ARCHIVED Negotiation and Re-tendering of Procurements - NAFTA and/or WTO-AGP

In order to reflect decisions by the CITT, with respect to the negotiation and re-tendering of procurements that are subject to NAFTA and/or the WTO-AGP, the Supply Manual will be revised to:

• incorporate specific references to NAFTA Article 1014 and WTO-AGP Article XIV, and, to consolidate negotiation procedures that relate to the evaluation phase into Chapter 7D;
• require that all responsive bidders are given an opportunity to revise their offer when negotiations are entered into on a procurement that is subject to NAFTA and/or the WTO-AGP;
• exclude procurements that are subject to NAFTA and/or the WTO-AGP from an assessment, and, subsequent negotiation, of transportation charges; and,
• to provide advice regarding cancelling and re-tendering procurements that are covered by NAFTA or the WTO-AGP.

The changes that are being incorporated into the December 1996 release of the Supply Manual are provided at Annex A with their respective headings and Chapter references. Contracting officers contemplating negotiations or the cancellation of a procurement that is subject to NAFTA or the WTO-AGP should refer to these instructions before taking either course of action.

For more information, please contact Heather Harrison (956-0912).

Annex A

CHAPTER 5 - SOURCING STRATEGY

Solicitation Methods

Invitation to Tender

5.137 (01/07/95) An Invitation to Tender (ITT) should be used when all of the following criteria apply:

1. two or more sources are considered capable of supplying the requirement;and
2. the requirement is adequately defined to permit the evaluation of tenders against clearly stated criteria; and
3. the market conditions are such that tenders can be submitted on a common pricing basis; and
4. it is intended to accept the lowest-priced responsive tender without negotiations; and
5. the evaluation of tenders will exclude any Product, Resource, Operating and Contingency (PROC) costs or socio-economic considerations, other than the employment equity provisions.

5.138 (02/12/96) Deleted

5.139 (01/07/95) Of the possible solicitation methods, tenders are unique in that they can be opened publicly. Public opening should be considered for all ITTs estimated to exceed $25,000, except for those that are classified. ITTs for requirements less than $25,000 may be opened publicly if circumstances warrant.

Public opening should be considered for any tender where the contract award will have a high degree of public visibility.

SECTION 6E: PROCESS

Transportation Charges

6.621 (02/12/96) All goods requirements with an estimated expenditure of $25,000 (including GST) or more, and with transportation charges exceeding $1,500 are subject to a detailed analysis of such charges by the Traffic Management Directorate, with the following exceptions:

1. contracts for repair and overhaul, development, engineering services, technical studies and tooling;
2. capital assistance;
3. construction of complete ships or complete aircraft;
4. contracts in which clients retain control of all or part of delivery;
5. contracts for perishable foods;
6. purchases from Canadian suppliers on behalf of a foreign government or agency, unless assistance is requested by that government or agency;
7. standing offers, where order quantities and destination are unknown;
8. food and bulk fertilizer purchases under an external aid program;
9. requirements for multiple items which may result in more than one contract and for which identification of individual transportation costs is not practicable;
10. contracts for complete systems where multiple components may be shipped from multiple sources and locations and for which establishment of an FOB Origin cost is impractical;
11. service contracts; and
12. procurements covered by NAFTA or the WTO/AGP, unless a non-competitive process under one of the Limited Tendering reasons in the Agreement is used.

SECTION 7D: BID HANDLING

Evaluation of Responses

Financial Security

7.402 (02/12/96) If a bidder submits an incorrect type of financial security, the contracting officer will advise the bidder to resubmit the security within a reasonable period of time, generally not exceeding five working days.

If a bidder submits a bid which includes insufficient security, i.e. less than the exact financial security stipulated, or none at all, the bid will be considered non-responsive unless the deviation is minor and inconsequential.

Bids which have a minor non-compliance with the bid security requirement may be considered if:

1. the non-compliance can be considered as trivial or negligible in relation to the cost or scope of the goods or services being procured. For example, it may usually be considered as trivial when the required bid security is 10 percent of the bid price of $250,150 and the bidder submits bonds worth $25,000 rather than the required $25,015; or
2. the non-compliance or its removal through clarifications, cannot reasonably be considered prejudicial to the other bidders.

The decision to accept such bids, under the criteria set out in (a) and (b) above, must be made at the director level and justification recorded in the contract file.

No Responsive Bid

7.438 (02/12/96) When no responsive bid is received in response to a competitive bid solicitation, the bid solicitation must be cancelled.

One Responsive Bid

7.440 (23/06/94) When only one responsive bid is received in response to a competitive bid solicitation, and if the Crown is obtaining fair value, the contract may be awarded using competitive authorities to the single responsive bidder without obtaining additional price support or a price certification.

7.441 (02/12/96) Where the contracting officer is not satisfied that the bid represents fair value, price support should be requested from the bidder. If this does not show that the price is fair and reasonable, the contracting officer may consider negotiating or cancelling and reissuing the bid solicitation. (See 7.447 and 7.468.)

Price support can take the form of comparing the proposed prices to the current market prices and/or to previous prices paid, taking into account the reasons for any increase.

Negotiations

7.445 (02/12/96) When two or more responsive bids, are received in response to a competitive bid solicitation, and If no responsive bid represents fair value, contracting officers should examine the solicitation to determine possible causes. Subsequently, the contracting officer may consider negotiating with all responsive bidders or cancelling and reissuing the bid solicitation. (See 7.447 and 7.468.)

7.446 (02/12/96) Deleted

7.447 (02/12/96) When negotiating with more than one firm, care should be taken that all are treated fairly and impartially. The negotiations should not become an auction of the contract, as firms progressively improve their proposals in the light of information about the position of other firms. The confidentiality of each firm's negotiating position is to be assured.

Treasury Board Manual

Contracting

Guideline 10.6.6

7.448 (23/06/94) All negotiations must be conducted by the contracting officer or, if of a technical nature, by the contracting officer in conjunction with the client. A negotiation report must be placed on the contract file.

7.449 (02/12/96) For all procurements that are subject to the North American Free Trade Agreement (NAFTA) or the World Trade Organization - Agreement on Government Procurements (WTO-AGP), the contracting officer may only enter into negotiations if one of the two conditions specified in NAFTA or the WTO-AGP is present. Negotiations must proceed in accordance with the steps outlined in these agreements. (Refer to NAFTA Article 1014 or WTO-AGP Article XIV, as appropriate. When both agreements apply, refer to NAFTA Article 1014.)

7.450 (02/12/96) For procurements that are not subject to NAFTA or the WTO-AGP,

1. when an Request for Proposal (RFP) was used, negotiations may be entered into
   
   1. prior to the completion of proposal evaluation, provided that they are held with all bidders that submitted responsive bids; or,
   2. after the proposal evaluation, with only one bidder, provided that the bidder submitted the only responsive proposal, or the bidder was selected after evaluating more than one responsive proposal and it can be demonstrated that if the negotiations had been held with all of the bidders that submitted responsive proposals, there would have been no change in the firm selected;

   The ability to prove that the same supplier will be selected regardless of whether negotiations are conducted with all responsive bidders presupposes that the requirement (e.g. technical specifications) will not change during negotiations, and, therefore, that other bidders given the same opportunity, could not submit different, and, perhaps, better offers.

2. when an Invitation to Tender (ITT) was used, where there is more than one responsive bid, but the lowest bid nor the other bids represent fair value, the contracting officer must have determined before considering entering into negotiations, that it would not be more effective to cancel the solicitation and meet the requirement using another supply method. When urgency is a major factor, the results of the original ITT might be capable of being used as the basis for entering into negotiations with bidders;
3. when an RFQ was used, negotiations should be avoided, with the exception that some negotiations may be necessary if the requirement was not adequately defined originally.

Bypassing a Supplier

7.455 (02/12/96) If it is proposed to bypass the supplier who would be awarded a contract based on the published evaluation criteria and selection method, approval to enter into the proposed contract must be sought at the appropriate non-competitive level. The award must be fully justified and documented on file.

This procedure is not permitted for procurements subject to NAFTA, the WTO-AGP or the Agreement on Internal Trade (AIT). For example, NAFTA Article 1015, 4 (c) states that "unless the entity decides in the public interest not to award the contract, the entity shall make the award to the supplier that has been determined to be fully capable of undertaking the contract and whose tender is either the lowest-priced tender or the tender determined to be the most advantageous in terms of the specific evaluation criteria set out in the notices or tender documentation." Provisions with the same effect exist in the other two agreements.

Cancelling and Reissuing a Bid Solicitation

7.465 (02/12/96) Deleted

7.466 (23/06/94) If a bid solicitation is cancelled before the closing date, the contracting officer must notify, by telephone or facsimile (so as not to charge the supplier for the cost of an amendment): all suppliers who submitted a bid or who were invited to bid; the Open Bidding Service (OBS); and, the bid receiving area. The contracting officer will also instruct the bid receiving area regarding the disposal of any responses to the original solicitation.

The contracting officer is responsible for internal distribution of bid solicitation documents and updates within PWGSC and to the clients.

Contracting officers must obtain from the OBS service provider a list of all suppliers who have ordered solicitation packages and notify those suppliers directly of the cancellation.

7.467 (23/06/94) If the cancellation takes place after the closing date has passed, suppliers who have submitted bids should be advised of the cancellation of the requirement.

7.468 (02/12/96) Contracting officers may reissue a bid solicitation, with the approval of the director (headquarters)/manager (regions) or above, where:

1. a significant change has occurred in a requirement before a contract is awarded;
2. all bids are non-responsive or do not represent fair value; or
3. the bid acceptance period has expired before a contract is placed.

For procurements that are subject to NAFTA,the WTO-AGP or the AIT, when there are no responsive bidders or the procurement is substantially modified, the bid solicitation must be cancelled.

Contracting officers may reissue a bid solicitation, with the approval of the manager (headquarters)/division chief (regions) or above, where no bids were received in response to a competitive solicitation.

7.469 (02/12/96) Deleted

7.470 (02/12/96) For procurements that are subject to the Open Bidding Policy or any of the trade agreements, a new Notice of Proposed Procurement (NPP) must be published, with one exception, when a bid solicitation document is cancelled and reissued. Contracting officers may use source lists and send bid solicitations directly to suppliers, without publishing a new NPP, if there were no responsive bids received in response to the original competitive solicitation and the requirement is not being changed significantly.

7.471 (23/06/94) When a bid solicitation list was used to invite bidders, all suppliers who bid on the original solicitation must be requested to bid on the reissued solicitation, except those who have declined in writing. Other suppliers not included in the original solicitation who requested to bid or who were added to the source list will be considered.

7.472 (23/06/94) Where source lists are used, the bid solicitation will not normally be reissued if a qualified supplier has been inadvertently omitted from the firms requested to bid. Should it be necessary to reissue a bid solicitation because a qualified supplier was not requested to bid, approval at the director level must be obtained prior to reissuing the bid solicitation.

A qualified supplier omitted from the bid solicitation list may be given an opportunity to bid before a bid closing time is reached provided that sufficient time is available for such action.