Purpose
The purpose of Policy Notification 133 (PN-133) is to notify all Acquisitions Program (AP) contracting officers of a new policy on the Cost Accounting Practices (CAP) Submission. This PN supports the Directive on the Use of Cost and Price Analysis Services
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The CAP Submission is a mechanism that can be used prior to, or in connection with, solicitations or contract negotiations where contract pricing is based on estimated or actual costs determined in accordance with Standard Acquisition Clauses and Conditions (SACC) General Condition 1031-2 Contract Cost Principles.
The CAP Submission serves to clarify the application of SACC General Condition 1031-2 and formally document the cost accounting practices to be used by a supplier for contract pricing. An accepted CAP Submission evidenced by a CAP Submission Acceptance Letter, will be incorporated into the terms and conditions of a contract if the requirement for one is expressly stated prior to contract award or by contract amendment.
Effective date
PN-133 is effective immediately.
Expected outcome
The CAP Submission supports the Government of Canada’s objective to achieve best value for money in contracts - in a manner that is fair and reasonable to the contractors by providing greater clarity, consistency, fairness and transparency in the application of SACC General Condition 1031-2.
Background and context
As detailed in the Department’s response, a third-party review from December 2015 concluded that Canada’s Contract Cost Principles were sound and compared favourably with costing standards applied by other nations. At the same time, the findings indicated that guidance material and tools were necessary in order to explain the application of Canada’s cost-based pricing approach as well as alternatives for all applicable procurements.
The CAP Submission set forth in this PN represents a measure that may be used to facilitate consistency in cost-based pricing and improve understanding and transparency on the acceptability of costs, while addressing industry’s expectations for a clear and consistent approach with regard to pricing and payment risks.
Requirements and responsibility
Application of the CAP Submission
At the discretion of the contracting officer (in consultation with a price advisor from Procurement Support Services Sector (PSSS)) the requirement for an accepted CAP Submission evidenced by a CAP Submission Acceptance Letter can be used in a competitive or non-competitive solicitation where pricing is, or will be based on estimated or actual costs in accordance with SACC General Condition 1031-2 Contract Cost Principles and clarification of the cost accounting practices to be used for pricing is desired.
The Directive on the Use of Cost and Price Analysis Services remains in effect and sets out the conditions under which the use of cost and price analysis services is mandatory.
To satisfy a CAP Submission requirement, a supplier can either provide a CAP Submission Acceptance Letter or refer to an existing CAP Submission Acceptance Letter in responding to a solicitation where the CAP Submission is a requirement.
A supplier may submit a CAP Submission for evaluation in anticipation of future requirements at any time.
When a supplier wishes to propose a change to accounting practices that differs from a previously accepted CAP Submission, a new CAP Submission must be submitted by that supplier for evaluation.
An accepted CAP Submission that has a valid CAP Submission Acceptance Letter may be incorporated if desired, by way of amendment to existing contracts.
When a CAP Submission is completed, signed by an authorized representative of the supplier and received, the CAP Submission Evaluation Committee will evaluate the submission and determine by consensus decision whether the bidder or offeror’s cost accounting practices are acceptable to Canada, as outlined in the Cost Accounting Practices Submission Evaluation Process. The CAP Submission Evaluation Committee will inform the supplier of acceptance or non-acceptance of the accounting practices described in the CAP Submission by letter.
Once incorporated as part of the terms of a contract, the accepted CAP Submission will apply for the life of the contract. The new SACC clause, C0014C, incorporates the cost accounting practices as terms of the contract.
A CAP Submission Acceptance Letter remains valid for a period of three (3) years from the date of issuance and may be provided in responding to a CAP Submission requirement. After the expiration of this three (3) year period, a new CAP Submission is required to obtain a valid CAP Submission Acceptance Letter for new solicitations where the CAP Submission is a requirement.
Canada reserves the right to revoke the CAP Submission Acceptance Letter at any time if it is determined that the CAP Submission or practice is no longer in compliance with SACC General Condition 1031-2.
Summary of changes
Supply Manual changes:
In support of PN-133, the Supply Manual has been updated. For more details, refer to the Affected Supply Manual sections listed below.
Standard Acquisition Clauses and Conditions (SACC) Manual changes:
In support of PN-133, the SACC Manual has been updated. For more details, refer to the Affected SACC Manual items listed below.
Guidance
The Cost Accounting Practices Submission Evaluation Process supports implementation of this policy notification by providing information on how Cost Accounting Practices Submissions are evaluated.
The Practitioner’s Guide for Procurement Pricing provides more details on the establishment and development of a cost-base for contract pricing.
Contact information
Enquiries related to this Policy on the Cost Accounting Practices Submission can be sent by email to the Procurement Support Services Sector, CAP Submission Evaluation Committee at the following address:
TPSGC.PADeclarationdesPCA-APCAPSubmission.PWGSC@tpsgc-pwgsc.gc.ca.
Enquiries related to cost and price services can be sent by email to the Procurement Support Services Sector, Price Advisory Group at the following address:
dspvacassistance.ccaapdassistance@tpsgc-pwgsc.gc.ca.
Questions related to Policy Notification PN-133, the Standard Procurement Templates, the Supply Manual and the SACC Manual can be sent by email to the Strategic Policy Sector’s SM/SACC Team at the following address:
TPSGC.Outilsdapprovisionnement-ProcurementTools.PWGSC@tpsgc-pwgsc.gc.ca.