ARCHIVED Vendor Performance Corrective Measure Policy

Introduction:

Policy Notification 11R3 (PN-11R3) replaces PN-11R2 of June 29, 2011 in its entirety. All the provisions of this PN are retroactive to June 29, 2011. PN-11R3 clarifies the purpose and scope of the policy, and further standardizes the processes and procedures pertaining to the application of a Vendor Performance Corrective Measure (VPCM). Fairness, openness and transparency will continue to be fundamental principles of the policy.

PN-11R3 is issued in order to modify the method of assessing vendor performance in cases where:

1. One or multiple call-ups resulting from a standing offer are terminated for default; or,
2. One or more conditional amendments are issued against one or more call-ups as a result of a default situation.

While every case of termination for default or every issuance of a conditional amendment must be reported to the VPCMP coordinator, only one VPCM assessment will be initiated, immediately after:

1. The expiry date of the standing offer; or,
2. The date the standing offer is permanently set aside;

whichever occurs first.

The VPCM assessment will apply for the performance of the vendor over the entire period of the standing offer and not on the basis of each individual terminated call-up or conditional amendment.

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-ups 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, Acquisitions Branch, 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 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 make available 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 in VIM, called Other Performance Records, 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 or at the expiry date of the standing offer 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(s) 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. VPCM consequences are determined on the basis of the VPCM cases that occurred 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 at bid closing date and 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 six years after the date the VPCM is implemented instead of seven.

Revisions to the Supply Manual

In support of this Policy Notification, sections of the Supply Manual have been changed. To view the changed sections, please refer to the "Affected Supply Manual sections" below.

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

No change has been made to the SACC. To view the latest SACC changes related to the Vendor Performance Corrective Measure, please refer to Policy Notification 11R2.

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 Information

For more information, contact the Policy, Risk, Integrity and Strategic Management (PRISM) Sector by email: dppapublications.appdpublications@tpsgc-pwgsc.gc.ca.