the Contract Price that Canada may be obliged to pay in procuring the goods, services or both elsewhere.

(Insert the following paragraph when the termination relates to performance issues within the scope of the Vendor Performance Corrective Measure Policy)

In accordance with the Vendor Performance Corrective Measure Policy, this termination for default will trigger a Vendor Performance Corrective Measure assessment. In addition, a note indicating that there was a termination for default for this contract will be registered in the Vendor Information Management system.

(REVISED) SACC Manual Clause J1001C Partial Termination for Default

This is further to the Stop Work Order dated _____ (delete this paragraph if no Stop Work Order was sent by the Contracting Authority).

In accordance with the unrestricted right of Canada to terminate the Contract in part for default if the Contractor is in default in carrying out any of its obligations under the Contract, the Contracting Authority notifies the Contractor that the following part of the Contract is terminated pursuant to section _____, Default by the Contractor, of general conditions _____, on the following grounds:

(Insert the terminated part(s) and the grounds for terminating the contract in part for default.)

The Contractor must continue with the rest of the Work in accordance with the Contract.

Canada reserves its right under the Contract to charge the Contractor for all losses and damages which Canada may suffer by reason of the default, including any amount in excess of the Contract Price which Canada may be obliged to pay in procuring the goods, services or both related to the part of the Contract being terminated elsewhere.

(Insert the following paragraph when the termination relates to performance issues within the scope of the Vendor Performance Corrective Measure Policy)

In accordance with the Vendor Performance Corrective Measure Policy, this partial termination for default will trigger a Vendor Performance Corrective Measure assessment at the end of the contract. In addition, a note indicating that there was a partial termination for default for this contract will be registered in the Vendor Information Management system.

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